Wednesday, March 25, 2009

A Darker Growth Industry

Yesterday I suggested that "rehab could become one of the major growth industries behind economic recovery." While it is nice to contemplate that the spirit of people helping others could provide a motivating force to get us out of the current crisis, a story filed from Houston last night by Sheila McNulty for the Financial Times made it clear that such altruism is far from the only path to economic growth:

Guns and ammunition are one growth industry in this recession, fuelled by anecdotal evidence that the economic downturn has sparked an increase in crime from which Americans want to protect themselves.

The Texas Senate criminal justice committee is debating whether to permit state residents to come to work with guns in their vehicles. Proponents say as crime rises, Texans must have guns to drive safely to and from work. Critics object that, given the increasing number of Texans losing their jobs, guns in their cars is a recipe for disaster.

In November last year there were a record 1,529,635 background checks for gun licences in the US, up 42 per cent from the same period a year earlier, according to the Federal Bureau of Investigation. In January 2009 the number of background checks re­quested was 1.21m, up from 942,556 in the same month last year, and rose in February to 1.3m, up from 1m in February 2008.

My guess is that Franklin Roosevelt did not have such circumstances in mind when he said of the Great Depression, "The only thing we have to fear is fear itself;" but it is clear from McNulty's account that the "engine" behind this particular growth industry is nothing more than raw get-them-before-they-get-us fear. Whether or not Roosevelt anticipated such a reaction, his cautionary admonition is as relevant now as it was almost half a century ago.

Nevertheless, to be fair, the growth of the firearms industry has at least one major driver other than preemptive fear of crime. McNulty's report concludes by exploring another aspect of this growth:

Jonathan Lowy, director of legal action at the Brady Center [to Prevent Gun Violence], says 95 per cent or more of the guns used in the Mexican drug battles are from the US. “That has certainly become a part of the US market, supplying guns to the Mexican gun cartels.”

Mexico has restrictive laws on gun sales and a ban on many types of firearms.

Thomas G. Mangan, a spokesman for the federal Bureau of Alcohol, Tobacco, Firearms and Explosives in Phoenix, says most of the guns recovered in Mexico are traced back to the US. “The biggest target is the south-western border states.’’

More than 7,000 guns were recovered in Mexico last year and traced back to the US, Mr Mangan says. At a Senate hearing last week, William Hoover, assistant director for field operations at the ATF, said the US had traced almost 10,000 weapons in Mexico so far this year. He said 90 per cent of such weapons came from the US.

Last year a Brookings Institution report estimated that 2,000 weapons illegally cross the border from the US into Mexico every day.

Apparently, we have an manufactured product for which there is still a high demand for export! Is this the sort of thing that Tom Friedman had in mind when he preached that globalization would lead to expanded market volume? As Paul Saffo used to say, "The future always arrives late and in unexpected ways." Were these current circumstances part of the future of globalization that you expected, Tom?

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