Thursday, June 16, 2016

On gun control and comparisons to Australia

On Sunday, I predicted that conservatives would assert that liberals plan to confiscate everyone's guns, and that liberals would aid in that portrayal by favorably referencing Australia as often as possible.

Sure enough, Australia has entered the discussion again.  So let's talk about vegemite.  Vegemite is a yeast extract that Australians love.  Non-Australians tend to think it tastes like gym socks.  If you banned vegemite sales in the US, nobody would complain.  Obviously, that means you could ban vegemite in Australia with no problems whatsoever, right?

Economics time!  Wanna learn a new buzz word?  Of course you do!  Why else would you be reading this pretentious, little blog?  "Elasticity of demand."

Price goes up, willingness to buy goes down.  That isn't always the case.  Conspicuous consumption and all that, but for the most part, price goes up, willingness to buy goes down.  But by how much?  Let's say you have a severe medical problem, and you need a drug to keep you alive.  Some megadouchebag named Martin Shkreli jacks up the price.  You still have to pay it.  So, the same quantity gets sold.  That way, megadouchebag Martin Shkreli gets rich by exploiting the "inelasticity" of your demand for the drug.

On the other hand, let's say Starbucks raises the price of a latte by the same percentage.  You might stop buying lattes.  You might at least find another way to get your caffeine fix.  Why?  Because your demand for lattes is more "elastic."

The other fun thing about elasticity of demand is that not everybody has the same elasticity.  I love coffee.  I brew my own at home (french press, for those who care to know), but I'll pay for the beans even if they jack up the price by a lot.  If you don't care much about the quality of your coffee, you won't.  But I'm a hipster.  I admit it.

Coffee.  Vegemite.  What does any of this have to do with guns?  Simple.  Banning stuff doesn't make it go away.  I work on a college campus.  Specifically, an engineering-focused campus with a lot of math geeks, but I have previously been affiliated with institutions like Berkeley and Oberlin.  I'm not sure if you know this, but certain organic substances that are Schedule 1, federally prohibited substances are actually quite common on such campuses!  It's true!  Clutch those pearls!

Banning a good pushes it to the black market.  That imposes risk on its production, distribution and sale.  That raises its price.  That only reduces the consumption of the good by an amount determined by its elasticity of demand.  If demand for a good is "inelastic," that means the quantity demanded doesn't go down very much even when the price goes up, like my demand for coffee.  Ban it, and the same quantity gets consumed, just at a higher price on the black market.  If demand is "elastic," then banning it pushes the price up to a point at which the quantity demanded goes down significantly 'cuz people don't really want it that much.

Americans don't give a crap about vegemite.  Ban it, and nobody will buy it.  Nobody is buying it here now.  Try to ban it in Australia and problems will ensue.  Why?  Because the demand for vegemite in Australia is different from the demand for vegemite in the US.

And in the scheme of things, Australia and the US are pretty culturally similar.  We sort of even speak the same language.


Maybe not.  Anyway, even given our similarities, we can and do have different demand curves for the same goods, so there is no empirical reason to believe that demand for guns is as elastic in the US as it was in Australia.  And if it isn't, then doing here what Australia did would have very different consequences.

So here's a question.  Does the fact that we haven't confiscated everyone's guns, even after a series of mass shootings, tell us something about the elasticity of demand for guns in the US?

If so, then you can't assume that passing an Australia-like law here would have the same effect, and if not, are you maybe hanging around Berkeley or Oberlin and using some substance that is a federally-banned, Schedule 1 substance?  And if that's true, then maybe you should think about what happens when the government bans something that people don't like...

Liberals who tout Australia as a model need to consider the possibility that the political circumstances that generated the law in Australia were the same circumstances that dictated its consequences, and that the fact that we have different political circumstances here means that we cannot assume similar consequences.

In macroeconomic policy, we distinguish between supply-side and demand-side economics.  Funny how liberals ignore the demand side of the equation on guns.

Sorry, but policy is hard.  Anybody who tells you otherwise is Donald Trump.

As long as I'm talking about Australia and guns, here's a thoughtful song from a great Australian bluesman (and great guitarist) on the topic.  Jeff Lang is great.

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