• A Market-Based Approach to the Mass Shooting Crisis

    A Market-Based Approach to the Mass Shooting Crisis

    The research is unambiguous: gun availability leads to increased homicide rates – more than proportionally. For example, since 2004, the Harvard T.H. Chan School of Public Health published half a dozen papers supporting the hypothesis, both across countries and across states with varying degrees of gun availability. Hundreds of other reputable researchers published equally dispositive conclusions over the last two decades.

    The culprit, of course is the Second Amendment. America’s current clinging to the Second Amendment as (if not more) fiercely as past generations protected the right to own slaves costs thousands of innocent lives every year. As a result, on a per capita basis, the US has six times as many firearm homicides as Canada, and sixteen times as many as Germany. The cause? America has 4% of the world’s population but nearly 50% of the world’s civilian-owned guns.

    It is a certainty that the constitution is not going to be de-amended during our lifetimes. By normalizing child murder, the political class’ reaction to Sandy Hook put a nail in that debate’s coffin. The prospects for meaningful legislative action are just about as dim; with the failure of the many efforts to pass “common sense” gun legislation being the bellwether.

    So, paraphrasing Lenin, what is to be done? The answer is deceivingly simple and firmly grounded in another cherished American dogma: the free market.

    Just like car liability insurance became mandatory in 49 states without a congressional mandate, state legislatures could, and should, mandate liability insurance for gun ownership. Such a requirement would result in gun ownership by high-risk individuals being either prohibitively expensive outright denied. Out of Adam Smithian self-interest the insurance companies will be performing the screening function that the federal and many state governments refuse to legislate.

    The appeal of this market-based solution is that it would be politically and constitutionally unassailable.

    Politically, it would throw back at the gun lobby their own tired argument (“cars don’t kill people, guns don’t kill people, people do”).

    Legally, it would stand on much firmer ground than, for example, recent state legislation to limit abortions. In fact, the state laws we propose would not have even a hint of defiance of constitutional principle, since the state mandates would regulate and not negate the right to gun ownership in the same way as they currently do by regulating the minimum age to purchase and possess firearms.

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    Carlos A. Abadi

    Carlos is a 30-year veteran international investment banker who pioneered a number of financial products, such as the trading and swapping of emerging markets sovereign loans in the wake of the 1982 Mexican debt crisis, the trading market for derivatives on emerging markets bonds and loans, the first non-dilutive CET1 transaction compliant with Basel III rules, and the first Chapter 11 filing for a Latin American issuer.

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