Tag Archives: Economics

Why Gun Control Won’t Work: The Economics of Human Behavior.

In recent days, the chattering class has spent a lot of time speculating about what kind of gun control regulations they might achieve in the wake of the national tragedy in Newton, Connecticut.

No_gun

I appreciate what liberals are trying to do. They sincerely believe that by banning firearms, they will make us safer and rid the country of a great evil. I agree with the objective of safety, but I reject their means because controlling the weapon will not work if the real issue is the heart of man.

Jeremiah 17_9

Get your MBA at Charleston Southern UniversityHere I will address the economics of the issue, and I will go beyond the abstract discussion of supply and demand, incentives, and deterrence to provide seven historical examples of how real people have reacted to weapons controls.

All Guns Are Banned!

Let’s start with a thought experiment. Let’s assume that liberals get everything they  want:

  • All guns are banned.
  • We have massive “Gun Disposal Days.”
  • We melt our guns into iPhones.

Everyone is blissful and the world will live as one.  But are we safer?

Any serious student of history should question how much better off we would be. If, as I have suggested, the problem is not with the gun but the heart of man (and, to a lesser degree, culture), we might be in a more precarious position. In fact, historically speaking, populations who have been disarmed have generally been oppressed by those with arms. Examples range from Carthage to the Third Reich.

Behavioral Economics & Arms Control: 7 Examples

1. CrossBows. Throughout the Middle Ages, Crossbows were loathed and feared because they were very accurate and they could penetrate armor, eliminating a knight’s battlefield advantage. The Magna Carta specifically mentioned crossbowmen among mercenary soldiers who should be banished from the kingdom as soon as peace was restored.

CrossbowThey were banned by the Pope in 1139, but they were so effective that even the threat of eternal damnation  did little to reduce the proliferation of crossbows in Europe.

2. Have you ever wondered why Martial Artists use such funny weapons?

Martial Arts Weapons from Karatemart

You can trace the use of these weapons to arms bans in feudalistic Asian societies. When farmers were occupied and disarmed, they used whatever they had at their disposal (e.g. farming tools) to defend themselves. Looking at the images above, you can see how these would be helpful in threshing grain or bailing hay.

Cane Defense3. The Cane.  Combat Hapkido, which was only developed in 1990, has adopted the cane as its weapon of choice. Yes, the cane–just like your grandfather uses.

Why? Because the practitioners of this modern martial art understand that the cane is 100% street legal. This is a selling point in Combat Hapkido classes, books, manuals, and training videos.

Gangland Season 14. Hammers. If I learned anything from the time I spent watching an entire season of Gangland,  it was that the Hell’s Angles motorcycle club members sometimes carry ball peen hammers. Why? Completely legal.

I would imagine a group of Hell’s Angels could do a lot of damage swinging ball peen hammers, but if they were stopped by the authorities, who could say that they were not just on their way to a habitat for humanity build?

5. Knives. Let’s go back to Modern day China. Recently there has been a wave of violent knife attacks. According to CNN:

Guns are strictly controlled in China, but until recently possession of large knives were not. Chinese authorities have recently issued a regulation requiring people to register with their national ID cards when they buy knives longer that 15 centimeters.

Note: 15 centimeters is roughly 6 inches. Is this where we want to go as a society–registering with the government when you buy a kitchen knife at Wal-Mart?

Box-cutter6. But what about the assault weapons used on 9/11? The AR-15s and M-16s used to subdue the passengers…oh wait, they used box cutters and claimed to have explosives.

At this point, the gun-control advocate might cry foul and ask, “But isn’t it better to just have a society armed only with knives. After all, if a would-be killer did not have access to a gun he could hurt a far fewer people.”

This argument assumes that criminals will not still obtain guns, leaving the law-abiding population at their mercy.  After all, criminals have a nasty habit of ignoring and violating the law. Moreover, it also assumes that those who can’t obtain guns will not turn to some other, more deadly means. Here, I am not talking about knives, but explosives.

7. Explosives. A 2011 U. S. Army medical study found that of 7877 combat casualties, “almost 75% resulted from explosive mechanisms; just 20% were gunshot wounds.”  More to the point, additional studies found that improvised explosive devices (IEDs) were directly responsible for roughly twice the number of casualties in Afghanistan and Iraq than in Vietnam.

The Heart of the Matter

From everything you have learned about how people react to these controls, does it stand to reason that bad men will recognize that Congress has passed sweeping legislation and change their evil gun-loving ways? A few might, but in an era where bomb building instructions can be found on the internet, do we really think we will be safer with more gun control legislation? Or, are we missing the point?

If the problem that we are trying to address is internal (the heart), an external solution (removing all guns) misses the point.

The heart can change voluntarily, but human nature is not easily subdued by legislation. Worse, an unintended consequence of robust gun control might be headlines about mall bombings and school bombings that take the lives of many more innocents.

Do you think Gun Control Legislation Will Be Effective?

-Darin Gerdes, Ph.D.

December 19, 2012

_______________

Dr. Gerdes is the Director of the MBA Program at Charleston Southern University

Advertisements

4 Comments

Filed under Economics, Misc., Motivation, Movies, Poltics

If You Do Not Read This Article, You Will Simply Hate How Much Money You Will Lose.

The Christmas season is here and it seems that everyone is having a once in a lifetime sale. Deals are everywhere. But listen closely to the advertisements and you will notice a funny trend. They all say: “buy now,” “limited time offer,” or “quantities are limited.” These companies are not out of merchandise. Instead, they are setting psychological traps intended to play on your fears of scarcity.

What is Scarcity?

Definition of Scarcity from Investopedia.com

Scarcity means that you cannot have everything you want.

Corporations understand that you desperately want certain items. Parents want to get particular toys for their children. Dad wants the largest TV possible. Mom wants some alone time (and for those of you who cannot get it, you truly know the meaning of scarcity).

Corporations Use Scarcity to Inflate Profits

Do you remember when cabbage patch dolls were all the rage?

It was the 1980s and I was in junior high school. I recall how difficult it was for Aunt Gail to get one for my cousin Amy. The lines at the toy store stretched around the block. People paid unbelievable prices, and they were thrilled if they could get one even at that price. Black markets formed where Cabbage Patch dolls were scalped.

I was only in junior high, but  I remember thinking that the company must have lousy executives to plan so poorly before the Christmas rush. With a little forethought, I thought, they could have produced plenty for everyone to buy.

Ah, but I was young and na·ïve. I did not understand that they were intentionally manufacturing scarcity in order to inflate profits.

I saw the same phenomenon repeat itself in 1996 with Tickle-me Elmo. The $29  toy was resold for as much as $1,500 because they were so scarce. Parents did not want to refuse their children the one toy that they most wanted.

Do not think you are immune. Apple uses this strategy when they roll out each iteration of the iPhone.

Scarcity Inflates Value.

This can be done in many ways: Producing fewer items produces scarcity Limited time offers create scarcity. As the clock counts down to Christmas morning–scarcity.

Get your MBA at Charleston Southern UniversityCorporations know how scarcity works and they use this understanding to manipulate you. They intentionally say things like “But you had better hurry. These deals won’t last long.” Then they have the After-Christmas sale, End of Year Clearance, and New Year’s Sale where they repeat the same line.

How To Protect Yourself From the Scarcity Mentality.

Understand what is happening.

1. Companies sometimes intentionally limit distribution in order to induce scarcity. Remember the Black Friday sales? Limited quantities drove consumers to camp outside in the cold for hours in order to purchase an artificially scarce item. Did the company have more in the warehouse? Of course they did.

2. Sales with limited time-frames also create scarcity. Companies want you to think that if you do not buy now, you will never have the opportunity again, at least not at this price.

3. Specific items that do not have substitutes are scarce. For example, when I was a kid, I wanted Star Wars action figures. These were more expensive than any alternatives on the market. To my dismay, I got Star Trek Action Figures. To my mom, it was all the same, but on the play ground Mr. Scott and Dr. McCoy were not welcomed on the Millennium Falcon.

Now, here is where parents get into trouble.  Remember the large TV dad wants? There are many brands and most have similar ranges of quality or substitutability. Dad will likely be as satisfied with a Panasonic, Sharp, LG, or Sony as long as the screen is 60 inches.

However, if your little darling desperately wants a Doc McStuffins Time for your Checkup Doll, there really are no clear substitutes. A knockoff simply is not the same, and Disney knows it. They have been selling Doc McStuffins through “commercial-free” Disney Channel cartoons all year. This is non-substituability.

What To Do

1. Recognize that if you are chasing a popular but limited item, the laws of supply and demand are working against you.

2.Do not be duped by limited time offers (e.g. Black Friday or Cyber Monday are the only times you will see great deals). Deals will ebb and flow.

3. If you simply must have the  Doc McStuffins Time for your Checkup Doll, you will pay dearly to have it. But you can lower your bill  for adult items by overcoming scarcity with substitution (e.g. a different 60 inch TV than the particular brand you want) or time (e.g. the After Christmas Sale).

4. Budget. The best plan is to know how much you plan to spend ahead of time. Do not exceed this total.

A good deal, such as 20% off, becomes a bad deal when you pay 120% because of the credit card payments.

5. Don’t believe the lie that your love can be measured by how much you spend.

6. Remember that scarcity is a mindset. Corporations attempt to inject it into the equation. You will pay less when you reject a scarcity mindset.

I am not a financial Planner, but I highly recommend Dave Ramsey’s Financial Peace University, which I have used  in  my classes.

The Professor’s Recommended Reading

Financial Peace University

November 26, 2012

_______________

Dr. Gerdes is the Director of the MBA Program at Charleston Southern University

2 Comments

Filed under Books, Economics, Leadership, Profitability