Three pistols
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The debate about gun violence in America has fallen into a depressingly familiar routine. After every horrendous mass shooting, like the recent one at the Tree of Life synagogue in Pittsburgh, or weekend spree of violence in Chicago, the media commences a few days of wall-to-wall coverage. Large numbers of Americans demand changes in gun laws. Experts debate various reforms on TV. When no changes are forthcoming, attention lags until the next mass shooting. Rinse and repeat. 

There are two principal reasons why we are stuck in this painful rut. The first is that the National Rifle Association, via its influence primarily within the Republican Party, has effective veto power over any gun legislation at the national level and in many states. The second is that the solutions that are typically discussed fail to match the scale of the problem. Banning military-style semiautomatic weapons, regulating magazine clips, closing the gun show loophole, and preventing people with domestic violence restraining orders from acquiring weapons might well reduce levels of gun violence—to some extent. But it is hard to argue that these reforms, even if they all went into effect, would do much more than put a modest dent in the problem, and for a simple reason: there are just too many guns floating around. 

In total, Americans possess as many as 393 million guns—almost half of all civilian-owned guns around the world—despite making up only 4.4 percent of the world’s population. In such an environment, it’s simply too easy for someone determined to do harm to get a gun. States with more guns experience more gun-related deaths, including homicides. According to the American Journal of Public Health, a 1 percent increase in a state’s gun ownership rate equates to a roughly 1 percent increase in firearm homicides. States with the most guns also report the most completed suicides, which account for the majority of gun-related deaths. This is partly because guns make it much easier for people to kill themselves. Over 85 percent of suicides attempted with a firearm prove fatal. By contrast, the fatality rate of poison-related suicide attempts is 7.4 percent. For cutting, it’s 5.1 percent. Gun violence did drop substantially in the 1990s before stabilizing—at a rate vastly higher than in any other developed country—during the first decade and a half of this century. But since 2014, gun violence rates have again spiked. 

To bring down the number of guns in circulation, the federal government should take three major steps: purchase the entire domestic handgun manufacturing industry; ban the import of all handguns; and offer cash buybacks for all handguns in circulation.

The stalemate on gun legislation will not last forever. A point will come, as it has several times in America’s past, when Washington will be politically ready to act—most likely the next time Democrats control both the White House and Congress. When that moment arrives, wouldn’t it be better if, instead of debating marginal fixes, there were new ideas on the table to actually address the root of the problem by substantially reducing the number of guns in circulation?

In that spirit, I would like to float such an idea. It is not one that comes from deep expertise in gun policy, which I cannot claim. Rather, it emerges from my experience in the private equity business. 

After our small company buyout firm purchased an importer of night vision monoculars, a product popular with hunters, we began to get approached by business brokers about small arms manufacturers that were for sale. One such company—which we later visited—was a well-run, highly profitable, and rather intimidating manufacturer of sniper rifles. At first the notion of competing in a market as large as the firearms industry didn’t seem to make sense. We soon learned, however, that the U.S. firearm manufacturing industry is relatively small. The market capitalizations of the two largest U.S. firearm manufacturers—Sturm, Ruger & Co. and Smith & Wesson, public companies that together produce approximately 50 percent of all handguns manufactured in the United States—total less than $3 billion. To put that in perspective, the market cap of General Motors is roughly $50 billion. In fact, the vast majority of U.S.-made handguns are produced by fewer than fifty, mostly small, private companies. 

In the end, we chose not to invest in the firearms industry. But the exercise drove a thought. To shift the supply and demand dynamics of firearms in America, and thereby reduce gun violence, what if somebody acquired every handgun manufacturer in America? And what if that somebody were the federal government?

Sniper rifles are fearsome weapons, made specifically to kill unsuspecting humans. But they are not seriously contributing to the gun violence problem in the U.S. Nor are hunting rifles, shotguns, or truly automatic weapons (the latter are heavily regulated and seldom in civilian hands). Rather, most gun violence is perpetrated with handguns. In the ten states with the most gun homicides, handguns are responsible for roughly 80 percent. 

Semiautomatic assault rifles, like the AR-15 and its competitors, are at the center of the gun debate, primarily because of their role in recent mass shootings. But mass shootings make up a small fraction of gun injuries and deaths in America. Moreover, according to a 2013 government report, a handgun was involved in roughly two-thirds of mass shootings in the U.S. since the 1999 Columbine High School massacre. 

The number of handguns in circulation is astonishing. According to the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), since 1986 over 100 million handguns have been manufactured and imported into the U.S.—approximately one for every household in America during that period. 

To bring down the level of gun violence, we need to have fewer handguns in circulation. To that end, I propose that Congress pass legislation directing the federal government to take three major steps: purchase the entire domestic handgun manufacturing industry; ban the import of all handguns; and offer cash buybacks for all handguns in circulation. Over time, this would allow the government to significantly lower the supply—and thereby raise the price—of handguns, all without infringing on Americans’ right to bear arms.

Let’s take these steps in turn, beginning with the first: empowering the federal government to buy out the domestic handgun industry. Constitutionally, there’s no reason why this could not happen. Washington nationalized the railroads temporarily during World War I, bailed Chrysler out of bankruptcy in the late 1970s, and bought out the insurance company AIG in 2008 before selling its shares in 2012. 

Under law, the government would have to offer “just compensation” to shareholders of the handgun businesses, but the cost would be quite modest. In many instances, it would not even be necessary to purchase the entire companies—only the handgun assets. These manufacturers could continue to make and sell hunting rifles, shotguns, ammunition, and accessories. Indeed, even at a price of two to three times current market valuation (which may be necessary because prices will certainly rise in anticipation of the sale), the entirety of U.S. handgun manufacturing capacity—literally every producer, large and small—could be acquired for around $5 billion. That’s big money, for sure, but within the context of the federal government it’s not so much. 

Then bring in a smart, highly experienced team of managers from the industry to pull the new federal handgun manufacturing holding company together. Maintain brands and models, run some of the divisions independently, but create efficiencies at the same time—just as is done in private industry. Build a board of directors with relevant experience. Continue to manufacture and sell handguns under existing laws to all of the usual customers, including national retail chains, independent gun stores and dealers, individuals who pass background checks, and federal, state, and local government agencies. Reaffirm every American’s Second Amendment rights to own a gun (or as many guns as you want) along with the enforcement of existing laws.

The second step in this long-term solution to gun violence is to ban the importation of handguns, which accounts for a growing proportion of the American market. Of the more than nine million handguns introduced to the U.S. market in 2016, about 40 percent were imported, predominantly from allies like Austria, Germany, Italy, Croatia, and Brazil.

Again, there is no constitutional reason why this could not happen. In 1989, George H. W. Bush declared a permanent ban on almost all foreign-made semiautomatic weapons. In 1998, Bill Clinton affirmed Bush’s ban, adjusting it to include weapons that could be easily converted to and from military-grade capacity. Banning handgun importation would require considerable political capital, possibly including new legislation and changes to existing trade agreements. But the fact remains that these countries and, in most cases, these foreign private companies, are supplying the United States with roughly four out of ten handguns being sold in our country every year and are a major contributor to the gun violence epidemic we are seeking to solve. 

At this point, we would control our own destiny with regard to the supply of handguns in the country. With the elimination of imported handguns, the federally owned factories would experience significantly higher demand and the ability to raise prices. And when the price of something goes up, the public buys less of it. 

Sniper rifles are fearsome weapons, made specifically to kill unsuspecting humans. But they are not seriously contributing to the gun violence problem in the U.S. Nor are hunting rifles, shotguns, or truly automatic weapons. Rather, most gun violence is perpetrated with handguns.

Higher prices for handguns would dramatically increase the profitability of the new federal handgun manufacturing holding company. And who would be the owners of these American factories? That’s right—you and I. The increased profitability of the U.S. handgun industry would inure directly to the benefit of the American taxpayer and likely lead to a boost in jobs in the domestic handgun manufacturing industry. Significantly, existing gun owners would also benefit from this shift in supply and demand, since the value of all existing handguns, both foreign made and domestic, would rise.

Of course, if new domestic companies were allowed to jump back into the handgun manufacturing business, they would flood the market, undercutting the government’s prices and spoiling the entire effort. So the legislation would also have to grant the government a monopoly on the manufacturing of handguns. Constitutionally, this would be controversial. Liberal jurists would point out that Congress has this power under the interstate commerce clause and argue that the Second Amendment protects the right to keep and bear arms—not to manufacture and sell them. Conservative judges might argue the opposite: that restricting supply more than what “the market” dictates unduly impinges on the right to obtain a gun. With conservatives dominating the Supreme Court, the legislation would face rough sledding. But that would be true of almost any ambitious progressive policy one can think of. Eventually, the more conservative reading of the Second Amendment will have to be overcome.

The third step is legislation that authorizes a long-term, nationwide federal buyback of handguns. Gun buybacks are nothing new; local governments have been running them for years, offering citizens cash for any guns they bring to the police department, no questions asked. There is scant evidence that local buybacks achieve their stated aim of reducing the number of guns on the streets, however, for the simple reason that the gun industry just fills the void by selling fresh weapons. But with the overall supply now restricted by the import ban and federal ownership of the domestic handgun business, every gun purchased through the federal buyback could mean one fewer in circulation. 

This program would only be effective if the prices paid—with no questions asked, no IDs required, and for cash—were attractive. And they would be, thanks to steps one and two. With the supply of new guns restricted, the buyback program would pay the now much higher market price for pre-owned handguns. A run-of-the-mill used handgun that was purchased legally for around $200 might fetch a buyback price of around $500. More expensive handguns could bring $1,000 or more. 

According to a 2015 analysis by the Washington Post, the average gun-owning American household owns about eight guns. Most gun owners bought all their guns lawfully and are highly responsible. If you are one of the millions of people who own a number of guns, the opportunity to sell down your collection at a significant profit and still remain well armed could be very attractive. On the other end of the spectrum, the communities where violence involving illegal guns is most severe are disproportionately poor and heavily African American and Hispanic. Changing the market dynamics to get handguns off the street and out of households—and dramatically raising the cost of obtaining one—would benefit these communities most of all. 

Unlike any other gun violence solution, this one provides substantial economic benefits to handgun owners and manufacturers. It would be instructive to observe how Second Amendment–focused gun enthusiasts weigh their ideological principles against the prospect of having existing gun collections rise substantially in value.

Weapons purchased by the government would be imaged, their serial numbers entered into a centralized system, and in most cases transferred to secure regional processing centers, like existing armories. Usable pre-owned weapons would be re-marketed to federal agencies, the military, state and local police departments, and private security agencies. Others might be sold to foreign governments at export market prices, never to be imported back to the U.S. Those that had been stolen would be held at the local buyback location—in most cases a police station—and returned to their rightful owners. Excess or unusable inventory would be systematically destroyed. 

Once in place, the system would necessarily be managed, through trial and error, with an eye toward its market effects. The aim would be to slowly, over many years, diminish the number of handguns in circulation, but not so much that rising prices caused a spike in gun theft or made a black market in smuggled or illegally fabricated weapons highly lucrative. (It almost goes without saying that manufacturing 3-D printable handguns, which the courts have already begun to crack down on, should remain illegal.)

The total long-term cost of this solution is difficult to measure with much intellectual honesty, but some aspects can be estimated. The federal purchase of the handgun manufacturers, as we’ve seen, would cost from about $5 billion to perhaps as much as $8 billion. But the ban on imports would effectively reduce that cost by increasing the value and profitability of the new taxpayer-owned federal handgun holding company. In other words, the federal government would overpay for the private manufacturing assets and then improve the profitability of those assets by limiting foreign supply. American taxpayers would subsequently own a very valuable and profitable business. 

The cost of the third part of the legislation, the nationwide handgun buyback, is the most difficult to estimate. Setting up and staffing 500 to 1,000 buyback locations around the country—even if they are in existing police departments or similar protected buildings—would be expensive. So would establishing regional secure processing locations. Purchasing pre-owned handguns at now higher market prices would be the most costly, especially since we can expect that many individuals would stock up on handguns in anticipation of the legislation going into effect. 

But, again, keep in mind that all these costs would be offset in three fundamental ways. First, a government-controlled monopoly handgun industry would be highly profitable, providing substantial recurring revenue. Second, most of the bought-back handguns would be resold at market prices, including as exports. 

Third, and most importantly, there would be enormous savings gained by a reduction in gun violence. The Giffords Law Center estimates that such violence costs the American economy at least $229 billion every year. This figure takes into account many factors, including the costs of taxpayer-paid emergency and other medical care, lost productivity, and courts and incarceration. It does not attempt to measure the pain of a life-altering injury, or the horror of losing a loved one to murder, accident, or suicide. The benefits of reducing gun violence are greater than what can be put in absolute dollar terms. What’s clear is that in the end, the long-term value to the American people of slowly but surely reducing the number of handguns in circulation and the resulting reduction in gun violence would be a tremendous bargain. 

The politics of a federal purchase of all handgun manufacturers, an import ban, and a federal buyback will obviously play badly with the gun rights movement and its standard-bearing organization, the NRA—which would face losing a major source of funding and thus a loss of political power. These politics could well stop the idea in its tracks. At the same time, this approach has something going for it that no other gun violence solution can claim: it provides direct, immediate, and substantial economic benefits to the owners of handgun manufacturers and every American handgun owner. The more handguns you own, the more money you stand to make. It would be instructive to observe how Second Amendment–focused gun enthusiasts weigh their ideological principles against the prospect of having existing gun collections rise substantially in value. We may never know until we put forth the proposal. It may be that American voters will recoil at the idea. But what about younger voters, who polls show are less skeptical about government and more sympathetic to gun violence legislation? And what happens when, a couple decades from now, these voters make up the majority?

Gun violence has woven its way into the fabric of American culture. It’s not simply a familiar breed of tragedy; it’s one we’ve come to expect. The possibilities I’ve described are not modest, but neither are the ramifications of gun violence. In the face of such thoroughly normalized violence, Americans deserve broad, sweeping reforms. As a country, we’ve experienced far too many years of painstaking incrementalism, of NRA stalemates masquerading as compromises. The scope of our imagination ought to match the scope of the epidemic. That way, when the moment for change comes—likely, when Democrats once again control Washington—we all can say we left no stone unturned.

Sara Hodgkins, a writer based in Chicago, contributed to this story. 

William V. Glastris Jr.

William V. Glastris Jr. is managing member at Evanston Partners, LLC. He's spent his entire career as a lower-middle-market private equity investor, and is now the chairman of Fabretto Children’s Foundation.