Focusing Only on Efficiency and Not Equality Has Backfired in Recent Political Debates

Vijay K. Mathur

The GOP nominee for president, Donald Trump, opposes trade pacts like NAFTA and TPP (Trans Pacific Partnership (not yet approved by the Senate) in his campaign. These pacts reduce trade barriers and tariffs. Senator Bernie Sanders, contender for the presidency in Democratic primaries, campaigned vehemently against trade pacts. The presumptive nominee Hillary Clinton has also backed out of her initial support for TPP, perceiving that the American people are not very sympathetic with the idea of trade pacts even though most economists believe these pacts promote free trade and economic growth.

Another recent example is the Brexit (exit of Britain) vote in a UK referendum on June 23, 3016. The majority of voters voted for UK to pull out of EU (European Union). This outcome was a surprise, despite warnings by concerned thoughtful politicians and economists that pulling out of EU will decrease economic growth and result in other adverse economic consequences for the economy.

These examples demonstrate that a significant number of voters in US and UK do not support the idea of efficiency without due attention to equality in public policy. In 1970’s Arthur Okun, Chairman of the Council of Economic Advisors in President Johnson’s administration, wrote a celebrated book, Equality and Efficiency, The Big Tradeoff (1975) in which he discusses the conflict between efficiency and equality. In his view, efforts to promote efficiency end up creating inequalities in income and standards of living among its citizens. Donald Trump and Bernie Sanders both alluded to harmful economic outcomes of trade pacts and globalization, thus garnering support of a significant proportion of voters.

TPP is a trade pact between 11 countries, most of which are low wage countries. We have already experienced adverse disparate economic impacts of cheap imports from China and out-migration of businesses to Mexico due to NAFTA. Economic Policy Institute, December 9, 2013, reported that movement of production resulted in 700, 000 job losses. Most losses were concentrated in California, Texas and Michigan and in the manufacturing sector. Imports from China also led to closing of plants in US manufacturing sectors, for example, steel, textiles, and furniture in certain states. The same fear is associated with TPP.

However, aside from globalization and trade pacts there are other reasons, such as skill-based technical change, decline of trade unions and low minimum wages for the increase in income inequality in the US. But the fact that free trade promoted by trade pacts is efficient and economically sound policy does not negate the other evidence that certain regions and labor force sectors in the country have faced detrimental economic consequences of globalization.

The evidence on the outcome of the Brexit vote is mixed. Some are of the view that UK voters did not want to be governed by the dictates of EU institutions. Some were apprehensive about the free flow of people between EU countries, especially now when there is a large in-migration of people into EU countries from Middle-Eastern countries. One could argue that allowing free flow of labor is an efficient policy, however from equality perspective, free flow of labor, especially from low wage countries, has a downward effect on overall wages. Hence, free flow of labor from those countries poses a conflict between efficiency and equality, because it skews the distribution of income in favor of capital.

Illegal immigration issue in the US also poses the same problem. A significant proportion of the American voters who support Donald Trump are also concerned about illegal immigration and its effect on wages and public benefits of citizens. However, the facts are that undocumented in-migrants from Mexico and other Central American countries provide low wage labor in certain sectors of the US economy where natives are not willing to work at those wages.

Nevertheless, the evidence also shows that for decades there is a redistribution of income from labor to capital. It may not be due to cheap illegal immigration, however labor does feel that lower wages of migrants, though efficient for businesses, is not improving their own standard of living. In addition, redistribution of income from labor to capital is also due to the increase in the industrial concentration and lack of competition in US markets. The Economist, March 26-April 1, 2016, points out that increase in monopoly power, and hence diminished competition, is not only inefficient but also inequitable. It results in higher profits and return to capital, high prices and/or lower wages. Therefore enforcement of Antitrust Laws against industrial concentration would improve both efficiency and equality.

Joseph Stiglitz, Nobel Laureate in Economics, in The Price of Inequality (2013), presents a cogent analysis of the inequality efficiency trade-off and states that “we could have a more efficient and productive economy with more equality” by curbing practices such as rent seeking, using political favors, and market failures.

I am not against free trade and legal immigration. They do promote efficiencies and growth in the long run. Nevertheless, public policy requires evidence based decision making, accounting of costs and benefits and their adverse distributional consequences and remedial actions for those consequences. Even Arthur Okun in his 1970 book, The Political Economy of Prosperity, recognized that economist should pay due attention to equity while “preserving efficiency.”

Mathur is former chair and professor of economics, and now professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio. He resides in Ogden, Utah.

http://www.huffingtonpost.com/vijay-k-mathur/

Trump Supporters See His Image in Their Mirrors

Vijay K. Mathur

Many in the media are appalled at the derogatory remarks GOP presidential presumptive nominee Donald Trump makes against Hillary Clinton, former President Clinton, women, and many ethnic and racial groups of Americans. However, I wonder if they have seriously examined the underlying views of Trump’s Republican supporters. It appears that Trump is reflecting the views of his electorate and political supporters about the rest of the American society. Perhaps we should not blame Trump for his foul, derogatory and unpresidential language against people and groups he does not like and who are critical of his views. Conceivably the blame lies with his cheering section.

During the 1950s, Senator Joseph McCarthy initiated a witch hunt for communists in the federal government and among Americans in all walks of life. It had gone unnoticed for some time by most responsible observers. But finally a courageous anchor newsman, Edward R. Murrow, in March 1954, exposed the Senator’s attempt to humiliate many honorable Americans and to damage freedom of expression and activity enjoyed by all Americans.

One of the most memorable statements Murrow made in support of his case against Senator McCarthy’s tactics and quoted by David Sheldon of Poynter, was, “He didn’t create his situation of fear, he merely exploited it—rather successfully. Cassius was right. ‘The fault, dear Brutus, is not in our stars, but in ourselves.’” The same situation is applicable in Trump’s presidential campaign. He is thriving on the fear, anger and suspicion of government of his supporters. Hence, it is time for them to look at themselves in the mirror, to consciously and cognitively examine who is exploiting whom. If they look carefully they may realize that Trump is not interested in their well-being but rather in his own lust for power and promotion of his brand.

Trump is also exploiting polarization of the electorate based on rumors he spreads in the news media. Experimental evidence reported by Cass R. Sunstein, in On Rumors, shows that internal group deliberations further strengthen members’ belief in rumors. Trump’s rumors, such as Muslims celebrated 9/11 attack on World Trade Center, Mexicans are rapists and murderers, Vince Foster may have been murdered during President Clinton’s administration, Senator Cruz’ father’s hand in JFK assassination, and Hillary Clinton desires to repeal Second Amendment are ignored by his supporters in his quest for the presidency.

Such rumors breed suspicion and even contempt against various ethnic and demographic groups and even against other presidential candidates who are supported by those groups. As psychologist Daniel Kahneman, former Nobel Laureate in Economics, states in Thinking Fast And Slow, “A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth. Authoritarian institutions and marketers have always known this fact.” Mr. Trump takes pride in his skills in marketing and branding but not in policies. Policies are left for the experts.

What about the media’s role in Trump’s campaign? Jacob S. Hacker and Paul Pierson in Winner-Take-All Politics are of the view that news media are not helping voters by providing vital and reliable information on the candidates and their policies.

“The erosion of traditional interest organizations has meant that for many voters, the media are the only regular source of political information... Even hard news consists mostly of dueling sound bites. Efforts to analyze the veracity or relevance of these claims, or place them in context, are either left to the end or left out altogether.”

These remarks are especially applicable to most television news. The Internet has not filled that gap either. In fact, the Internet has contributed to the speed and durability of rumors.

Why have Trump supporters, and presumably responsible Republican politicians, forgotten their basic principles of Republicanism and are supporting Trump? Speaker of the House Paul Ryan emphasizes conservative principles such as “big tent,” smaller government, and entitlement reform every time he gets the opportunity before the media; but even he is wavering in his principles and hinting tacit support for Trump’s presidency. Is it conceivable that many of Trump’s supporters secretly believe in what Trump is overtly saying, zeroing in on his supporters’ inner thoughts, such as fear of immigrants, minorities, off-shoring of businesses, China’s unfair trade practices and loss of respect for America in the world?

According to Tax Foundation, October 2012, 60 percent of households now receive more federal transfer income than they pay in taxes. Obviously the Republican Congress has not been very faithful to its principle of small government. The Republican electorate in Southern states also does not practice its explicitly expressed concern about big government. Out of the top ten states receiving disability benefits under SSDI, seven are in the South.

Trump’s contemptible inflammatory language, and his vindictiveness against those who do not agree with his ever changing inconsistent policies and statements is a reflection of the cognitive dissonance of his supporters. It is time for his supporters and Republican politicians to look at themselves in the mirror and find their true self and not Trump’s image.

Mathur is former chair and professor of economics, and now professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio. He resides in Ogden, Utah.

Targeting Trade and Trade Pacts for Job Losses is Counter Productive in Presidential Campaigns

Vijay K. Mathur

Presidential candidates, particularly Donald Trump and Bernie Sanders, have started this myth among Americans that their economic hardships are due to trade pacts like NAFTA and recently negotiated with 11 countries, not yet implemented, Trans-Pacific Partnership (TPP).  TPP would reduce tariffs and other trade barriers within the block that controls 40 percent of world trade.  This rhetoric against trade and trade pacts sounds as if these candidates are adopting a more protectionist posture.

US exports during 2000-2015 grew at the average rate of 5 percent per year, more than the average import growth rate of 4 percent per year.  In 2015 the US exports of goods and services were $2.2 trillion and imports were $2.7 trillion, creating a trade imbalance of $0.5 trillion.  However, this trade deficit is only 3 percent of our GDP, hardly the sign of economic distress portrayed by these presidential candidates. 

In regard to international trade accounts, these candidates, especially businessman Donald Trump, should know that there are two major flows in the balance of payments that matter to a country.  Trade account lists trade in goods and services, and capital account lists financial flows.  If there is a deficit in trade account, it is balanced by surplus in capital account (financial flows).   According to National Bureau of Economic Research (www.nber.org), “Foreigners invest an average of over  $5 billion in the United States every day…", a significant share of the GDP.  The US is one of the top investment destinations in the world.  Investment provides capital, creates employment, and increases productivity and wages of labor.  Growth in export sector also benefits import-competing industries and intermediate goods industries in the supply chain.  

A White House report in October 2013 states that in 2011 US affiliates of foreign countries employed 5.9 million people in the private sector, about 4.1 percent of total employment.   Kevin Zhang’s research in Contemporary Economic Policy, October 2010, shows for a cross-section of 87 countries/regions that foreign direct investment and trade strengthens industrial competiveness. Creating fear of trade and trade pacts diverts attention from areas of policy that demand more attention to create more jobs in the future.  More attention should be paid to emerging skill-biased technologies, causing job losses for certain skills, especially in the manufacturing sector.

Research by MIT Professor David Autor for The Hamilton Project, April 2010, shows that skill-biased technical change is the major source of job polarization. It is increasingly replacing and off-shoring middle-skill labor performing routine tasks. The well-defined routine tasks can be performed either by computer programs and/or low skill labor with minimal guidance.  However, demand for non-routine jobs that require high-level skills, abstract thinking and creativity have been increasing.  Low skill level service jobs are also rising in the US. 

This job polarization is causing wage polarization where wages for high skill occupations are rising with contraction in middle- skilled and low-skilled occupations.  Research by Maarten Goos, Alan Manning and Anna Salomons, American Economic Review, August 2014, shows similar job polarization in 16 Western European countries. This age of globalization requires resources and deliberate actions to upgrade skills to complement new technologies.

It makes more sense for presidential candidates to come up with a comprehensive plan to meet the challenges posed by new technologies rather than blaming foreign low wage countries for selling goods and services in the US at lower prices.  As long as these countries’ markets are open, they do not engage in unfair trade practices and manipulation of exchange rates, American businesses and labor have to learn to compete in the world market.  Unfair trade practices and exchange rate manipulation require actions within the framework of the rules of World Trade Organization (WTO) and International Monetary Fund (IMF), not protectionist policies. In a free trade environment, US business and labor have to implement cooperative strategies to meet competitive trade and technological challenges.  Increasing business profits at the cost of reduction in wage share is a losing proposition in the long run for both parties and the nation.    

Policy makers in cooperation with businesses and labor have to implement education and training programs on a macro scale on an ongoing basis to generate skilled manpower that complements emerging technologies.  Protectionism will lead to a downward spiral of economic activity in the US and in the rest of the world, because it will be an excuse for other countries to engage in protectionist policies, thereby shrinking trade and growth in all economies.  As Paul Krugman notes in his book Pop Internationalism (1996) “…international trade, unlike competition among businesses for a limited market, is not a zero sum game…”

I hope our presidential candidates are aware of the lesson of the Great Depression when President Hoover signed the protectionist Smoot-Hawley Tariff Act in 1930. By 1932, sixty countries retaliated by increasing their tariffs. That led to the collapse of world trade and deepening of worldwide depression.

Mathur is former chair and professor of economics and professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio. He blogs for Huffington Post.  He resides in Ogden, Utah.          

Conservatives Must Realize That Redistribution Programs Help Poor

Published in The Huffington Post: Huffpost Politics 04/12/2016

Vijay K. Mathur
, Professor of Economics, Emeritus at Cleveland State University

Income inequality in the U.S. has increased since 1979. According to the Center on Budget and Policy Priorities, October 26, 2015, real after-tax income gains of the top 1 percent of households were 200 percent, while the bottom 20 percent and mid 60 percent gained only 48 percent from 1979 to 2010. Other measures of income inequality tell the same story.

It is also well known that inequality in the US is greater than in European countries. The question then is why are conservative Americans in general, and Republicans in particular averse to the issue of redistribution programs despite such inequalities in the U.S.? I am referring to all kinds of redistribution programs, such as Supplemental Nutrition Assistance Program (SNAP), Medicaid, healthcare under ACA, Earned Income Tax Credit (EIT). Even programs such as Medicare and Social Security are redistribution programs, since a significant number of people collect more benefits over their lifetime than they contribute to the programs.

Let me briefly enumerate the findings of some academic studies that provide useful information to most conservative Americans and politicians in Congress. They challenge their views on redistribution policies and economic opportunities available to the poor.

The central result of the paper “Preferences for Redistribution in the Land of Opportunity“, by Alberto Alesina and Eliana La Ferrara (Harvard Institute of Economic Research), November 2001, is that those who believe that opportunities are equally available to the poor as well as to the rich see social and income mobility as a substitute for redistribution. People who expect to be in the upper income brackets or are wealthy are afraid to lose with redistribution and hence are opposed to redistribution schemes. However, Blacks, women and those who suffered unemployment shocks support redistribution. High income and wealthier people in general vote for Republican and conservative politicians. Pew Research Center data, December 12, 2013 show, that whites were almost 13 times wealthier than Blacks in 2013.

The above findings are consistent with the results in another study by Alberto Alesina and George-Marios Angeletos, American Economic Review, September 2005. Most Americans, as opposed to Europeans, believe that poverty is due to bad choices or lack of effort. This view reflects cultural differences between U.S. and countries such as Denmark, Sweden and Norway, where people are willing to pay more taxes to help poor and low-income people, because they do not consider the poor lazy.

These findings on attitudes of richer Americans about the poor are at odds with studies that have investigated opportunity issue, work profile and income mobility of the poor, and the remedial effect of redistribution on poverty.

The paper, “Rags, Riches, And Race“, by Tom Herts, published in Unequal Chances (2005), editors Samuel Bowes et al., found that a rich child, born in the top decile (top 10 percent of the income distribution), has 26.7 percent chance of remaining in the same decile, while a child born in the bottom decile has only 0.5 percent chance of ending up in the top decile. In the paper, “Land of Opportunity“, for the Federal Reserve Bank of Richmond, 2002 Annual Report, Kartik Athreya and Jessie Romero report that 43 percent of taxpayers in the bottom quintile (20 percent of the income distribution) were still in the same quintile after 20 years. Similarly, 46 percent of taxpayers in the top quintile were still in the same quintile. Hence, poverty and low-income status persist in a large fraction of families throughout generations.

What about the claim that poor are lazy? A study by Deborah et al., “The Working Poor Families Project 2014-2015“, using Census data, found that 32 percent of working families were below 200 percent of the official poverty threshold in 2013. The percentages for Hispanic and Blacks are almost double (48 to 49 percent) the percentage for white working families.

Two recent studies by researchers Raj Chetty et al., and Hilary Haynes et al., in The American Economic Review, April 2016, tend to dispel the myth that redistribution programs do not help the poor. Chetty et al., found that the housing voucher program, enabling children before the age of 13 to move from high poverty areas to low poverty areas, increased their college attendance, earnings and reduced single parenthood.

Hilary Hoynes et al., focused on the effect of the food stamp program (FSP), now called SNAP, on the general well being of a sample of adults born between 1956 and 1981 and their mothers. The estimates show that FSP significantly reduced “metabolic syndrome” (conditions such as obesity, high blood pressure, heart disease and diabetes) and promoted good health among adults. The FSP also significantly increased economic self-sufficiency among mothers.

Evidence shows that programs promoting better neighborhoods, schools, sufficient food supply, health care and education in the lives of poor children, have the best chance to ameliorate poverty in the long run. By now conservatives must realize that trickle-down model is flawed and is not the solution for generational poverty. They must work with progressives to implement the most efficient redistribution programs that enable the poor to get out of the poverty trap, hence minimizing waste of human resources.

Mathur is former chair and professor of economics and now professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio. He resides in Ogden, Utah.

http://www.huffingtonpost.com/vijay-k-mathur/conservatives-aversion-to_b_9657314.html

Poverty Trap and Emerging Underclass in the Land of Opportunity

Published blog in Huffington Post: Politics, January, 13, 2016

Vijay K. Mathur

In August 29, 1977, Time published a cover story about impoverished urban Blacks, labeling them as The American Underclass.  Those were people who were stuck in an environment of  “psychological and material destitution despite 20 years of civil rights gains and 13 years of antipoverty programs” and robust job recovery after the end of 1973-75 recession.   Since 2001 the poverty problem has worsened, and the    severe recession of 2007-08 has accelerated the downward spiral in income opportunities for many Americans.  It is making it more difficult, especially for Blacks and Hispanics and a significant proportion of Whites, to extricate themselves from the lower end of the income scale.

There is greater propensity for an increasing proportion of families and their adult children to end up in the bottom of the income distribution.   American Community Survey, Bureau of Census, September 2013, found that the poverty rate increased from 12.2percent in 2000 to 15.9 percent in 2012.  In addition, the percentage of people with income below 50 percent of the poverty threshold increased from 5 percent in 2000 to 7 percent in 2012.   The rates vary across racial groups, where Blacks and Hispanic rates are more than twice the poverty rates for Asians and Whites.

The study by Elizabeth Kneebone (http://www.brookings.edu/research/interactives/2014/concentrated-poverty#/M10420) at the Brookings Institution, July 31, 2014, found that from 2000 to the peak period 2008-12 of the great recession poverty is becoming more concentrated.  The 100 largest metro areas have 70 percent of the distressed areas with poverty rates of 40 percent or more.  The share of poor people in cities increased from 18.2 percent in 2000 to 23 percent in 2008-12; Suburban share has increased from 4 percent in 2000 to 6.3 percent in 2008-12.  Hence, the poverty problem has worsened over time despite economic growth during 2003-2006 and 2010-2012, and it has affected all ethnic groups.     

The increased concentration of poverty is especially worrisome in light of a study’s finding by Harvard researchers Raj Chetty et al., August 2015 (http://www.equality-of-opportunity.org/images/mto_paper.p). They found that children below age 13 in families given housing subsidy vouchers have significantly higher college attendance rates and earnings in mid-twenties, when they moved to lower poverty neighborhoods, as opposed to the same age children in families in the control group (with no housing subsidy vouchers).

One could argue that high poverty rates may not be of much concern if poor people have more opportunities for intergenerational income mobility.   But the findings of studies that have rigorously examined the issue are not encouraging.   In a book Unequal Chances (2005), edited by Samuel Bowles et al., a study by Tom Hertz found that, adjusting for household size, a rich child born in a household in the top income decile (top 10 percent of the income distribution), has 26.7 percent chance of remaining in that decile.  However, a poor child born in a household in the bottom decile (10 percent) has only 0.5 percent chance of ending up in the top income decile.  Hence, a rich child, as opposed to a poor child, is 53 times more likely to remain rich as an adult.   Persistence of poverty is much more severe for Blacks and Hispanics than for Whites.

Therefore, the question arises: what can be done about it, given the fact that, to some extent, parental education, traits and income determine their children’s educational attainment and incomes.  Another study by Professor Raj Chetty et al., June 2014 (http://www.rajchetty.com/chettyfiles/mobility_geo.pdf) is instructive.  They found that children have a high probability of moving up the income ladder in cities that have less residential segregation, less income inequality, better primary schools, greater social capital and family stability.  Hence, intergenerational mobility is local.

 Although income inequality in the current period affects intergenerational inequality, families stuck in the poverty trap cannot change income inequality in the short run. But they can take the initiative to improve their own skills, better their public schools, demand pre-kindergarten education, provide family stability, and create an environment for disciplined growth of children to foster love for education.  There is increasing evidence in psychological and behavioral studies that the interaction of environmental experiences and personal traits, such as impulse control, determine educational and economic success of children in adulthood.  The Washington Post story of December 20, 2015, on Jennings School District, MO., points out the success in educating primarily Black children.  In addition to requiring high academic standards, the Superintendent Tiffany Anderson has recognized and is dealing with issues related to poverty and fostering a disciplined approach to academic excellence among poor children.

Changes in the labor markets due to globalization and emerging new technologies have created a skills gap.  The skills gap, and therefore poverty, will persist if policy makers and families at the lower end of the income distribution do not respond by taking deliberate actions to remedy the problem.  Families facing prospects of sliding down the income ladder must also recognize the limitations of government income support programs and poverty policies. Hence, their own initiatives in concert with public policy assistance will be the path for economic success for themselves, as well as for their children.

A nation with persistence poverty over a period of time suffers human capital loss in perpetuity and other adverse social and cultural consequences.  Former Prime Minister of India, Atal Behari Vajpayee, once remarked, “Poverty is multidimensional. It extends beyond money incomes to education, health care, political participation and advancement of one’s own culture and social organization.”

Mathur is former chair and professor of economics and now professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio.  He resides in Ogden, Utah.

  http://www.huffingtonpost.com/vijay-k-mathur/poverty-trap-and-emerging_b_8958306.html

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Gun Laws to Reduce Mass Murders Require Political Courage

Vijay K. Mathur

Mass murders have become such a part of life in the United States that we all go through the routine of feeling sad, comforting the families, lighting candles, and bringing flowers to the murder site.  However, Americans are so entrenched in preserving the status quo, thanks to NRA, that many politicians refuse to support some realistic cost effective solutions, such as stricter regulations of firearms sales to reduce mass murders.  This apathy has reached a point that even researchers are shying away from the topic of gun violence research.

 FBI classifies killings as mass murders when there are 4 or more victims. William Krause and Daniel Richardson of Congressional Research Service (CRS) provide some evidence on mass murders in a paper, July 30, 2015.  From 1999 to 2013 there were 317 mass shooting incidents, where 1554 people were killed and 441 wounded.  In addition, since 1990, days between mass shootings have been decreasing.  

An investigation on mass murders by Mark Follman of Mother Jones (http://www.motherjones.com/politics/2012/07/mass-shootings-map), Updated December 3, 2015, found that during 1982-2012, of the 143 guns used 99 of them were semiautomatic and rifles, and more than three-fourths were obtained legally. According to CRS, a significant number of mass murderers have mental problems.  Hence, facts show that mass murders are rising with greater frequency, high-powered weapons are the favorite tools in most shootings and a significant number of shooters have mental problems. 

 We cannot restrict the constitutional right to bear arms affirmed by the Supreme Court in 2008.  However, the Second Amendment of the Constitution or the Supreme Court ruling in 2008 did not support that right to be unlimited (http://bigthink.com/risk-reason-and-reality/the-supreme-court-ruling-on-the-2nd-amendment-did-not-grant-an-unlimited-right-to-own-guns).  Writing for the majority conservative Justice Antonin Scalia stated, “Like most rights, the right secured by the Second Amendment is not unlimited…” It is “…not a right to keep and carry any weapon whatsoever in any manner whatsoever and whatever purpose.”   The majority report also supported prohibition of “dangerous and unusual weapons”, and even carrying of concealed weapons.

 A study of 27 developed countries including US, in The American Journal of Medicine, October 2013, found that gun ownership rate is an independent predictor of firearm-related deaths.  Mark Duggan obtained similar results in an academic paper, “ More Guns, More Crimes”, Journal of Political Economy, October 2001.

Hence, it makes sense to pass laws that regulate purchases of all types of guns and high capacity magazines (without any loopholes), supplemented by requiring universal nation-wide background checks (without any loopholes), high tax rates on all types of guns and magazines and personalized gun technology.  This would require political courage despite NRA’s lobbyists.

Since different types of guns are substitutes, Tomas Philipson and Richard Posner argued for restricting ammunition as an effective strategy to curb the use of guns in their research for The Journal of Law and Economics, October 1996.  However, in addition to ammunition regulation, a proportionate tax on all guns would avoid the substitution problem.  Increase in price due to the tax would decrease demand for guns.  For example, Douglas Bice and David Hamley, The Journal of Law and Economics, April 2002, found that a 10% increase in the price of handguns reduces demand 20% to 30%.

What about millions of guns that are already in circulation?  Since I am advocating for federal guns and ammunitions regulations, I propose that the federal government could provide incentive of income tax credits, with a 5 year window, to those who come forward to register their guns and ammunitions and go through background checks.

Fear-mongering statements, often made by NRA and other opponents of any firearms regulations, defy simple logic.  We all have heard the claim that guns do not kill people but people kill people.  Precisely due to this reason, I propose nation-wide universal firearms regulations and background checks.  These regulations are meant to discourage those people who are prone to violent behavior and are mentally incapacitated from owning guns and ammunitions.  The argument for guns for self-defense cannot justify possession of sophisticated weapons with high kill factor and range accuracy, and high capacity magazines.  Finally, the argument that gun regulations would deny guns to lawful people and not outlaws is patently illogical.  The purpose of national universal guns and ammunitions regulations (without loopholes) is exactly to deny guns and ammunition to outlaws.        

Law-abiding citizens have a vested interest to make the logical choice to support common sense firearms and bullet magazine regulations and to elect politicians who have the courage to defy lobbyists to support their cause.   Such laws and regulations would protect the right to bear arms while at the same time would tend to reduce murders, suicides, familicides (killing of family members) and mass murders, thus promoting freedom from fear in daily lives of Americans.

Mathur is former chairman and professor of economics and now professor emeritus, Department of Economics, Cleveland State University, Cleveland, Ohio. He resides in Ogden , Utah.