Drawing Blanks

The long-running political battle on the Gun Question has the unhealthy tendency of funneling deeper problems into a single-issue bog.

During national policy firefights, nothing tends to get caught in the crossfire and shot to hell quicker than subtle yet crucial questions, lost in conflicting narratives. The battle lines drawn between each side of the political aisle make it increasingly harder to notice issues that should be of the utmost importance, which are instead used as cannon-fodder to score political points, but little else.

Case in point, a back-and-forth between two articles published in late December 2018, on the topic of gun control: The first, written by Andrew Sorkin of the New York Times [1]; the second, written by David French for the National Review [2], which responds to the first. While both bring interesting arguments to the table, they seem to miss the underlying essence of the issue: Is the current situation of credit in the United States tenable?

First, let us provide some context on both articles. Sorkin explores a seeming connection between credit cards and mass shooters: as it turns out, the overwhelming majority of recent killers gamed the credit system in order to make purchases that likely would have been seen as highly suspicious if they were to come from a single account. In short, they were all found with between four and six credit cards each, which investigators discovered had been used to fan out their purchasing history and amounts.

Not only that, but because of the nature of credit, said criminals were able to buy much more than their real wealth permitted, thus stockpiling shocking quantities of both weapons and ammunition -most notably Stephen Paddock, the Las Vegas shooter, who spent over $95,000 on firearms and gun-related purchases in the year before the massacre.

While banks are required to notify the authorities for single purchases of more than $10,000, or even as low as $5,000 if there is “reason to suspect” that such a purchase is made with malicious intent, there are easy loopholes and scrutiny is often lacking: “No bank has instituted a ban [on the sale of guns] or committed to tracking gun purchases. (…) And under the Gun Control Act of 1968, firearms dealers must report if someone buys two or more handguns in a span of five business days. That requirement can be evaded simply by buying at more than one store.”

The solution? According to the New York Times, banks and other financial institutions should pay more attention to gun purchases specifically, and report them whenever suspicious regardless of any amount threshold or time lapsed. The article argues that the ‘financial industry’ would have a sizeable advantage on law enforcement -presumably because tracking purchases comes before any act of domestic terrorism-, and that in any case banks already track other types of financial fraud with relative ease (money laundering, funding terrorism, and so on).

The main problem comes in knowing exactly what is being purchased: retailers, exact products, quantities, are usually hidden or unclear in purchasing histories. Retailers could, Sorkin writes, send more detailed information when it comes to gun-related transactions, which the banks could then analyze and report if necessary.

However, banks are for the most part opposed to the proposed fix. They do not believe it is their role to decide who can purchase what, as their primary raison-d’être is to be the medium of transaction. Granted, banks would be against anything that may put restrictions on their business, because that could lead to losses in revenue and clients, but their avowed intent, that legal payments should remain unhindered as much as possible, is understandable as well.

The precedent that would be set is dangerous: if banks become able to regulate the way money is spent on top of operating some of the avenues through which money can be spent, at least when it is spent with cards and other similar types of transaction -anything but direct cash, really-, the power that they would then have would be monstrous. Of course, it should be of concern when someone starts to spend increasing amounts of money that they didn’t seem to have on purchases such as guns and ammunition, but is it really a tenable long term solution?

As expected, those on the other side of the gun control debate are not exactly enthusiastic about what Sorkin has in mind: two days after the original publication, David French of the National Review wrote an article attacking the NYT’s proposal. In essence, French points out that purchasing any gun legally will be seen as an unusual and suspect purchase under the terms set by the New York Times article.

They are a sizeable expense -from the weapon itself to certain customization elements as well as ammunition-, one that may need equally sizeable savings before it is made. As such, they would automatically register as a big red flag for banks should they have the power to see the full details of the transactions, one that would instantly report anyone buying a gun to the authorities.

French identifies correctly, even if he does not name it as such, that this would mean judging the intent behind every gun-related purchase. It would ascribe criminality or at least the aura of criminal intent to any such transaction; thus flipping the presumption of innocence on its head -suspicious until proven innocent; although it’s perhaps safe to assume that most/many who are on the side of gun-control already view the purchase of guns with noticeable unease and questions aplenty.

Automatically investigating heavy gun purchases without cause is most certainly the wrong solution. Nevermind the potential breach of privacy it would entail, it would further shift law enforcement towards becoming a market good -think of private prisons- and not a prerogative of the state as it should be.

French and Sorkin both fall into the traps of their partisanship by narrowing the issue to a simple guns-good versus guns-bad dichotomy. It isn’t that credit cards are bad because they are used for massive gun purchases, or that guns need to be defended from banks’ prying eyes: the fact that credit is so easily accessible appears a more glaring issue. We know full well from recent history the catastrophic consequences it can have on the financial system: Have we all forgotten the subprime crisis?

If the connection should be unclear, here is a brief explanation: subprime loans – those at the heart of the financial crisis of 2008 – and credit cards operate along similar if not identical lines. They are loans given by banks; the only differences being in interest rates and the banks’ calculations. A subprime loan is riskier because the money is lent to people with lower credit scores, as in people with a history of having trouble paying their debts.

Credit use is widespread in the US [3], being at the core of many “milestone” purchases (cars, mortgages, and the like) as well as insurance or employment. They have become an integral part of life to the point that one may be inclined to ask whether US society hasn’t incentivized indebtedness to a fault.

This isn’t to say that credit in an of itself has become a problem, although the question may be legitimate. It seems more or less a necessary evil, a part of the age old cultural landmark in the US psyche that is the road to success -you need money to make money, after all.

Yet, a more relevant question than French and Sorkin’s whipping horse looks to be why anyone would be able to open so many credit accounts in the first place. Given how many options for quick credit access exist today, the overarching issue looks to be about economic growth and financial responsibility. Loans appear as helping hands for the pursuit of a certain American way of life; but living large off of cheap credit led us to the issues above, and to omit this as a core component of the issue debated in the two articles borders on the irresponsible.

The fix is about as thorny as the problem, naturally. It is a matter of spreading economic literacy at a micro level, encouraging healthier spending habits for individual households, while at the same time trying to push back against the financial system’s own habits of offering so many tempting options for credit. Yet, it’s difficult to justify putting a limit on credit avenues when the demand for it is as high as it is in the US, especially given that credit has been a motor for American growth for nearly the entirety of the 20th Century [4].

One thing, however, is pretty clear: trading a healthy -though clearly too enticing for its own good- financial system for a moralizing panopticon run by the banks is the quickest way to end up stuck in a major political quagmire with no way out.

1. Andrew Ross Sorkin, “How Banks Unwittingly Finance Mass Shootings”, The New York Times, December 24, 2018
2. David French, “Corporate Gun Control: The NYT Outlines the Dangerous Next Development”, The National Review, December 26, 2018
3. Jeff Desjardins, “How Tech is Changing the Modern Credit Landscape”, Visual Capitalist, May 2, 2018
4. Jeff Desjardins, “The History of Consumer Credit in One Giant Infographic”, Visual Capitalist, August 29, 2017

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