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Guns and Wall Street, a match made in heaven?

Lindsey Rae Gjording
February 23, 2018

Mass shootings lead to stock gains for gun manufacturers, yet American voters are in favor of stricter gun laws. The contradiction of guns and Wall Street despite strong public opinion.

USA - Schusswaffengebrauch
Image: Getty Images/S. Platt

The firearms manufacturers Smith & Wesson saw its stock rise and close at a net gain on Thursday, the day following a mass shooting in Parkland, Florida. Smith & Wesson is the maker of the M&P15 rifle used by a student to kill 17 people at his high school. With around 265 million guns in private hands, over 42 percent of Americans own guns.

Analysts have found people are more likely to purchase guns after a mass shooting. This is attributed to the fear that gun control measures will be enacted as a response to the shooting. Yet this is not the case, in fact the US has not passed a single federal gun measure in the last decade. Even last week Florida lawmakers voted down a motion to debate assault rifles. Many attribute this to the National Rifle Association (NRA).

"The NRA does seem to have a near unique hold on Congress when it comes to preventing any new restrictions on gun rights," said Dan Auble, a senior researcher at Washington's Center for Responsive Politics.

Read more: Trump open to arming teachers after Florida shooting

Even so, gun sales have been down in the past year. Revenues reported from 2017 of American Outdoor Brands, Sturm Ruger, Vista Outdoors and Winchester fell 13 percent, adding up to a combined loss of $610 million (€496 million). Another gun maker, Remington, recently announced it will declare Chapter 11 bankruptcy.

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Americans want stricter gun laws

Yet recent polls indicate American voters support tighter gun laws. According to the Pew Research Center and a poll by Quinnipiac University, over 60 percent of people support stricter gun laws and 90 percent support universal background checks. As it stands, private-party sellers are not required to run background checks when selling guns.

Additionally, 67 percent of voters support a ban on selling assault weapons to civilians. Yet this has not deterred the NRA, which sticks closely to an agenda surrounding the Constitution's Second Amendment and the premise that access to firearms is one of America's founding principles of freedom.

"We are now seeing the implementation of a strategy to spend more money to direct gun policy and not just rely on the inherent influence of millions of members," said Auble.

Read more: 8 facts about gun control in the US

With a reported five million members, the NRA spent $54 million pushing preferred candidates in 2016 elections, $31 million of which went toward the presidential race.

In 2017, an additional $10 million dollars went toward gun lobbying, a cause led by 48 full time lobbyists, the majority of which work directly for the NRA. These lobbyists dedicate their time and energy to pushing their agenda to influence policymaking — in this case, the protection of the Second Amendment and, by extension, protecting guns. They befriend congressmen, donate to their campaigns, and wage costly smear campaigns against politicians who refuse support or remain neutral.

American gun owners comprise a tight-knit subculture, one that is encouraged to vote pro-NRA. The group even has a grading system for members of Congress. Ranging from A to F, the members receive a grade based on their support of the NRA. These grades are then used to push preferred candidates.

Read more: Can a group of Florida high school students change America's cycle of gun violence?

"For years, their real power has been the millions of members they have in every congressional district in the country that made them so powerful," says Auble. "The ability to reach those members and advise them on which candidates are strong on gun rights is really the source of their influence."

Corporate Social Responsibility

This year opened with BlackRock CEO Larry Fink's letter to business leaders, advocating renewed consideration toward social responsibility. BlackRock and Vanguard are currently the largest investors — through both passive and active funds — of gun manufactures Smith & Wesson and Sturm Ruger, the maker of an AR-15-style rifle used in at least one mass shooting.

With BlackRock's close relationship to the companies in question, the words of Fink take on a hopeful meaning: "In the current environment, these stakeholders are demanding that companies exercise leadership on a broader range of issues. And they are right to: a company's ability to manage environmental, social, and governance matters demonstrates the leadership and good governance that is so essential to sustainable growth, which is why we are increasingly integrating these issues into our investment process."

BlackRock officials said they would reach out to companies to discuss their response to the Florida shootings. We will be waiting.

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