Gradeup Magazine: Let's Talk Politics #11

Q: Who owns the companies which make guns, bombs and tanks?

Would you be surprised to find out that an Argentina mall owner is a major shareholder behind many defense companies?

It is quite hard to find out who really owns the defense corporations. Through layers of indirection - deliberately or by accident - the ownership information is hard to get. Some group of influential investors would invest in a hedge fund/private equity which would buy a company that would own the shares in the defense company. We have to unpack it all.

Unless we unpack the investor data, all defense companies would have just 3–4 owners - Vanguard, State Street, Capital Group and Black Rock. These are just mutual funds/ETFs and nothing more interesting about them. We need to get deep.

As others mentioned the world’s largest defense company, Lockheed Martin [The 9 Most Powerful Weapons Manufacturers In The World], has substantial holdings of State Street and Capital World investors. You cannot stop here. Now, who are they? Let’s dig one more level.

The State Street has its own shareholders and it is a financial company that connects investors with companies. They invest in Defense primarily through their mutual funds and ETF like this - XAR.

Now, who owns the fund, XAR? Let me dig through the documents. Here we have : SPDR® S&P Aerospace & Defense ETF.

We find the largest shareholder leading substantially ahead is Clal Insurance Company Ltd, which in turn is controlled by a company named: IDB Holding Companies.

IDB was controlled by an Israeli tycoon named: Nochi Dankner, but he recently lost control to an Argentine businessman named: Eduardo Elsztain [Top Israeli tycoon Nochi Dankner loses control of IDB Holding Corporation]. He is a descendent of Russian refugees exiting post the 1917 revolution and among the wealthiest guys in South America, owning most of the malls in South America.

A little bit of digging of the shareholders takes you to interesting directions.

Other companies have even murkier shareholder data. For instance, this company called Capital World Investors owns substantial shares in the world’s defense company Lockheed Martin and the largest investment bank Goldman Sachs, but being a private company it is not easy to find out who its real investors are. Is this holding a mere correlation [because both are good profit making enterprises]? All we know is the shareholders of many top investment banks are same as the top investors in defense companies.

Then there are people like Daniel A. D'Aniello the Chairman of Carlyle group who is one major influential person in defense industry as Private-equity firms play major role in defense industry today

The gun industry is simpler and very fragmented and the largest gun manufacturers [6 Biggest Gun Manufacturers in the World] might be only small divisions in tech companies like Microsoft or Google. Some of these are made by families like these: La Vita Beretta: At Home in Italy with the First Family of Firearms

Governments should really clarify to the public who the real end shareholders of defense companies. There has to be an aggregation of share ownership of these individuals across all companies and funds they directly and indirectly own. Unless we make the ownership data transparent, there will only be more conspiracy theories.

Q: What is the root cause of mass gun violence in the US, and how should it be solved?

If you browse through this list of Deadliest Mass Shootings in U.S. - you can quickly notice that all the top ones are recent ones [2016, 2007, 2012].

Of the top 30, 28 of them occurred since 1980. 23 of them since 1990 and 17 of them since 2000. And US is not the only one experiencing such mass gun shooting in the recent times. We have to stop thinking of this as a US problem, but a global phenomenon. Again, you have to question why these shootings didn’t happen at this rate even a decade ago. Did US have tougher gun laws 10 years ago? No. Instead of simplistically blaming guns, we have to go deeper into what causes young people to kill their classmates and others.

In the past few years, Germany has had: Winnenden school shooting and Erfurt school massacre. China had Shiguan kindergarten attack and School attacks in China (2010–12). Finland has had the Kauhajoki school shooting. Brazil had Rio de Janeiro school shooting. Norway probably had the worst such incident: 2011 Norway attacks.

The concept of students gunning down their school mates has no real precedent in history. And it is all happening in the past decade. Almost all of these by fairly young people from reasonably doing families. None of the countries other than the US have lax gun laws [And the US has had far more gun ownership in the past, but with far fewer mass shooting incidents]. And such incidents were all unthinkable in all these countries. And these happen even if you ban the guns: last month a teenager killed 31 people in Pakistan by poisoning their sweets. 31 people suddenly dropped dead in a Pakistani village. Now police claim to know the horrible reason why.

So the question is what changed across the world in the past decade? In US, gun ownership & violent crimes have been going down, while mass shooting is going up.

We are having a shooting epidemic. The more shooting happens, there will be more who will be “inspired”. The mass killing 'contagion effect'

In a study published in July, researchers reported that school shootings and mass shootings occur in clusters. On average, each school shooting inspires 0.22 other school shootings, and each mass shooting inspires 0.3 additional mass shootings.

Almost all the killers have been seeking attention and many of them had narcissistic personalities [American Narcissism and Mass Shooters and Have We Become a Nation of Narcissists?]. Some even wanted to break shooting records.

The massive spike in narcissism created by social media and the mass global coverage of the killers in a threadbare manner is providing the incentives for those who are seeking attention to have their hand at “popularity”. Look through the statistics above and you can see students across the world are going through this and US just has more effect due to its greater media mania. Social media also adds extreme peer pressure contributing to great student stress.

It is not just the guns that are a problem. US had had few of the mass shooting a few decades ago and many other countries with tight gun laws are also having mass killing episodes in schools. When finding guns become hard, mass stabbing also occurs in school [such as Chenpeng Village Primary School stabbing].

I’m not sayings guns don’t contribute to the problem. They do. But, they are not the root cause. If that had been true, we should have been seeing such incidents for a century. While guns do increase the deadliness of such attacks, we have to fundamentally question what is happening in schools across the world - from China to Germany to US to Brazil. That problem likely stems from attention seeking [fueled by social media] and the massive coverage of the killers [fueled by all kinds of media].

References:

(The author, Mr.Balaji Vishwanathan(formerly of Silicon Valley) is a Top Writer on Quora,with a following of over 216,000)

Gradeup Magazine: Let's Talk Politics #11

Comments

CAT & MBA

Featured Articles