Well, We Wanted a Free Market…

UPI has a story on the arms spot market in Iraq:

BAGHDAD, Iraq, Sept. 29 (UPI) — The U.S.-led coalition forces are losing a bidding war for sophisticated weapons still widely available in Iraq, nearly six months after the fall of Baghdad. Anti-occupation groups and supporters of the old regime are financially able and willing to spend more for weapons, a series of interviews with underground arms dealers by United Press International has determined.

Adding to the concern, private contractors involved in security consulting to companies operating in Iraq say the street prices for some weapons appear to be increasing, indicating weapons are being bought at a higher rate than previously during the occupation.

Um, guys…
When I took Econ 101, the suggestion was that changes in either supply or demand could change prices…and so I’ll suggest that there are at least two alternative explanations – more buyers in the marketplace (which is bad for us) – or less weapons in the marketplace (which is good for us).

And as someone who has sold things once or twice, I always found that the “well, I’ve got another buyer for $50.00 more” argument was an effective one when dealing with someone with a fat wallet. There’s a quote from one of the arms merchants here that supports that:

“It’s too late to stop the trading,” Najeeb said. “There are too many hidden stores of weapons and people are dealing and trading freely. The Americans should pay more for the guns they want.”

But while Mikhael agrees that the rise in prices — an AK-47 that sold for $50 three weeks ago can now fetch $200-$300 — could be a harbinger of an impending offensive against the U.S. troops, Najeeb doesn’t think so.

“They just pay more for them,” he said of the illegal buyers.

7 thoughts on “Well, We Wanted a Free Market…”

  1. The free market in arms in Iraq is no different than the free market in arms in America.

    No matter what government does the market always rules. The best the government can do is to affect the price for a while.

    Drug war any one?

  2. Just a note on the legendary AK rifle: In America (also in the CounterStrike game) you have to pay around 1000$ for AK-47. The main difference [besides the usual supply and demand] in the price is because Iraq used to manufacture AKs. However their supply is quickly running out.

  3. Kaveh, semi-auto AK’s are not that expensive in the U.S. right now Before the assault weapon ban, you could get Chinese remanufactured ( to make them non-convertable to full auto ) AKM’s for $300 retail. The price has fluctuated up and down since depending on demand. At one time it was as much as you state.

    I can point you to Romanian AK’s today for $325 retail.

  4. The rise in prices is very good news. Prices rise for one of two reasons: Either supply is going down or demand is going up. The buyers didn’t just decide they wanted to pay more for them.

    This is probably a sign that the remaining supply is declining because the US military continually finds and scoops up illegal arms caches. Plus, every time the US military engages in a gun battle and kills their opponents the US military captures whatever guns those people were using.

    I can’t see why the demand would be going up. Saddam’s forces can not longer replenish their money supply since they no longer have control of a sovereign government. Plus, the US military does find cash stashes from time to time. Plus, Saddam’s forces have on-going expenses that are going to deplete their cash reserves.

    So my guess is that supply is going down.

    This reminds me of reports a few months back that the cost of paying kids to attack the American soldiers was going up. We need more price indicators from Iraq to give us an idea of how things are going there.

  5. It just doesn’t make sense for these weapons to be used in a direct fire fight with American forces, the major troops on the ground in the Sunni triangle are armored and mechanized units, the north has been quiet for the most part. The only area where they could be used effectively is in the south in the Polish or British sectors where troops don’t wear IPVs. These weapons may be intended for use against Iraqi civilians/police.

  6. …Or looters and criminals, which are in abundant supply thanks to all of Saddam’s “get out of jail free” cards.

    If that is what’s driving demand, all I can think of is… how very American.

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