The Gun Industry's Deadly Addiction

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3. Turn Shooting Ranges into Live-Action Video Games

For a younger generation raised on graphic video games, shooting at paper targets or "plinking" bottles and tin cans doesn't carry much appeal. So the industry has come up with some new ways to make shooting more like playtime. A firm called Zombie Industries manufactures life-size mannequins for target practice. Some models "bleed" fluorescent goo when shot. Others respond to gunfire in a more lifelike fashion, opening up gaping chest wounds and "bursting into little pieces of blood-soaked zombie matter when you shoot them." The manufacturer offers a wide line of "zombie" targets, including "the Terrorist" – an undead bin Laden – and, more troubling, a blood-soaked, buxom woman-target called "The Ex."

Firing ranges now offer zombie-themed hunts. "Shooters must battle their way through a Zombie Assault Course to save us all from these undead people eaters," advertises one Florida range. The industry itself is also cashing in on the craze, selling zombie-branded accessories, including sights that use a biohazard hologram instead of cross hairs for aim. Ammunitions giant Hornady has even rebranded its Critical Defense line of bullets as Zombie Max. "This is an incredible marketing strategy," one dealer told Shooting Industry. "If you set Hornady Critical Defense next to Zombie Max ammunition, a young customer is going to grab the Zombie ammo. The old-timers don't care much for it, but the younger shooters love it."

Obama and Romney Both Failed the Gun Control Question

Zombie shooting is part of a broader trend described in the trade magazine: "Gun dealers are rebranding themselves and marketing their businesses as part of the entertainment industry." Nowhere is this more in evidence than Las Vegas. Tourists at the Range 702 can plunk down on the "Prohibition" package – which promises a "great experience of the mob days," including shooting a tommy gun – or the "Black Ops" package, which was "created for all you Call of Duty fans" and offers "high adrenaline guns," including a military SAW machine gun, to "bring out the inner Special Ops in you!"

4. Prep the Preppers

If zombie hunters train for apocalyptic scenarios as entertainment, there's another dedicated breed of buyer who is stockpiling weapons out of true fear of social collapse driven by dark forces outside of their control – whether it's a superstorm, rampant inflation or an out-of-control government. Through the end of 2012, Stag Arms sold an "Executive Survivors Kit" – a wheeled briefcase containing an AR-15, two high-capacity magazines, 60 rounds of ammo, a first-aid kit and even a military field ration – all for the Mayan-apocalypse-worthy price of $2,012.

If some in the gun industry just want to profiteer from the fear of preppers, a few gun figures themselves have joined this subculture. Take James Yeager, the CEO of Tactical Response, a Tennessee company dedicated to "providing the highest-end firearms and tactical training" to civilians who believe they require battlefield readiness.

As the gun-control debate heated up in Washington this winter, Yeager took to YouTube with a call to arms about the coming "civil war." He told his fellow "patriots" to "load your damn mags, make sure your rifle's clean, pack a backpack with some food in it and get ready to fight." Yeager ended his rant with a call to violence. "I'm not letting my country be ruled by a dictator. I'm not letting anybody take my guns! If it goes one inch further, I'm going to start killing people."

5. Supply Cartels and Criminals

The gun industry's dirtiest – and most open – secret is that it is profiting from the sale of guns that are illegally trafficked into Mexico to arm the drug cartels responsible for the deaths of tens of thousands of civilians. "Nobody has a clue how big that market is," says Diaz. "It's like drugs in reverse."

"Military-style weapons are arming Mexico's brutal drug trafficking organizations at an alarming rate," Dianne Feinstein wrote in a 2011 letter to her Senate colleagues. Nearly 90 percent of weapons seized in Mexico are trafficked from the U.S. "Many of these firearms came from gun shops and gun shows in Southwest border states," the GAO reported, decrying the "increasingly lethal weapons," specifically "high-caliber and high-powered" guns such as "AR-15-type semiautomatic rifles, which fire ammunition that can pierce armor often used by Mexican police."

For the industry itself, the violent deaths of tens of thousands of Mexicans are of no greater concern than the mock executions of zombie dummies. In 2005, Congress granted gunmakers and gun dealers blanket immunity from civil damages resulting from the misuse of their products. The National Shooting Sports Federation has even gone to court attempting to block modest ATF efforts to track sales of assault rifles. In January 2012, a federal judge dismissed the industry's complaint – leading the NRA to grumble that this was just "more proof that the Obama administration is intent on blaming gun owners and the Second Amendment for a problem that is rooted in Mexico."

The industry is also fueling violence closer to home. Gunmakers reap money from a shadowy network of gun dealers that supply weapons to criminals and gangs that terrorize our neighborhoods and kill cops. An ATF report found that nearly 58 percent of crime guns traced in 1998 had been sold by just 1.2 percent of gun dealers. Thanks to the NRA and Congress, ATF is now prohibited from publishing such data.

With gun-control legislation facing an uncertain path in Washington, advocates determined to end the industry's bloodiest practices are pursuing reform through the free market.

Following the Newtown massacre, investor activism by the California teacher's pension fund spurred the private equity firm Cerberus Capital Management to exit the gun business. Cerberus has a broad ownership stake in the Freedom Group, the parent company of Bushmaster. "We have determined to immediately engage in a formal process to sell our investment in Freedom Group," Cerberus said in a statement just days after the killings.

Divestment from the gun industry is gaining momentum: Following Cerberus' lead, the hedge fund Tiger Global Management sold off the estimated 800,000 shares it owned in gunmaker Ruger and has vowed to steer clear of the industry. In February, California Public Employees' Retirement System voted to sell off $5 million in gun equities. Pension funds from the nation's biggest cities are joining the rush to exit the market: New York, Los Angeles, Philadelphia and Chicago have each committed to withdraw investments from gunmakers who profit from assault weapons and high-capacity magazines.

From Chicago, Mayor Rahm Emanuel is calling in chits from the world of finance, pressuring the CEOs of Bank of America and TD Bank – which extend credit to gunmakers – to use financial leverage to demand companies like Smith & Wesson and Ruger back an assault-weapons ban and universal background checks. Emanuel is also ratcheting up pressure on mutual funds like Vanguard and BlackRock to divest from gunmakers who oppose gun control in an effort to stop "military-style guns and magazines from ending up on the street and putting families, children and police officers at risk."

Purchases by police departments may provide a creative form of leverage. Minneapolis' mayor, R.T. Rybak, announced in January that he's in talks with mayors of about 60 cities to withhold police firearm and ammunition purchases from gunmakers that lobby against gun control. "We all ought to have a conversation as taxpayers," he said, "about whether our dollars should be used for people who are not working to reduce gun violence."

But even divestment is easier said than done. As of February, Cerberus was still scrambling to find a buyer for the Freedom Group – a horizontally integrated business that includes makers of handguns, hunting guns, assault rifles and even ammunition. Its sales volume is nearly double that of its top publicly traded competitors, and that's a problem. "There's not some 800-pound gorilla to buy it all," a top analyst told The Wall Street Journal.

If history is any guide, even the most restrictive political outcome now being considered in Washington could leave the industry laughing all the way to the bank. The assault-weapons ban now being proposed in the Senate repeats the cardinal sin of the 1994 ban – namely, it grandfathers all assault weapons "lawfully possessed" on the date of passage.

Under the 1994 ban, lawful possession included the inventories of dealers and manufacturers. By the time the law had worked its way through the legislative process, some had stockpiled up to 10 years' worth of supplies and magazines that were destined to become, in effect, legal contraband, which could then be sold at two and three times the previous price. Richard Feldman, a top industry lobbyist at the time, recalls his advice to manufacturers in the early 1990s – counsel that today's gunmakers are surely heeding: "Make as many guns and high-capacity magazines as you possibly can," he said. "Put your plants on three shifts, seven days a week. You won't get stuck with unsold product."

This story is from the March 14th, 2013 issue of Rolling Stone.

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