The Economic Benifits

In late 2006, Congressman Charles Rangel, D-NY, made headlines when he proposed a bill to reinstate military conscription. Citing a disproportionate number of poor and minority groups in the enlisted service, as well as the current administration’s unpopular war in Iraq, Congressman Rangel portrayed mandatory service as an equitable way to spread the obligation of national security. Rangel also argued that under conscription, politicians would be less likely to vote for pre-emptive military action knowing that such a move would be unpopular with constituents. In addition to Congressman Rangel’s arguments, others have questioned the U.S.’s ability to cope with the global war on terror given its current military size.

The debate over whether a professional army is better than one derived by conscription, and vice versa, is one that has been waged for hundreds of years. Our analysis is a look into the economic arguments for why a professional army, i.e. an all volunteer force, is better than one created via conscription, or as it is more popularly known in the US a “draft”. It is important to note however that our arguments are based on the underlying assumption that the United States is not in a “Full War” situation. Under Full War circumstances, a country mobilizes all of its available resources in an effort to prevent another country from engaging in war.

Unless said country has an unfounded amount of wealth with which it can persuade men to voluntarily join the military much of the following analysis does not realistically hold. Even Milton Friedman, the man who helped convince the government to end the draft, noted that in times of extremely high governmental spending, like those of WWII, optimal fiscal policy may very well call for the utilization of a military draft.

The U.S. has imposed drafts on its able bodied men since the 1800’s. In 1863, the first conscription act in United States history was passed, authorizing the President to draft citizens between the ages of 18 and 35. Included in the act was a provision that allowed draftees to either pay $300 or supply a substitute to gain exemption. This touched off numerous draft riots, most notably in New York City. Conscription was imposed again in 1917 after the U.S. entered WWI and with WWII a looming prospect, the first peacetime conscription came into existence with the introduction of the Selective Service Act of 1940. As a result of this Act, over 10 million men entered the military system between 1940 and 1946 (sss.gov). After World War II, conscription was required in various forms and for various lengths of time until 1973.

Throughout this period draftees were called upon in both peacetime and periods of conflict to fill vacancies that were not met through volunteer means. It was during the Vietnam War however, that a growing movement emerged to end mandatory military service. At that time, only a fraction of draft age eligible men were actually conscripted, but the Selective Service office in each locality had broad discretion over whom to draft and whom to exempt. In addition, with the coming of age of the Baby Boomer generation came an increase in the number of men eligible for the draft. This also meant a steep increase in the number of education exemptions and deferments which were a source of considerable resentment among poor and working class young men who could not afford a college education.

This growing opposition to both the draft and the war led to student protests, draft card burnings, and the most common form of draft protest – evasion. It was during this heated political and social period that renowned economist Milton Friedman, along with many others, first spoke of the opportunity costs of conscription. At a 1966 University of Chicago conference, Friedman and fellow Economist Walter Oi spoke of the draft as an in-kind tax on young men.

They further argued that while the accounting costs of a draft may be lower than those of maintaining an all-volunteer army, the opportunity costs associated with mandatory military service far outweigh the fiscal benefits. Three years later, Friedman and interestingly enough Alan Greenspan were appointed to the Advisory Commission on an All-Volunteer Force. After much debate and controversy, the U.S. officially abolished conscription in 1973.

Although the United States does not currently employ a draft system, by law all able bodied men must enlist with the Selective Service within thirty days of their eighteenth birthday. However there are differences between how a draft would operate today versus how it operated in the Vietnam Era. Even with an independent organization in charge of the Selective Service, great inequities prevailed during the Vietnam War.

Until 1971, pursuing an advanced degree would make a man ineligible for service; today deferment would only last one semester to one academic year. Another change is that today, men know the probability of having to serve in advance, so a potential draftee can plan his life without being surprised by unexpected service. There are also provisions allowing conscientious objectors to serve in “alternative service” stateside.

This service includes conservation, educational projects and caring for the sick or elderly. Changes also expand the “surviving son” provision to include any member of the immediate family, so if an immediate family member is killed in the line of duty, siblings or children are exempt from service. Despite these changes however, controversies and inequities still exist. One of the biggest inequities is that the majority of the U.S. population is ineligible for the draft based on sex and/or age. In addition, the quality of a conscript army in today’s world is questionable.

Warfare has increasingly become more technologically focused. Soldiers require more expertise, training, and skills in handling complex weapons than in the past. Questions regarding discrimination and training will have to be dealt with should the U.S. ever reinstate conscription. Yet even if a system were in place to deal with these issues, the negative economic consequences of mandatory military service are far more difficult to deal with.

To explore the issue of why an all volunteer army is more economically desirable, we have broken the issue down into two parts: the first being static, or short term, economic consequences, and the second being dynamic, or long term consequences. Although connected in many ways, it is important to look at each separately. Additionally, we have found it more insightful to point out the downsides of an army derived via a draft in order to highlight why a professional army is in fact a better choice.

In his classic novel, The Wealth of Nations, Adam Smith proposed that economic progress depends on three individual prerogatives: pursuit of self-interest, division of labor, and freedom of trade. Whether the individual is a person or a nation, these axioms hold true in some general form. Granted, none of these should be applied blindly or in any absolute terms. However, taken as a general economic theory, they get the point across.