Monday, 24 February 2014

The economics of conscription

One of the many things economist Milton Friedman was well known for was his oppression to the draft. In this article another University of Chicago economist, Allen Sanderson, discusses the economics and political economy of conscription. In part Sanderson writes,
After a few weeks of class, any Economics 101 student should be able to demonstrate that the lowest cost way to provide a military force is our current “volunteer” or free-market army, a system we have employed since 1973.

Why? Because only those whose opportunity cost is at or below the established market wage rate, plus those who are extremely patriotic, will enlist. By contrast, drafting LeBron James may appear cheaper on the Pentagon’s budget by paying him a draftee’s salary, but that entails—to him and to the economy—an implicit tax of several million dollars a year (that is, what he would have earned, and would now be forgoing, as a member of the NBA Miami Heat).

In addition, a volunteer force is more likely to have higher morale as well as lower turnover and training costs because these recruits want to be involved in defending the nation rather than serving grudgingly because they were taken away from family, friends and other preferred options.
Opportunity cost and incentives come to the fore in this issue as with so much of economics. I do wonder however just how many econ 101 students - or politicians for that matter - could actually could give this analysis of conscription.

No comments: