Tuesday, January 02, 2007

Do you feel a draft?

Senator Charles Rangell is pushing for reinstatement of the military draft. He seems to think it will cut down on our use of the military. It might not. Walter Williams looks at the question, using the tools of economics:
Let's apply a bit of economic logic to it, but first get a pet peeve of mine out of the way: The term "draft" is a euphemism for what is actually "confiscation of labor services." The Defense Department can get all the military personnel it wants on an all-volunteer basis; it could simply raise wages. Indeed, there exists a wage whereby even I would volunteer my services.
(Um... Is it "volunteering" if you're paid a fair wage?)
The draft is needed when the military wants to pay soldiers wages lower than those earned in the non-military sector of our economy. ... Some argue that depending on an all-volunteer military is too expensive. That's wrong. The true cost of having a man in the military is what society has to forgo, what economists call opportunity costs. Say a man worked producing televisions for which he was paid $1,000 a month. If he's drafted, he's not producing $1,000 worth of televisions. The sacrificed $1,000 worth of televisions is part of the cost of his being in the military whether he's paid $68 a month or nothing a month. One effect of the draft is to understate the full cost of military operations. In 1959, prior to my being drafted, I drove a taxi for Yellow Cab Company in Philadelphia earning about $400 a month. In August that year, I started earning $68 a month. The military budget saw a cost of $68 as opposed to the $400 worth of taxi services society had to forgo.
So in other words, by imposing a draft, the U.S. Military forces someone else to pay the actual cost of each soldier's labor. Rather than paying the $400 (or $1000, or whatever) the soldier is actually worth, based on what the market is willing to pay him, it pays a much reduced amount, and the rest of the cost is borne by someone else -- namely the rest of the economy. Now, here's one cold, hard law of economics. When you subsidize something, people use more of it.
Simple economics suggests that if the cost of a resource is understated, there will be bias toward greater and more wasteful use of that resource. Contrary to Rep. Rangel's assertion, a draft would tend to give rise to greater, not less, use of the military.

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