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Ed Dolan's Econ Blog

The Illusory Economic Benefits of Bringing Back the Draft

Writing in Tuesday’s New York Times, Thomas E. Ricks makes a plea for reinstating the draft. His argument is largely based on supposed economic benefits that I find questionable. Here is why.

Ricks’ proposal would expand the draft beyond the military to make it a form of near-universal national service. Under his plan, combat units would continue to be filled by volunteers who would receive full military training, pay, and benefits, much as they do now. In addition, Ricks would add two new categories of service.

One new category would consist of uniformed conscripts who would not be deployed, but would instead do paperwork, mow lawns, paint barracks, and drive generals around. They would receive no weapons training. The Washington Post’s Richard Cohen envisions a stirring movie, “Top Broom,” about the exploits of these valiant troops.

The other new category  would be a civilian corps for young people who did not want to serve in uniform. These conscripts, who would have a slightly longer term of service, would teach in low income areas, clean parks, rebuild crumbling infrastructure, or aid the elderly. The concept is similar to that of AmeriCorps, except for an element of compulsion.

The compulsion would not be absolute. There would be an exemption for libertarians who object on principle to the idea of forced labor. However, those seeking the exemption would not get a free ride; they would have to forgo future claims on Medicare, mortgage guarantees, and other government benefits.

Both categories of noncombatant conscripts would receive minimal pay (Ricks suggests $15,000 per year), housing, and, one supposes, although Ricks does not mention it, healthcare coverage, while in service. At the end of their term, they would receive “excellent post-service benefits, including free college tuition.”

To Ricks, this makes great economic sense. True, it would cost billions, but, he says, it would also save billions. Much of the labor that the military currently contracts out to the private sector could, he says, be performed by conscripted 18-year-olds for much less.  What a bargain!

Really? I’m not sure Ricks has much grasp of basic economics. The whole idea looks far more costly to me than he makes it out to be.

First, the direct costs would not be as low as he seems to think. True, the pay, at $15,000 a year, is little more than the minimum wage, but that’s just the start. Housing is not going to be free. He talks about putting people in barracks on closed military bases and in spare rooms in VA hospitals, but those may not be handy to where the grass needs to be mowed or the meals-on-wheels delivered. Even if they are, they require maintenance, heat, and other utilities. I can easily imagine that even the most Spartan barrack accommodations might cost $250 a month. Throw in another $250 a month for health insurance, and the cost for 18 months of national service is up to $31,500. Contributions to social security and Medicare would add another $1,500 or so.

Then there are the costs of those “excellent post-service benefits, including free college tuition.” OK, let’s be stingy. Assume that “free college tuition” means only bare tuition and fees at an in-state public university. Collegedata.com calculates those at $8,244 per year, or $32,976 for a four-year program. (Tuition and fees, by the way, are only about one-third of the cost of attending a state university. Since conscripts would not be able to save much from their minimal pay, they would still be on the hook for student loans or family support to make up the difference.) Let’s not even adjust tuition and fees for inflation, even though college costs have been rising much faster than the cost of living in general. Even so, the college benefits put the total cost of 18 months of national service up to roughly $66,000.

How much work would we get out of the conscripts? If they put in a 40-hour week, they would potentially supply 3,000 hours of labor over their 18 months. However, some of that time would have to go into training. Even those conscripts assigned to painting and mowing lawns are going to need some basic orientation that would probably burn up most of their first month of service. Eighteen-year-olds who are expected to teach or rebuild crumbling infrastructure could well require more training. Let’s suppose, then, that on average conscripts supply 2,800 hours of actual work. Suddenly, the conscripts are costing us almost $24 per hour. Costs of supervision and administrative overhead would easily put that up to $30 an hour. Is that really a whole lot less than the Pentagon now pays private contractors to perform similarly menial tasks?

Most important of all, though, Ricks makes no allowance at all for opportunity cost. The opportunity cost of using conscripts to mow military lawns or provide civilian eldercare is the value of whatever it is that those 18-year-olds would otherwise be spending their time on. What would that be?

Some would be unemployed. (The unemployment rate for people aged 16 to 19 years is currently 23.7 percent, although it is usually a little lower than that.) On the face of it, it might seem that there would be no opportunity cost to conscripting an unemployed teenager, but that is not necessarily true. Some of them might very well be doing something useful with their time, like mowing their parents’ lawns or delivering meals to their grandparents. Even for the unemployed, then, there is some opportunity cost.

Another group of teenage conscripts would otherwise be working at unskilled, minimum wage jobs. The opportunity cost of conscripting them would be the cost of replacing them in their former positions. There would be zero economic gain to moving them from one low-productivity job to another.

A third group of conscripted teenagers would be taken away from jobs that pay more than the minimum wage, say, construction or factory jobs. The opportunity cost of putting them into national service would be the difference between their productivity in their civilian jobs and their productivity in national service. That could be substantial.

The greatest opportunity cost, though, would come from conscripting those teenagers who would otherwise be going to college. Something like two-thirds of all high school graduates go to college, and about half of them end up getting four-year degrees. The opportunity cost of national service, for them, would be an 18-month delay in going to college, and hence, an 18-month delay in beginning their post-college careers. Their post-college jobs, even for those with less than a bachelor’s degree, would in almost all cases pay more than minimum wage, in some cases a lot more. What the national service obligation would do, then, is shift a year and a half of each college-bound conscript’s labor from high-productivity post-college work to low-productivity lawn mowing or park cleaning.

When all the different kinds of opportunity costs are considered, it would be reasonable to suppose that the costs of national service would at least double, to something like $60 per hour. Instead of a pool of cheap labor, the program would,  in reality, be an extremely costly way to mow the grass.

Rather than relying on the illusory promise of a cheap pool of labor, some proponents of the draft use a different line of argument. For example, Ricks cites Gen. Stanley A. McChrystal, former commander of international forces in Afghanistan, another supporter of conscription. In fact, though, McChrystal’s argument is quite different. His concern is that a volunteer army does not spread the cost of fighting foreign wars broadly enough. “I think if a nation goes to war, every town, every city needs to be at risk. You make that decision and everybody has skin in the game,” says the general.

There is something to the notion that voters might too casually endorse foreign military adventures if they see the cost as falling on someone else. Insofar as the cost of war means the risk of having your son or daughter die in it, an all-volunteer military does let a majority of voters off the hook. But, in a different way, a military draft does much the same thing. Because conscripts do not have to be paid as much as volunteers, a draft lowers the apparent budgetary cost of fighting a war, even though the opportunity cost of using draftee is much more than the budgetary cost, for the reasons given above.

In effect, a draft transfers the opportunity cost of war from taxpayers to conscripts. Voters who are themselves subject to the draft, or whose sons and daughters are, might be more reluctant to vote to go to war, but at the same time, other taxpayers will be less reluctant. On balance, it is far from clear that the “skin in the game” argument would make it all that much harder to get majority political support for a foreign war.

The bottom line: If there is a case to be made for universal, compulsory national service, whether military or civilian, it must be made on grounds other than economics. War is very costly, both in economic terms and in lives lost. Civilian national service, even if less hazardous to life, is not much less costly in economic terms. The best way to minimize the economic burden of both is to make the costs as transparent as possible, not to hide them through an implicit tax on teenagers. No one should casually vote to take even 18 months from the life of a young citizen, let alone ask them to risk their life in combat, under the illusion that doing so is a clever way to save money.

 

4 Responses to “The Illusory Economic Benefits of Bringing Back the Draft”

R. CoutinhoJuly 12th, 2012 at 12:56 pm

If one wanted to change things, a similar arrangement could be made on a VOLUNTARY basis, except that no one could vote unless he/she served the country for an allotted time period (similar to R. A. Heinlein's Starship Troopers world).

Mary WondraJuly 12th, 2012 at 3:37 pm

Doesn't this contradict your arguments in TANSTAAFL about assessing the true cost of our actions to those who will benefit from them? The actual costs of running a mercenary military through our current system means that the taxpayers are bearing the cost while a few of the Halliburton's are making the money. If the true cost of a national service is $60/hour, then the American taxpayers should be getting the benefits of that cost, not a few corporations.

barfJuly 12th, 2012 at 10:16 pm

we are careening towards war with Iran. Have the American people been consulted? The fact of the matter is a draft makes any war "serious business" and generally speaking keeps you out of trouble (Vietnam being the obvious and biggest exception–interestingly we never fought another major engagement until Panama in 1989 (?) and then the Iraq war of 1990. "it's been all war all the time" ever since…and obvious BAD for our economy no? I agree moving to a draft now would probably not be a good thing now for the economy–but when speaking of the entire ME in flames and the EZ in danger of imploding and a massive catastrophe threatening the totality of the Island of Japan I really don't think you can argue the value of one…whether you….OR I…want it or not.

Jay HodgeJuly 17th, 2012 at 6:59 am

yeah …. all quality workers ….. kind of like unionized state or federal employees with less pay and even less motivation …. and of course, all on the back of those who pay taxes so that democrats could claim lower unemployment ….. nice… and about par for the course from the mind of a liberal that lacks logical and reasoning processes ….