Most sports fans have a favourite player. Readers of novels will usually have a favourite author. People who are interested in economics also have their heroes – a favourite economist. For me and many others, that economist is Milton Friedman, who – were he still alive today – would celebrate his 108th birthday today.
Milton Friedman was, according to the Wall Street Journal, “arguably the greatest economist of the 20th century.” The Economist similarly described him as “the most influential economist of the second half of the 20th century… possibly of all of it.” His contributions to monetary and fiscal policy were indeed immense, but, as the Wall Street Journal noted, his role in advancing the ideas of a free society may well have been even more important.
Perhaps Friedman’s greatest legacy actually has to do with defence policy. Thanks in part to to him, military conscription, also called the draft, is no longer practiced in the United States. Friedman, along with other economists at the time, played a prominent role in having it eliminated in 1973.
Conscription had existed in the United States since 1940 except, as David R. Henderson has noted, for a brief period from March 1947 to June 1948. One of the primary arguments in its favour, cited by many conservatives who supported it, was that it was supposedly cheaper: if men were forced to join the military, the government didn’t have to pay them the market wage.
But with an unpopular war in Vietnam, and draft opponent Martin Anderson as his policy research director, Richard Nixon campaigned during the 1968 presidential election to end conscription and won. Shortly after his inauguration, Nixon appointed a commission of 15 people, including Milton Friedman, to explore ending the draft.
A famous exchange occurred when General William Westmoreland, Chief of Staff of the United States Army, argued before the commission in favour of maintaining the draft. Not wanting the government to have to pay higher wages to attract people to enlist, General Westmoreland said that he did not want to command an army of mercenaries.
Friedman’s response: “General, would you rather command an army of slaves?”
If people who voluntarily enlisted to serve in the military were “mercenaries” said Friedman, “then, I, sir, am a mercenary professor, and you, sir, are a mercenary general. We are served by mercenary physicians, we use a mercenary lawyer, and we get our meat from a mercenary butcher.” The argument that conscripted soldiers were preferable because those who voluntarily enlisted were “mercenaries” was demolished.
The quickness and sharpness of Friedman’s repartee was accompanied by clear and well-reasoned analysis. Contrary to popular belief, the cost of staffing the military, Friedman showed both in an essay in the New York Times Magazine in 1967 and in his regular columns in Newsweek magazine, was not made cheaper by conscription.
“The fact is,” wrote Friedman, “that it would cost less to man the armed forces by volunteers than it now costs to man them by compulsion – if cost is properly calculated.” As Friedman explained, “The real cost of conscripting a soldier who would not voluntarily serve on present terms is not his pay and the cost of his keep. It is the amount for which he would be willing to serve. He is paying the difference.”
Suppose, for example, that a man is earning $75,000 a year as a banker, and would be willing to serve in the military if he was paid $90,000 (the additional $15,000 to compensate him for a more dangerous and physically demanding job). If he is conscripted into the military and paid $40,000, the non-economist reading the federal budget might say that the cost of increasing the military staff by one man is $40,000. However, this accounting of the costs is wrong. The real cost is $90,000: the taxpayers pay $40,000, and the conscripted man pays $50,000 – the difference between the minimum pay for which he is willing to serve in the military, and what he is actually receiving.