In response to co-blogger Bryan Caplan, John Smith argues that Singapore needs conscription. Here’s where economics is really helpful: in helping us understand the distinction between how big a military to have and how to man a military.

Smith argues that Singapore needs a large military and argues implicitly that to have a large military, Singapore needs a draft. But those are two separate issues. As economists have pointed out, you don’t reduce the cost of military manpower with a draft. All you do is keep the government’s budget outlay lower than otherwise and, in the process, shift the cost, hide the cost, and raise the cost.

The government shifts the cost onto the backs of draftees, hides the cost by having it not be visible in any government budget but, instead, having it borne by the draftees, and raises the cost by causing manpower to be priced artificially low so that it is used less efficiently.

If the Singapore government wants a large military, it can get it, under a volunteer system, by paying enough to get its desired number of volunteers.

Still, some would worry that the amount required to pay these volunteers would be a budget buster.

Au contraire. Singapore’s active-duty military is now about 72,000, of whom about half are conscripts. The conscripts are paid about $500 Singapore dollars a month and up. One Singapore dollar = about 80 U.S. cents. So that’s about US$5,000 a year. Of course, just as in the U.S. case when we had a draft, the draft causes there to be less pressure to pay volunteers also. So let’s say that the Singapore government ended the draft and doing so caused it to pay an average of an extra $20K per person. I’m betting this is an overestimate. Total expenditure increase per year: 72,000 * $20K = $1.44 billion. Of course it would cost more to maintain a large reserve force also. So let’s kick in another $1 billion. Total: $2.5 billion. How does this compare to Singapore’s GDP? It’s about $240 billion. So the added government outlay to avoid conscription would be about another 1% of GDP. Steep, yes. But not outlandish.