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Markets, Public Goods and Military Recruiting

June 30, 2005

During Thursday's hearings of the Armed Services Committee, several Republican Senators blamed the usual suspects for the shortfalls in Army and Marine recruiting. James Inhofe (R-OK) lambasted unnamed Senate colleagues, adding the potential recruits are being discouraged "because of all the negative media that's out there." Kansan Pat Roberts chimed in, "with the deluge of negative news that we get daily, it's just amazing to me that anybody would want to sign up."
But while these conservative Senators predictably pointed fingers for partisan gain, our military recruiting problem is not one of media or marketing. Instead, the military's recruiting woes can better explained in ways these conservatives should know well. Welcome to the theories of free markets and public goods.
Let's start with military service as classical labor market. Uncle Sam is learning first hand about homo economicus, the rational actor seeking to maximize his profit and pleasure in the open market. Here, opportunity-maximizing potential recruits offer their labor in exchange for military careers, pay, benefits, travel, and intangibles including pride, sense of service, and more. But as the costs grow (increasing possibility of death or serious injury, likelihood of extended duty and family separation), potential recruits make rational cost-benefit decisions and withhold their labor.
Viewed another way, the U.S. government is a seller offering military service as a "product" to possible recruits in the market to buy a career. To attract buyers, the armed forces are discounting the price of a military career, cutting the "costs" by offering better pay, bigger sign-up bonuses (perhaps as high as $40,000), shorter tours of duty and expanded educational opportunities. Sadly, Uncle Sam is finding that demand is price inelastic; lowering the cost of a military career doesn't get you any more takers.
All of which suggests that in a democracy, national defense is a public good. National defense cannot be privately produced. All citizens enjoy its benefits; by definition, its protection is available to each without limiting access to anyone.
But national defense, like a public park, does not require the contribution of each to be enjoyed by all. Thus, the free-rider problem. (As some conservative critics of Marx used to argue, the proletarian revolution itself was a classic free-rider problem. If the overthrow of capital and the supposed communist utopia to be enjoyed by all workers only required the actions of a core vanguard of proletarians, no one would go to the barricades to make the revolution.)
Which brings us back to today's shortfall in American military recruiting. We are witnessing market failure; as the costs of national service continue to rise, potential enlistees understandably look elsewhere. And viewed through the lens of the public good model, most of us are free-riders when it comes to national defense. We may pay taxes, but at the end of day, we are all blessed and privileged to enjoy the protection that only the bravest and most selfless among us choose to provide.
That is why during times of crisis, we must take national defense out of the realm of the market and avoid the trap of public good free ridership. It is time for politicians' carping and finger-pointing to come to an end. As I suggested in "Getting Drafty", it is time to reintroduce the draft.

One comment on “Markets, Public Goods and Military Recruiting”

  1. ".........We may pay taxes, but at the end of day, we are all blessed and privileged to enjoy the protection that only the bravest and most selfless among us choose to provide."
    Brave and selfless is debateable. Snarkley-Smythe contends that most are in the military out of economic need, some have been sold on yankee-doodleism and some are psychopaths.


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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