Universal National Service is a Tax, and a Bad One –Becker

Universal service usually means that young persons, say 18 year olds, can either be drafted into military service for a specified period, say a year or two, or instead they can work for a similar period in one among a number of qualifying occupations. In Germany qualifying occupations include menial jobs in hospitals or nursing homes, while France has qualified working overseas in a French company. This approach to service has been advocated mainly by persons who would like all young persons to serve in the military, but reluctantly recognize that this is impracticable because of the small size of the peacetime armed forces compared to the much larger number of young persons available. In effect, such compulsory service is a tax on those serving that has many of the characteristics of a very bad tax. It is a tax in kind, on the time of young persons, rather than a tax on income, wealth, or spending. A tax in kind limits the ability of those taxed to respond by substituting toward a more efficient allocation of their resources. In-kind taxes also limit how governments can spend their tax receipts since these tax receipts are not general purchasing power. Universal service is also a narrow-based rather than a broad-based tax. Broad based taxes, such as a general value added tax on all transactions, are better because marginal tax rates, and hence the inefficiency caused by the tax, can be lower for a given level of receipts since the base being taxed is more extensive. By contrast, narrow taxes have high marginal rates for any given revenue, and hence generally distort behavior much more. In the case of service, young individuals who have much better opportunities in school or at jobs that do not qualify will be taxed heavily, as would young persons who greatly dislike spending all their time either in military service or at one of the recognized alternatives. Narrow-based taxes often are enacted because of the weak political power of those being taxed compared to groups who benefit either directly or indirectly from such taxes. For there is no argument based on efficiency why young persons should be the primary suppliers of the resources needed to fund peacetime armed forces. The effects on efficiency would be better during a major war since then the social cost of the taxes needed to get enough young volunteers for the armed forces may exceed the social cost of a draft. The logic of combining a military draft for young persons with an alternative of compulsory service at other occupations is questionable also on grounds other than being a bad tax. If greater employment at hospitals or other tasks has social value beyond the private value to those working there, it would be better to subsidize anyone who works at these tasks than to require young persons to work there. With subsidies, the general taxpayer would finance any desired greater output in these sectors rather than young persons doing their compulsory service. Furthermore, a subsidy would attract workers of all ages, and so would be much less socially costly than compulsory service applied only to a single age group. As Posner indicates, one possible justification for compulsory universal service is the belief that it is good for young men (and women as well?) to serve with low pay in the military or other specified occupations. The argument might be that such service makes them better citizens, perhaps because they would then appreciate the hardships of the poor. (Does that mean that the poor should be exempt from this service?) Even accepting this argument, which I do not, compulsory service is a bad policy. A better way to achieve service with low pay would be to combine a ceiling on the earnings of young persons- the opposite of a minimum wage- with a subsidy to employers if they hired these persons at the desired occupations. This approach would have the advantage over compulsory service of allowing young men (and women) to avoid the military and other specified options if they had much-preferred alternatives even for the same pay. Although I have shown that compulsory service is partly equivalent to a ceiling on the earnings of young people, would politicians or anyone else who advocate compulsory service call explicitly for such a ceiling? I very much doubt it!

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