A Different Lesson In Economics
Milton Friedman Was Right Again
If you saw Vladimir Putin’s speech last week, you saw a person that seemed a bit desperate. His incursion into Ukraine isn’t going well.
His reaction is a great lesson in how economics is more than just supply chains, goods and money. Economics is a part of being human too. It enters into how you make human decisions in your life. Friedman and especially Gary Becker pushed economic concepts into places they had never been before and we are seeing it acted out in real time today.
Initially, based on what I knew, I was against sending money to Ukraine. It’s a corrupt country. Hunter Biden milked Ukraine for the Biden Family Operation, serving on boards of directors. His role was to call in political favors since he had no operational experience. Ukraine strategically isn’t a big deal for the US. The territory isn’t that important militarily. So, seeing billions in cash go to Ukraine sort of ticked me off.
I didn’t mind sending material to them. Give them weapons. Give them a chance to fight. It’s not as if Putin is some nice fella. A friend of mine says the best place for him is a pine box and he is right.
I am pretty happy that supposedly Ukraine is winning if we can believe the news. Let’s hope it continues. We should continue to send them military material, but I wouldn’t be sending them any more cash.
So, here we are today and Putin is calling up a million men. His draft board is out on the street, conscripting men to go fight in a war they don’t want to fight in. Many Russian men are fleeing across the border so they don’t have to fight.
From the Financial Times here are two stories of many in the article I linked above. You just feel for these people.
One doctor in the city of Makhachkala said some patients had asked her to provide them with medical exemptions so they could avoid the draft. “On the day they announced mobilisation, everyone started whispering in queues, shops and on the bus,” she said. “There was already news — everyone had heard that someone they knew got drafted. Of course, people are upset.” The doctor, who spoke on condition of anonymity, said authorities had begun drafting medical workers, including nurses, in Dagestan, prompting some of her friends and relatives to flee to Kazakhstan. “We’re going to hide and run away. We won’t open the door, go to the draft office or take the notices. We’ve talked it all over,” she said.
Lev, a 27-year-old who lives in suburban Moscow, quit his job and left home after officials put his draft notice in his mailbox. He said he had decided to avoid his registration address but stay in the country, fearful that he would be caught at the border and handed a draft notice. “Putin’s ‘special military operation’ has just destroyed my life and any chances I had,” he said. “And now he literally wants to take my life away.”
I can’t say that I blame them.
I will leave it to others like Jeff and Craig to discuss the subtleties of the military conflict. Jeff served and commanded troops. Craig is a USNA dropout and a keen observer of Russia due to his research on world oil markets. I don’t know intimate details about that stuff like they do. The only thing I do know is if the Ukrainians had air power, this thing is over in a week and I think Putin knows that too.
So do the Chinese who are watching carefully.
However, I do know economics relatively well. Way back in the 1970s after the Vietnam War, Milton Friedman persuaded Richard Nixon to turn the American military into an all-volunteer military. Prior to that, we had a draft, even in peacetime.
During Vietnam, thousands of American men who would have been drafted fled to Canada, or hid out in the US. For the ones that did go, it’s complicated. Some were exemplary soldiers. Some weren’t. Two famous people, Elvis Presley and Muhammad Ali, were drafted. Presley went. It was easier because we were at peace. Ali didn’t and served time in jail because of it.
Connected people, like President Bill Clinton, were able to get deferments and avoid the draft. Other connected people got medical deferments. Yet, other connected people like President Bush actually served in the military but were given plum jobs stateside which never put their lives in danger.
Friedman’s idea changed that.
An all-volunteer military made the military compete in the open labor market for personnel. The military had to compete with companies. People now were free to choose.
What’s the result?
We have a bang-up military. Despite the leadership problems we might have today and lack of support from certain politicos, it’s still the best military force in the world. The people that sign up want to be there. They are great soldiers and do their jobs well.
Freedom of choice is powerful. Read the book Free to Choose if you doubt me.
Ironically, it would work with government-run schools too. Free market competition would make education better in the United States. Free market competition would force our government-run schools to meet the challenge from private sector schools and they’d become better too, or go out of business.
It works with abortion too. Instead of having courts mandate standards, putting it in the hands of the voter like the Supreme Court decision did is the right way to go. Let voters choose.
Government spending eliminates choice. It’s mandated. It’s got lots of strings attached. It also has a multiplier effect in the economy of zero or close to zero so it’s generally not that helpful. In most cases, finding a private solution is better.
As Ayn Rand duly noted, A businessman’s success depends on his intelligence, his knowledge, his productive ability, his economic judgment—and on the voluntary agreement of all those he deals with: his customers, his suppliers, his employees, his creditors or investors. A bureaucrat’s success depends on his political pull. A businessman cannot force you to buy his product; if he makes a mistake, he suffers the consequences; if he fails, he takes the loss. A bureaucrat forces you to obey his decisions, whether you agree with him or not—and the more advanced the stage of a country’s statism, the wider and more discretionary the powers wielded by a bureaucrat. If he makes a mistake, you suffer the consequences; if he fails, he passes the loss on to you, in the form of heavier taxes.
Free to choose embraces decentralization. It incentivizes innovation and competition. No choice kills all that.
An all-volunteer military forces the military to make an arms-length deal with the person. If they make a bad deal, or don’t adapt to new situations, they don’t get the recruits or re-enlistments they need.
When you look at issues, see where the choices are being made. Are they mandated from the top down to the masses? Is it one size fits all? Or, is there flexibility? Is there a choice for the individual?
It might make a difference in how you view the world.
I've come to believe that all of politics are defined by the need to control others. My left/right spectrum is driven by one question: "Do you feel the need to control other people, all outcomes and society itself? Do you want to make rules for every situation?"
If you do, I consider you to be a Leftist, of the political Left. The Constitution makes these people uncomfortable or downright hostile, because it takes the power of control away from government and yields it to individuals and their local representatives and governments.
If you don't, I consider you to be of the Right, like libertarians. The Constitution is your guiding document, and the rights enshrined are sacred to you. You are satisfied with a Free Market and individuals self-sustaining as long as they respect your own rights and others' rights. Your terms of coexistence with others are happier and more accepting.
So I always look through this lens to figure out who a person is, and whether they are hostile to me or someone who is friendly.
Interestingly, the Classical Liberal is someone I deem very friendly, even though I am someone of the "Far" Right (as is popular in our modern lexicon). "Live and Let Live" is very comfortable to me. I am not hostile to or threatened by someone who just wants to live peacefully and surf on the ocean like a hippie. I don't care either way. I also believe this is why we can easily identify Leftists and Democrats by simply listening to them. The lockdowns, vaccine requirements and mask requirements were revealing of everyone who couldn't contain that inner desire to control everyone else. Leftists wanted to force you to be vaccinated, wear a mask and stay in your home -- away from them. People of the Right felt it should largely be each person's own decision.
I like to read the humanities through this lens. Think of obvious ones like 1984, or Lord of the Flies, or Shakespeare. It's all there.
This to me, is Friedman's essence, and your essence, Mr. Carter. It's why I continually read every piece of yours, and I feel at home, as if you were a family member.
I listen to Gavin Newsome, and Joe Biden and AOC, and Rashida Tlieb and I feel very aggressive, uncomfortable even. These people don't wish for me to live freely, but want to control my life and every aspect of it until they achieve some sort of utopian outcome that they will define. Somehow we've never reached it, as they keep trying, with ever greater vigor.
That's how I see things, and wondered if others see it the same way?
In the 1960s, the draft was composed primarily of young men who didn't go to college. College was a four year deferment and in the early years longer than that. A lot of guys went into the reserves, and had limited active duty and a continuing obligation. For someone who grew up during the draft, the important thing is whether or not you served -- not whether or not you were in harms way. A lot of guys who were drafted wound up in Europe or Alaska and not Viet Nam. It's a false dichotomy to use Viet Nam as the measure of service. Once you put on the uniform, you go where they tell you. Putting on the uniform, doing unpleasant things while the college guys were eating pizza, honored an obligation that so many never fulfilled. And this continues for reservists today. George Bush may have been rich and privileged but he put more time into serving this nation than most of his contemporaries.