Walter Oi 1929 – 2013

Walter Oi passed away on 24 December. Many readers would never have heard of him but he made a contribution that would have impacted on many people. He was the economist who calculated the economic costs of conscription showing that conscription was a expensive option for providing military personnel. His work played a major role in the US abandoning conscription in the early 1970s.

David Henderson comments here.

One of the first empirical studies of the economics of the draft and of ending the draft was done by Walter Oi (1967a, 1967b), an economics professor then at the University of Washington and later at the University of Rochester’s Graduate School of Management. In his study published in the Sol Tax volume (Oi 1967b), Oi distinguished clearly between the budgetary cost of military manpower and the economic cost. Oi granted the obvious, that a military of given size could be obtained with a lower budgetary cost if the government used the threat of force to get people to join–that is, used the draft. But, he noted, the hidden cost of this was the loss of well-being among draftees and draft-induced volunteers. Using some empirical methods that were sophisticated for their day, Oi estimated the loss to draftees and draft-induced volunteers and found it quite high– between $826 million and $1.134 billion. While this number might seem low today, Oi’s data were in mid-1960s dollars. Inflation-adjusted to 2005, the losses would be $4.8 billion to $6.6 billion.

Steve Landsberg here.

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32 Responses to Walter Oi 1929 – 2013

  1. Alfonso

    He never got it….conscription wasn’t a monetary concept, the money was irrelevant, it was to involve the populace spiritually in a military conflict.

  2. Gab

    Conscription is just not the way to go…but I’m sure numbers will be along soon enough to rail against the Liberals over this, as he has done for years now.

  3. stackja

    Official Histories – Second World War – Volume VII – The Final Campaigns (1st edition, 1963)
    Gavin Long – Chapter 24 – Looking Back

    Within this community was an honoured tradition of military efficiency handed down by the men who had fought in the war of 1914-18.
    “The best fighting force in the fourth year of war was, by general recognition, the Australian Corps,” wrote a British military critic. B. H. Liddell Hart, Why Don’t We Learn From History (1944), p. 24.

    “The A.I.F., like all other armies from the British dominions, was found to be among the most effective military forces in the war, “wrote its Australian historian. C. E. W. Bean, Official History of Australia in the War of 1914-1918, Vol VI, p.1078

    Anzac Day had become the national day that drew greater throngs than any other observed in Australia. Restless enterprise and comradeship, both high military virtues, were qualities with which the Australian soldier was richly endowed. His egalitarian outlook lent itself to the development of a stronger team spirit and a more efficient sort of discipline than is likely to be achieved in armies in which there are strict social barriers and a resultant insistence on unthinking obedience.
    In the early years of the war the fighting part of the Australian Army was made up entirely of volunteers and in the later years mainly so. The fact that there was always so strong a flow of volunteers was largely a result of factors mentioned above: the homogeneous community, the cherished military tradition and the restless national temperament. A volunteer force, given adequate leadership, is likely to have a stronger pride and to display more enthusiasm, enterprise and fortitude than one compulsorily enlisted.

    The gradual and unhurried growth of the Second A.I.F., made possible by Australia’s remoteness from the main battlefields, helped the force to maintain specially high standards. The officers of the divisions of volunteers formed in the first two years of war were selected from the large number available in the regular and citizen forces. Those chosen earliest were the first to gain valuable experience and, as has been shown, they ultimately provided most of the senior leaders of the larger army that fought against the Japanese. Wherever they fought in the first two years and a half the Australian divisions, like those of the other Dominions, were formations which, as a result of various processes of selection, were inevitably of higher quality than the Australian Army as a whole, whereas
    1939-45 THE AUSTRALIAN CONTRIBUTION 589
    the armies of their United Kingdom and Indian allies – and later their American allies – had been rapidly expanded, with a consequent dilution of the experienced soldiers and the volunteers. In general the leaders chosen for the volunteer formations stood the test. Relatively few were relieved of their appointments; this fact combined with the steady reduction in the size of the army after 1942 meant that at senior levels promotion was far slower than in the First A.I.F., or in the British and Canadian Armies in the Second World War. In the British Army, for example, unit commanders of 1940 were commanding corps in 1942; in the Canadian Army an officer who had been a captain when war broke out was a corps commander in 1944.

  4. C.L.

    … the money was irrelevant, it was to involve the populace spiritually in a military conflict.

    Baloney.

  5. Sinclair Davidson

    Conscription in SA was a mechanism to indoctrinate the white male population.

  6. Token

    He never got it….conscription wasn’t a monetary concept, the money was irrelevant, it was to involve the populace spiritually in a military conflict.

    Is that a reference to the idea of keeping males engaged in an undertaking during the 18-25 year period when the risk of them committing crimes & therefore being drawn into the criminal system for life is at its highest?

    I have heard this being raised a few times in the past year by people seeking to decrease the number of people held in gaols.

  7. Alfonso

    ‘Baloney’…..bwaaaa.

  8. Alfonso

    Nah Token, a much wider concept….Mum’s and Dad’s with conscripted boys in combat zones works as political support for the conflict ….for a while.

  9. Jim Rose

    Oi was an outstanding labour economist. Everything he wrote was worth reading. Applied price theory at its best.

  10. C.L.

    Tell us more about how conscription “spiritually” enlivened the war effort in the 1960s, you mindless oaf.

  11. Jim Rose

    He also wrote great papers on safety in the workplace and consumer product safety

  12. Jim Rose

    Stalkas,Ile was a recently major in 1941. His evaluations from MacArthur was Ike should go straight to the top in event of a war

  13. eb

    Nice avatar, Gab.

    But it does raise some questions in relation to Santa and penguins!

  14. Sinclair Davidson

    JC – Japanese. Interned during the war.

  15. tomix

    I was once told by a neighbour who had joined the Army in the 30s that conscription was essential

    because the intelligence of the average soldier was so poor. He’d been in Greece and up in the islands

    and said that none of the blokes he did basic training with were alive by 1945.

  16. squawkbox

    The main benefit of conscription in WW2 (at least as far as the US and UK were concerned) was not so much to get the necessary numbers in uniform, but to know how many would be joining the armed forces at what times. Made planning and training much easier, without the huge WW1 style surges of volunteers that could not be properly equipped or trained for months. Of course, none of this applied outside the context of total war.

  17. Alfonso

    Conscription acted as a patriotic marketing tool for the Vietnam War, everyone voted for it , support your sons in SE Asia…….at least until later, you dipstick.
    The DLP loved it , is that relevant?

  18. C.L.

    … at least until later …

    Oh. Not much spiritually compelling perseverence there, hey?

  19. George Smiley

    Thank you for posting the piece by David Henderson. Walter was an outstanding economist. What your readers may not know is that he was blind. But that never stopped Walter who it was said: “guided his guide dog.”
    RIP Walter

  20. Bruce

    Israel and Switzerland have compulsory military service. I suspect their economic models say that being conquered has an inferior NPV to that of conscription. Especially for Israel. Being exterminated would ruin your whole day.

    As always economic models are subject to the input variables. In the US this makes sense. With ‘a rifle behind every blade of grass’ no one is going to invade them.

  21. manalive

    Conscription was introduced in ’64 by the Menzies Government to prepare for a possible confrontation with the pro-communist government of Indonesia under Sukarno along the Irian Jaya – Papua New Guinea (then Australian-governed territory) border.
    That potentially dangerous situation passed with Sukarno’s overthrow in 1965.
    ” … Opposition to the scheme, which grew increasingly widespread once national servicemen began to be sent to Vietnam, became the catalyst for broader opposition to the war …”.

  22. Tekweni

    Sinc, not sure that conscription was successful in SA in indoctrinating people. After the way I was treated and insulted as an English speaker by non coms who were still fighting the Boer war, I came away at the ripe old age of 18 detesting Afrikaners as a group. Seeing that I had many Afrikaans friends this was a bit confusing at the time because as a youngster straight out of school in Durban I had never been exposed to this sort of hatred.

    Anyway, my dislike of the AWB and Nationalists never abated but as always you cannot group everybody.

  23. .

    Alfonso
    #1125318, posted on December 27, 2013 at 7:08 pm

    He never got it….conscription wasn’t a monetary concept, the money was irrelevant, it was to involve the populace spiritually in a military conflict.

    Fascist tripe.

  24. jupes

    Economics has nothing to do with it.

    Conscription is a good idea for existential wars, hence Israel has conscription to train youngsters for war. It then releases them to pursue their civilian careers while having the ability to recall them for a rapid, massive, increase to the IDF when required.

    Australia fought two existential wars in the first half of the last century. Conscription was not required in WW1 because enough men volunteered. In WW2 the war got a bit too close for comfort so conscription was required.

    Where conscription doesn’t work is wars of choice. It increases opposition to the war.

  25. .

    jupes

    There is no military justification for the draft either.

    It is entirely to do with economics.

    If Australia had the same military as the Israelis in terms of a proportion of total population, the ADF would have 575,000 people.

    This could be filled merely by paying them more money and opening up more positions in the military.

    The problem with conscription is you are not pricing the jobs you are eliminating. You have no measure of how sustainable it is.

    You are better off paying for these even with the deadweight losses of taxation than to eliminate those jobs and not know what the true costs are.

    Curtin committed conscripted forces after the Japanese were beginning to retreat (Midway, Milne Bay, Coral Sea, Kokoda Trail).

    The ADF also hold nuclear arms and a very well equipped, otherwise conventionally armed air force. Conscription doesn’t really add to these.

  26. jupes

    There is no military justification for the draft either.

    So you disregard this argument:

    … having the ability to recall them for a rapid, massive, increase to the IDF when required.

    Why? Simply increasing the size of the permanent IDF (as I think you are alluding to) would be a dumb idea compared to having a nation of trained soldiers – available at short notice – which is what conscription gives them. And hey, it’s a lot cheaper too.

    Curtin committed conscripted forces after the Japanese were beginning to retreat (Midway, Milne Bay, Coral Sea, Kokoda Trail).

    All those battles were in 1942 the same year conscription was introduced. There was a hell of a lot of Jap fighting to be done after that.

    The ADF also hold nuclear arms and a very well equipped, otherwise conventionally armed air force.

    Surely you mean IDF.

  27. Walter Plinge

    This post prompted me to buy Stephen Landsberg’s The Armchair Economist on The Book Depository. Landsberg’s obit is a fascinating read.

  28. Sinclair Davidson

    Sinc, not sure that conscription was successful in SA in indoctrinating people.

    Well yes. It may not have been successful, but that was the intention.

  29. .

    Why? Simply increasing the size of the permanent IDF (as I think you are alluding to) would be a dumb idea compared to having a nation of trained soldiers – available at short notice – which is what conscription gives them. And hey, it’s a lot cheaper too.

    It’s slavery. No it is not cheaper either. No I’m not alluding to that at all either. Since the IDF gained air superiority they’ve never ‘needed’ conscription. The threats to Israel since 1973 have been nuclear or asymetric.

    All those battles were in 1942 the same year conscription was introduced. There was a hell of a lot of Jap fighting to be done after that.

    There was enough men to enlisting to do that. I think this is the act you are referring to regarding conscription:

    Defence (Citizen Military Forces) Act (1943)

    Yes I did mean the IDF.

  30. stackja

    .
    #1127145, posted on December 29, 2013 at 4:18 pm
    There was enough men to enlisting to do that. I think this is the act you are referring to regarding conscription:
    Defence (Citizen Military Forces) Act (1943)

    Official Histories – Second World War Volume VII – The Final Campaigns (1st edition, 1963)
    Gavin Long

    Chapter 24 – Looking Back

    In Australia the reduction of the army from 1943 onwards produced a surplus of capable and tested field commanders, and some military leaders of great capacity were returned to civil life while the war was still being fought.
    The Australian military contribution to the defeat of Germany, Italy and Japan was a big one in the years 1941, 1942 and 1943.
    In the Middle East in 1941 a series of important operations would scarcely have been possible had it not been for the presence there of the Australian corps of three divisions, and in 1942 the 9th Division played a vital part at El Alamein.
    In 1942, 1943 and early 1944 Australian troops first halted the Japanese and then drove them out of most of the mainland of Australian New Guinea, inflicting on them their biggest reverses on land up to that time.
    Thereafter the Australian Army was not needed for any major role, but was arduously employed in the series of minor campaigns which it has been the task of this volume to describe. Always a realist and therefore the more keenly aware of the probably doubtful value of the tasks to which he had been relegated, nevertheless the battlewise Australian soldier fought on to the end with much the same devotion and skill that he had shown in the decisive battles of earlier years.

  31. jupes

    It’s slavery.

    Except conscripts are not treated as property to be bought and sold. Oh and they get paid.

    No it is not cheaper either.

    Riiighhht. So training conscripts for two years then releasing them into the civilian community with regurlar short training stints is dearer than employing a greater number of people full time?

    * Note that the conscript system allows the IDF to expand to a size larger than the permanent force plus the current conscripts in training. The IDF has identified that they may require this larger force at short notice. It seems to me you are saying that it would be cheaper to have the larger force however only comprising permanent soldiers. That is a ridiculous proposition.

    No I’m not alluding to that at all either. Since the IDF gained air superiority they’ve never ‘needed’ conscription.

    Israel has had air superiority since at least 1967. Are you saying they didn’t need conscripts in 1973? Good grief, I’m glad for Israel’s sake that you weren’t running the IDF back then. Air superiority has it’s limitations. The 2006 conflict with Hezbollah is a good example.

    The threats to Israel since 1973 have been nuclear or asymetric.

    Asymetric threats are not dealt with by airpower alone. But that’s not the point. Just because Arab armies haven’t invaded since 1973 doesn’t mean they won’t again. If Israel takes away the deterent of a large groung force then the Arabs will try to exploit it. It’s not rocket science. The only reason they are reduced to terrorism now is because they know they will have their arse handed to them on a plate if they invade. Having the large majority of its citizens being trained soldiers is a deterent in itself.

    Defence (Citizen Military Forces) Act (1943)

    That act allowed conscripts to fight outside Australian territory. Up to that point conscripts were only allowed to fight on Australian territory which included PNG at that time.

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