Bad Idea: Paying Servicemembers More to Do the Same Amount of Work

From CSIS's Bad Ideas in National Security Series:

Because military pay is tied to the ECI, civilian wage increases drive commensurate increases in military pay. This helps retain an all-volunteer force that may be more inclined to leave military service if civilian wages were to increase at a faster rate. But, real increases in civilian pay reflect productivity growth. If the military matches those wage increases without commensurate increases in military productivity, we end up paying more each year for the same amount of output.

2021 Military Pay Table

Unless Congress or the President intervenes, the annual increase in basic pay for military members is adjusted according to 37 USC 1009. The increase is based on the 12 month percent change in private industry wages and salaries as reported in the September report in the "year before the preceding year" in which the pay raise takes effect. In other words, the pay raise to take effect on January 1, 2020 is based on the September 2018 ECI report.

Congress implemented this automatic adjustment to ensure that military salaries grow in tandem with private industry wages. However, the lag between the measurement of changes in private industry wages and the reflection of that change in military wages is substantial.

Since the Bureau of Labor and Statistics recently released the September 2019 ECI report showing a 3.0 percent increase in private industry wages, it is possible to calculate the 2021 pay table despite the fact that Congress has yet to pass the 2020 NDAA (as of 11/9/19). Presuming the 2020 table reflects the 3.1 percent increase called for in the September 2018 ECI report, the 2021 table will be as follows unless either Congress or the President overrides the law.

2021 Basic Military Pay table at 3.0 percent above 2020 rates
*note O-7 — O-10 pay may be capped

Alan Krueger on What Makes a Terrorist

I’m deeply saddened to learn that Alan Krueger has died. Many will recall his vast contributions to labor economics in the coming days. I had the honor of working for Alan on the Council of Economic Advisers, and he and I spoke about his work on the economics of terrorism. Alan focused his brilliant, analytic mind on society’s most pressing concerns.

Kling on Defense Economics

Arnold Kling gives 7 comments to a reader who asks about the lack of Defense Economic courses and papers.

Research is more likely to flow up through a hierarchy than out through economics journals. One’s reputation is more likely to depend on how one is received by bureaucratic superiors than by academic peers.

Considering the Chinese Air Force's Best Response

RAND released a report on the Chinese People's Liberation Army (PLA) asserting that "the main driver for Chinese military aerospace power development is the PLA's view that it needs to be prepared to deter and, if necessary, defeat the United States in a high-end clash." And, it states that the Chinese Air Force is closely following U.S. Air Force capabilities and copying or innovating in areas necessary to accomplish its objectives.

The author recommends that the U.S. Air Force should respond by monitoring advancements in Chinese military aerospace capability so it can exploit weaknesses and avoid further capability transfers. These are reasonable suggestions, but the U.S. should also consider how its own behavior may be encouraging Chinese military development.

If the Chinese are truly focused on developing their capability to compete with the U.S., it may be possible to reduce the impetus for additional Chinese military build-up by decreasing the negative rhetoric and providing less overt demonstrations of U.S. capability. The Chinese are responding to U.S. efforts to maintain Command of the Commons. In turn, the U.S. observes the increase in Chinese military capability and responds with additional investment that the Chinese then copy. We find ourselves in a tit for tat scenario of escalating responses. So, rather than overtly label China as a military threat which encourages further Chinese military modernization, the U.S. could preserve the effectiveness of its current capabilities by considering the best response of those concerned with U.S. military advantages. This is especially important at a time when the U.S. is already facing significant national security challenges.

"If you find yourself in a hole, stop digging."
—Will Rogers