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Pay volunteers more money, you get more volunteers, better motivation to perform, better retention (which means less "meaningless" training like close order drill is required) , et cetera, ALL of which lowers costs of an all volunteer force over draftees.
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I agree with this in principle, but in practice it doesn't seem to fly the way we would like it to.
Our volunteer military requires a willingness to serve regardless of the financial benefits. If the only reason somebody is serving is the monetary advantages, then he's not a soldier, he's a mercenary.
If you're going to be a mercenary, why work for the U.S. military? You could work as a security guard for Halliburton in Iraq, and make 100x the money.