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The answer to this depends largely on what sort of conflicts you think the United States military will be engaged in in the future.
You have placed this question in the “War on Terrorism” section. One of the major arguments for this new manpower model is that future conflicts will likely resemble the war on terrorism. In this sort of conflict, there is not that much of a need for massive numbers of personnel. Instead, the conflicts can be conducted using things like drones and only a few “boots on the ground.” If this is the way the future will look, then a small but older military force might be workable.
However, if the US is likely to get involved in real wars in the future this model might not be so good. If the US is ever involved in another large war with a powerful country (as opposed to fighting against terrorist groups), it will need to have a much more traditional military. It would need to have more soldiers because large wars simply have to be fought using large armies.
So, the real issue here is what sort of future conflicts we envision the US fighting.
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