Inflation and recession at home. Humiliation abroad. In the wake of the Vietnam War, America was foundering. Yet, the seeds of a national resurgence had already been planted by a most unlikely pair: Nobel Prize-winning economist Milton Friedman and Melvin R. Laird, Richard Nixon’s secretary of defense.

Throughout most of the Cold War, the United States used the draft to fill its military ranks. Previously, we had resorted to conscription only during hot wars — the Civil War and the two World Wars. But Cold War Congresses went along with a peacetime draft, because they thought it would be cheap.

Well, like most good “deals,” you get what you pay for. The quality of draftees wasn’t great. Motivation and morale were worse. And because they left as soon as their enlistment was up, the cost of training replacements made the draftee military not much of a bargain.

Along came Friedman, who had long argued that a draft was “inconsistent with a free society.” As the head of a presidential commission, he also made the case that an all-volunteer force would be more economical and far more effective than a conscription-based military. When Congress ended the draft in 1973, Laird put Friedman’s theories into practice.

That all-volunteer force, combined with President Reagan’s 1980s defense buildup, turned everything around. The U.S. military went from being almost a has-been to the most respected, feared and effective military force on Earth.

But that was then. We’ve been living off this legacy for almost a quarter of a century. Now we are on the verge of tapping out the bequest.

It started at the end of the Cold War, when Congress — eager to cash a peace dividend — stopped “modernizing” the military (i.e., buying new equipment to replace old systems before they wear out or become outdated).

Congress then compounded the problem by letting personnel costs skyrocket. Total budget authority for the military personnel account, across both the core defense program and operations in Afghanistan and Iraq, has more than doubled in current dollars since 9/11. Personnel costs now account for more than half the Pentagon’s budget.

On top of that, Congress keeps layering on new rules and directives that make defense spending even less efficient. For example, the majority of the Army’s research and development budget is directed according to congressional earmarks, not military needs.

A study by the TechAmerica Foundation warns that the Pentagon may soon get hit with a “double tsunami” — a call to divert Pentagon spending to other purposes as the U.S. draws down in Iraq and Afghanistan (a new “peace dividend”), coupled with calls for further cuts to reduce the federal deficit.

The double tsunami’s first casualty will be the all-volunteer force. Sure, everyone likes good pay and benefits, but what draws most young people to military service is a sense of mission and the desire to be part of an effective institution.

Few will want to join an institution with inadequate funding for training and readiness and dilapidated equipment. And if Congress slashes the size of the military, necessitating longer, more frequent deployments and shorter stateside rest periods, fewer will want to stay in the service.

We can save the all-volunteer force without breaking the bank. Reforms in procurement, personnel management and operations (modernizing logistics, alone, would save $35 billion) can keep the all-volunteer force healthy and combat-ready — and free up enough money to modernize.

There is no need to gut the defense budget. That would merely squander the miracle wrought by men like Friedman and Laird, leaving the Pentagon saddled with all of today’s inefficiencies and inadequate resources to meet our security needs.

at The Washington Examiner.