It is a fallacy that the disbanding of troops after wars will create a problem of absorption in the labour market. The removal of government support for the troops will allow an expansion of civilian demand which can in turn accommodate the increase in the labour force. This assumes a balanced budget and tax cuts; a later chapter will consider deficit finance.
Disbanded troops become self-supporting citizens. Total national production — wealth — is thus increased.
The same argument applies to unnecessary officials in the government, whose removal increases the disposable income of taxpayers if taxes are cut. The people removed from government service become productive by taking jobs in private business.
Certain public employees such as firemen are justified because of their social utility, not their purchasing power. The argument that some bureaucrats should not be sacked because it would reduce their purchasing power ignores the increasing purchasing power taxpayers have once these people are no longer employed by government and taxes are cut.