I want to lower my army budget to make my divisions go down to around ~3000 strength and only maintain a few standing divisions at full strength. My question is: what happens to my Soldier pops when i lower the division strength. Do the men from the divisions that desert simply disappear? So if I lower the army budget and raise some units to full strength I will have a net loss of manpower?
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No your soldier pops will remain soldier pops, and the strength discarded from your divisions will add to your manpower pool.
Dropping the budget to zero and max, and doing it over and over, can be exploited to create "Paper Divisions" (1800 or so men) that can act as coastline defense, 'military presence' (Gendarmerie)
Effectively doing so, 12,000 POPs can be used to defend or garrison twelve provinces, incredibly useful when we take into account colonial terrain (Philippines is a real bitch as Spain if rebels spawn and there are no defending soldiers. Even 1000 Regulars can beat 30,000 Guard Infantry, especially if your attack modifier is reduced to 2 because of Jungle and Topology!)
Effectively doing so, 12,000 POPs can be used to defend or garrison twelve provinces, incredibly useful when we take into account colonial terrain (Philippines is a real bitch as Spain if rebels spawn and there are no defending soldiers. Even 1000 Regulars can beat 30,000 Guard Infantry, especially if your attack modifier is reduced to 2 because of Jungle and Topology!)