As an armchair economist who believes that everything DOES happen at the margins, we can't completely ignore this, so I'm at least somewhat sympathetic to the argument.
But what really kills the argument is looking at how our medical professionals have stepped up and responded to COVID-19, putting their lives on the line every day, with utterly inadequate gear. And still they serve.
Yes, if the police are less militarized and have more personal liability/responsibility, it will reduce the level of interest in the profession somewhat, but I think we have to not kid ourselves about the degree of such an impact.
This is before we get into whether we really even want "those people" (who are attracted to the militaristic side of policing) 'serving' our communities at all.
Just as anti-pursuit policies have swept the nation to reduce officer-involved carnage, we can reduce escalation of violence.
The DHS funding being pumped into the forces have resulted in police being better battle-equipped than the average country's military and this has become a recruiting tool. Don't want to sign many years of your life away and probably get shipped out to a -stan where you have to deal with constant misery just to live out a military fantasy? Just go to a police academy for a couple months and you can cosplay all you want while with all the same toys in a "target rich environment".
The end result is we've created a recruiting pull that only finds the worst possible people for the job. It would be like HR only hiring people for a software company who picked computer science entirely because they heard it was high paying but somehow far far deadlier.