The term “Sunk Cost” is often used in economics and in business. What it means is that once money has been spent it is gone and should have no effect on future decisions. A good example of this, which spans the economic and political spectrums, was the supersonic aircraft Concorde which continued to be funded by the French and British governments long after it was clear that each flight was losing money. When the original decision to develop and build a series of aircraft was made, projections showed that the venture could be profitable. Once the development costs had been incurred and more was known about the cost of operation, it became clear that every day that any of the aircraft were operated would send good money after bad. At that point, every franc or pound that had been spent up to that date was a sunk cost. From an economic point of view, the project should have been abandoned and all prior costs written off as unrecoverable.
During the course of an investment cycle, it is often unclear as to when a point has been reached where an investment should be written off. To reduce this uncertainty, new projections are usually put on paper periodically, disregarding prior investment, to compare the cost and potential profit from going forward versus using the money so required for some other more promising project. Those involved in making the original decision to spend the money usually have a very difficult time with this re-evaluation. No one wants to be responsible for large losses.
What we have spent in Iraq is now a sunk cost. Going into Iraq was a terrible and tragic decision made by a handful of men and a few women at the center of our government. Over 3,000 lives are forever gone and there are more than 20,000 wounded. Estimates of Iraqi losses are unreliable but they are very much larger. Five hundred billion dollars have been committed and the long term cost of the war and badly botched occupation is estimated to be over one trillion dollars, maybe more. Although it is unclear just why we went into the war, it seems obvious that there were a number of factors including deposing Saddam Hussein, concern about the possible development of nuclear weapons, and concern about the stability of Saudi Arabia and the need to assure a future and inexpensive supply of oil. It is also almost certain, though, that the overriding consideration was that this administration thought a quick victory would be easy and that going into Iraq would guarantee Republican success in the near term elections and possibly create a longer term Republican hegemony. If this is true there are obvious moral and possibly legal implications which bear thinking about.
The lives and limbs and eyes and money spent so far, Iraqi as well as US, are gone and should have no effect on our present decision making. (Not much is said these days about the “coalition”, but several other unfortunate countries have suffered grievous losses too). The appropriate way to think about decisions we make from here on is how much more will it cost us in American lives, injuries and money, now and over the years ahead, if we stay in Iraq for the longer term versus the consequences of leaving quickly or, alternatively, leaving somewhat more slowly.
No one knows exactly what will happen if we pull out quickly. The analyses range from an improvement over what is happening now to igniting conflict across the region and, possibly, beyond. If we stay for a few months or for much longer, few analysts think that the downward spiral into more and more violence will be halted. Possibly it may be slowed, but at the cost of more American lives and lots more money. My own view is that the damage has been done. The lives are gone, the money is gone, our country’s standing in the region and in the world is badly damaged and a military solution is no longer possible without a further very major commitment of lives and money which will make the losses already suffered look small. Let’s not forget that, while we concentrate on Iraq, Afghanistan is also falling into disorder and violence.
Are you, the reader, willing to go to Iraq now, carrying a rifle and riding in a Humvee, to try to salvage the mess? What about going in for a second, third or fourth tour of duty? If we are not willing, should we ask anyone else to do it for us? How does it feel to be on the front lines risking your life in an already failed and foolhardy enterprise? Do we have an obligation to the Iraqis to continue even if there is little likelihood of any outcome which might be termed successful?
Let’s not put any more American lives in danger for what is clearly a sunk cost with little if any possible benefit from continuing on. We probably have an obligation to spend more money to try to reduce the continuing consequences of what we have done. We have again put Iraqis who have supported us at great risk and we need to be responsible. Certainly we should spend money and time in trying to work out a wider regional diplomatic solution. The Palestinian – Israeli situation needs our political and monetary attention and even limited success would help tamp down regional turmoil. If we were willing to commit even a fraction of the money we’ve poured out in Iraq, it could smooth the way to success here. The obvious problem with this as with all other possible courses of action is that our present administration does not have the horsepower to accomplish acceptable results regardless of the course chosen. We probably can’t fix this. As they blunder through the next two years, let’s not put any more American lives at risk.
E. Packer Wilbur
January 18, 2007