The Rippling Effects of Sinking Costs

Co-blogger Caitlin’s post on the problems and sunk costs about Afghanistan makes a very valuable point about the problematic reasoning of “seeing through” incredibly costly and struggling military commitments. Her last paragraph is worth quoting again for emphasis:

Taking more time, spending more money, risking more lives doesn’t undo what has already happened, doesn’t fix what has gone wrong, and doesn’t justify what we have spent in the past. We need to acknowledge and set aside these emotional drivers in our decision-making so that we can make policy decisions based on what choices give us the best chance of success in achieving our objectives. The psychological and emotional trap of money spent, time wasted, and – hardest of all – lives lost, can’t be permitted to dominate these decisions.

Nevertheless, American foreign and defense policy is replete with these sorts of decisions. Part of the reason this is so is obviously, as Caitlin argues, because there are significant emotional factors which discourage policymakers from making decisions to cut their losses.

Another issue, though, is that incentives to double down on sunk costs are built into discourses about the perception of U.S. power, and even a fair deal of U.S. strategy. Sunk cost reasoning, particularly about war duration, is built into the policy and geopolitical discourses of credibility and more lately, will power, that came to exert a significant influence on American foreign and defense policy and analysis and commentary surrounding it.

In the Cold War, the United States found itself, for the first time, with a relatively wide-ranging domestic and international mandate for taking on a global security role. The number of potential threat areas were vast and, in material terms, the efforts to secure and advance U.S. interests in each of them frequently infungible except at the strategic nuclear scale. The preferred option to simultaneously defend these interests from Communist perturbation was deterrence. In Germany, Korea, and many other theaters, deterrence relied on using so-called speedbumps which could not adequately defend a position but would presumably tie the U.S. into “doubling down” on losses or launching punitive strikes.

In Vietnam where nuclear deterrence had only limited utility to U.S. policy objectives, sunk costs proved especially difficult to avoid. Policymakers believed that failing to stay the course in Indochina would undermine the credibility of U.S. security commitments elsewhere and encourage Soviet provocations. The obsession with credibility has since morphed into a more ambiguous preoccupation with willpower, resolve, strength, and seriousness. Much as the credibility-concerned believed doubling down in one area was necessary to dissuade hostile encroachment and provocation most everywhere else, fears of American weakness, lack of resolve, or seriousness acquire a ripple-effect that endagers America or constitutes a choice in favor of decline with world-historical implications.

Doubtless, deterrence is not bankrupt as a concept, but letting highly perceptual factors such as willpower or credibility rule U.S. policies becomes more and more unsustainable. In a period of diminishing material capacity. In the political discourse surrounding arguments of willpower and deterrence, doubling down on sunk costs becomes necessary to convince actual and potential adversaries that the United States would not renege on its security commitments and hegemonic prerogatives.

However, the material realities of doubling down on sunk costs tend to undermine, rather than bolster U.S. credibility. Whatever fear was struck into the heart of American adversaries by the prosecution of wars in Afghanistan and Iraq, the strain these wars - actual and perceived - placed on the U.S. military have certainly done more to enhance actual and perceived U.S. decline than any failure to double down

Retrenchment very often works. Even if it forswears achieving the desired local outcomes, if it frees up resources necessary to achieve more important or realistic goals elsewhere, it is generally a worthwhile undertaking. This will not always be happily resolved by convincing allies to take on a larger burden or reductions in local hostile intent. Some objectives will still not be desirable to local allies, and some objections to U.S. interests will persist long after the U.S. leaves.

This is basically fine, though. There is no superpower or great power cartel which has the interest or capability to exploit peripheral retrenchment by the U.S. into advantage against it in more critical areas, as the Soviet Union plausibly could by encroaching on U.S. interests in some regions. In the case of Afghanistan, the U.S. very well could fail to achieve most or all of its core local objectives, but still be better off if doing so freed up resources to focus on more vital resources elsewhere, or mitigated the failure at a lower cost than sinking more costs into the country.

This is deeply unsettling both emotionally and for visions of U.S. power with American credibility and willpower as central components. The promise of credible U.S. power and universally-feared American strength provides a way for the U.S. to, in theory, put potential adversaries into awe and mitigate threats globally while simultaneously achieving local objectives. But as the material advantages enabling the U.S. to pile on sunk costs diminish, the price of the local objective quickly detracts, rather than enhances, American power.

The sunk costs fallacies which latch, remora-like, onto theories of deterrence and hegemonic stability, survive not just because of emotional appeal but because they appear to derive from the relatively successful historical record of the U.S. confrontation with the Soviet Union. Yet the United States triumphed in the Cold War in spite of its occasional doubling down on sunk costs and unachievable objectives, and so the emotional glow of that victory, and the selective memory of its policies and strategies, outweigh the favorable geopolitical and economic trends which both significantly enabled America’s success and mitigated the costs of its failures.

Embracing retrenchment rather than doubling down on sunk costs is particularly vital, because as prevailing balance of power and economic trends attenuate the potential scope and scale of U.S. dominance, doubling down will have a greater relative impact on straining and degrading U.S. capabilities, and therefore accelerate the undermining of the U.S.’s overall position. A managed retrenchment that occurs earlier, while the strain is lower and the prevailing shift in power more gradual, on the other hand, opens more opportunities for recapitalization and managed realignment. Honestly assessing U.S. priorities and areas of interest, and discarding with the lesser and peripheral ones rather than trying to see them through at increasing cost will be emotionally painful and perhaps politically disconcerting, but a strong will directed towards accepting painful losses rather than denying them amidst mounting costs would better serve U.S. interests today.