The Gambler Revisited

Here’s an idea. Perhaps writing off sunk costs and doing something else is not the same thing as giving up and accepting that you’ve failed, shamefully. Sometimes it’s real wisdom. Kenny Rogers sang about that. You know, about knowing when to hold ’em, when to fold ’em, when to walk away, and when to run.

That was back in November 1978, about the time of the Jonestown mass suicide, back when Jimmy Carter was president, talking about our national malaise or whatever. And that song came out about the time Dianne Feinstein succeeded the murdered George Moscone as San Francisco’s first woman mayor. She was the one who discovered his body, and Harvey Milk’s body. Bad things happen. But as the song goes, when you’re out of aces, you think about what to do next. Sometimes you understand what is lost is indeed lost – it’s not coming back – and you move on to the next thing.

The Kenny Rogers song riffed on that bit of folk wisdom – don’t be a jerk and double-down on your bet when you don’t have the cards, as what you lost isn’t coming back. There’s bluster and hope against all odds, and then there’s reality. Walking away – or even running away – is sometimes damned smart. And no one called Kenny Rogers a cheese-eating French surrender-monkey. Hell, it was a Country and Western song.

But as we learned in the long national shouting match about getting out of Vietnam, none of us are Kenny Rogers. We have a problem with sunk costs.

To be precise, there is Sunk Costs Theory:

In economics and business decision-making, sunk costs are retrospective (past) costs which have already been incurred and cannot be recovered. Sunk costs are sometimes contrasted with prospective costs which are future costs that may be incurred or changed if an action is taken.

In traditional microeconomic theory, only prospective (future) costs are relevant to an investment decision. Traditional economics proposes that an economic actor does not let sunk costs influence one’s decisions, because doing so would not be rationally assessing a decision exclusively on its own merits.

But no one is very good at rationally assessing a decision exclusively on its own merits, so we get the Sunk Cost Dilemma:

A sunk cost dilemma is a dilemma of having to choose between continuing a project of uncertain prospects already involving considerable sunk costs, or discontinuing the project. Given this choice between the certain loss of the sunk costs when stopping the project versus possible – even if unlikely – long-term profitability when going on, policy makers tend to favor uncertain success over certain loss. As long as the project is neither completed nor stopped, the dilemma will keep presenting itself.

The classic example of that is the Concorde, the Anglo-French supersonic jetliner. Both governments knew from before the first test flight that there was no way that aircraft would ever turn a profit, and in fact, it never did. But they build a fleet of them anyway, and Air France and British Airways ran scheduled service for decades. This wasn’t so much hope that they would one day turn a profit as a sunk costs thing – each government had poured billions into the project, and if they said, no, let’s not do this after all, all that money would have been spent for nothing. But of course it was. So the terrible accident in Paris in July 2000, the only crash, was, oddly enough, a relief. Sure, it was caused by debris on the runway, not any problem with the Concorde, but it provided an out. By 2003 they were all gone from the skies.

But while economists and the game theory wonks cite the Concorde as an example of the sunk cost dilemma, those of us who were around in the late sixties and early seventies remember all the arguments that we should stay in Vietnam and fight on, even if the war no longer made any geopolitical sense and no one could define what winning would look like – there would be no way to tell if we won. But over and over again you hear that, well, maybe the war had been a mistake, but if we stopped and decided to do something else instead, all our brave soldiers would have died for nothing. And of course we couldn’t dishonor our dead soldiers.

The counterargument was obvious. So, you want more of our guys to die pointlessly, in honor of the fifty-five thousand who already have. Then the shouting began.

John Kerry, then a decorated officer, famously testified to congress in 1971 and asked the obvious question about winding down that war:

Each day to facilitate the process by which the United States washes her hands of Vietnam someone has to give up his life so that the United States doesn’t have to admit something that the entire world already knows, so that we can’t say that we have made a mistake. Someone has to die so that President Nixon won’t be, and these are his words, “the first President to lose a war.”

We are asking Americans to think about that because how do you ask a man to be the last man to die in Vietnam? How do you ask a man to be the last man to die for a mistake?

That didn’t go over well. He should have pulled out a guitar and ripped into a rousing version of that Kenny Rogers song. But of course that song hadn’t been written yet. It would be another seven years before the rest of the country finally got it. Dealing with sunk costs is difficult.

But, yes, as long as the project is neither completed nor stopped, the dilemma will keep presenting itself:

President Barack Obama summoned his war council to the White House Situation Room on Wednesday for an intense, three-hour discussion that exposed emerging fault lines over Afghanistan – with military commanders pressing for more troops and other key officials expressing skepticism.

There was no discussion of specific troop levels during the meeting in the West Wing basement, according to a senior administration official. But the talks underscored the divisions throughout Obama’s inner circle that must be navigated in the coming weeks, the official said.

Secretary of State Hillary Rodham Clinton and special Afghan and Pakistan envoy Richard Holbrooke – send in tens of thousands of more troops, now – and Rahm Emanuel and General James Jones, Obama’s national security adviser – not so fast, there, as we need to think about this.

And there was the context:

The meeting, the second of at least five Obama has planned as he reviews his Afghanistan strategy, comes after Obama received a critical assessment of the war effort from Gen. Stanley McChrystal, the man he put in charge of the Afghan war earlier this year. McChrystal declared that the U.S. would fail to meet its objectives of causing irreparable damage to Taliban militants and their al-Qaida allies if the administration did not significantly increase American forces.

But he didn’t say we could win or anything, just that we could lose. That’s classic sunk costs thinking. But there were other ways of thinking:

One alternative to McChrystal’s call for additional troops for a counterinsurgency is to use Special Forces and unmanned drone aircraft for tactical strikes on the Taliban and al-Qaida leadership, a move that would require much more U.S. action in Pakistan but fewer troops.

Defense Secretary Robert Gates “has clearly been a strong proponent of counterinsurgency” organized by McChrystal, Pentagon press secretary Geoff Morrell said earlier Wednesday. “But he wants to have a thorough discussion with the president and the rest of the national security team” about whether that remains the best strategy for crushing the militant forces.

Vice President Joe Biden, who joined the discussions in the White House basement, also favors a high-tech approach to target al-Qaida, the official said.

Obama asked the group to meet with him twice more the next week. There’s a lot to think about. And key Democrats in Congress have begun grumbling, and public support for the war has fallen though the floor, more than half of us now say the conflict is not worth it. What’s the point? And John McCain is saying send in everything we’ve got – the entire region would be destabilized if we don’t. And Eric Cantor, the House Republican, says that Obama is endangering our troops in Afghanistan by even having a meeting – “As long as they are delaying, that puts in jeopardy, I believe, our men and women.”

But we’ve been in Afghanistan since late 2001, looking for Osama bin Laden, or something. It was never quite clear, and we kind of forgot the guy, and somehow, now the Taliban, who once ran the place, have taken control of more than half the country. We’ve been there eight years. Now what?

We could get out. The Soviets did, and the world didn’t end. And in the New Yorker, Steve Coll explains how they did that:

In Afghanistan, after an initial and failed attempt to use special forces more aggressively to hit Islamist guerrillas along the Pakistan-Afghanistan border, the Soviets began to pull back into Afghanistan’s major cities and to “Afghan-ize” their military operations. As they prepared to withdraw, Soviet troops moved away from direct combat, particularly in the countryside, and instead concentrated on training and equipping the Afghan forces. They also provided supplies and expertise the Afghans lacked—air power, for example, and SCUD missiles. As I described in a previous post, this military strategy worked pretty well, and the Soviet city-fortresses withstood heavy assaults from the U.S.-financed mujahidin even after Soviet troops left the country; they left only a thousand or two military and intelligence advisers behind.

His previous post is here if you want the details. But they didn’t meet their objectives of course.

And that led Andrew Sullivan to ask this question – “How did the US get into a situation that destroyed the last global empire?”

But he admits he knows why:

That was where al Qaeda was based when 19 men with not even a single bomb were able to murder thousands in America. We went there to prevent another. I supported it fanatically. But all these years later, I can’t help wondering if it was a giant trap. If someone had told me that the US would occupy Afghanistan for eight years and launch a huge counter-terrorism operation across the globe and still not have captured Osama bin Laden, and watched as al Qaeda built a new base in liberated Iraq (since cornered at enormous expense) and Pakistan (still very much alive), and elsewhere around the globe, I would have been incredulous. Yes, I know that al Qaeda is weaker than it once was – partly because of the dedication of Western intelligence, partly by military power, partly by their own record of murdering Muslims – but the costs and benefits seem increasingly out of whack.

And he knows the sunk costs:

Afghanistan, like Iran, presents an excruciating set of choices, which is why I find the caution and deliberation of the current administration a welcome change of pace (although, to be fair, Bush was fast moving in this direction in his second term). But any review must include the basic question: are we engaging in a rational deployment of resources? Did 9/11 psychologically mold us to over-estimate the real toll of terrorism on the West’s actual interests? If terrorism claims a minuscule number of Western lives in comparison with, say, smoking, have we been conned into a global war that could actually cripple the West rather than protect it? Or would a self-interested retreat provoke a more dangerous attack in due course?

See Kenny Rogers, above, on knowing when to walk away, and when to run. Perhaps Sullivan is humming that tune:

I don’t know the answer to this question. But I do believe it needs to be asked. Or we will have learned very little from the war we so righteously began and have waged at such expense, as the West’s fiscal footing gives way underneath.

And in Slate, Fred Kaplan is a bit more thorough, reminding us that when Obama agreed to send 21,000 more troops to Afghanistan six months ago, he said this – “We will not blindly stay the course,” and we “will not, and cannot, provide a blank check.” Kaplan says that’s precisely the dilemma:

His rethinking of the whole business now may stem, in part, from a realization that a blind journey and a blank check are exactly what loom before him.

As senator, presidential candidate, and commander in chief, Obama has always stressed that his aims in Afghanistan were “limited” – not the ambitious and impractical vision of turning the place into a Western-style democracy (or, as Defense Secretary Robert Gates derided the notion, “a central Asian Valhalla”) but rather a hard-core campaign of disrupting and defeating the Taliban and preventing al-Qaida from using the country as a “safe haven” for global terrorism once again.

It may be (I don’t know for sure, and I doubt anyone on the outside has any great insight on the matter) that Obama has only recently come to understand that, according to classic counterinsurgency (COIN) doctrine, his “limited aims” cannot be accomplished by limited means; that simply chasing insurgents from one hillside or valley to another isn’t going to turn the tide; that COIN, if it has much chance of success, requires an ambitious agenda of nation-building, a strategy – and enough troops and resources – to protect the Afghan people so that their government can supply justice and basic services, which will in turn inculcate popular loyalty to the government and thus dry up support for the insurgents.

In short, if you want to do this right, even his “limited aims” – get the bad guys and establish some stability – might take far more than half a million troops, and several decades. Is that worth the cost? And does it recover any of the sunk costs, what has already been spent?

Kaplan argues there are two choices here:

First, is Afghan President Hamid Karzai likely to rally the support of his own people, especially given the massive fraud in the recent election? (If he doesn’t rally this support, counterinsurgency is doomed to fail; this, the top U.S. military leaders acknowledge.)

Second, given the vast amount of blood, treasure, and time that a COIN campaign requires under the best of circumstances, are the prospective benefits worth the cost?

He says there’s another way to ask that first question:

Assuming Karzai is re-elected (all the ballots, including the phony ones, have not yet been counted), is there any way that the United States and NATO can prod him to take steps that might broaden his legitimacy and regain the Afghan people’s trust?

He suggests benchmarks might do the trick, and you can follow him on that. It might work. But he says there is a more basic question to consider, which Obama may actually be considering. Is this war worth fighting at all? The “most common rationale for war” seems to be the need to destroy all traces of those who launched the attacks of September 2001. But, citing Stephen Biddle, Kaplan says that may be wrong-headed:

As top generals concede, al-Qaida no longer has a presence in Afghanistan, and other unstable countries (Yemen, Somalia, and Sudan, among others) could offer Osama Bin Laden more secure “safe havens.” We could send troops to those places, too, but, as Biddle notes, “we would run out of brigades long before bin Laden runs out of prospective sanctuaries.”

There are of course serious concerns:

The one plausible nightmare scenario that could threaten US interests, he says, concerns the stability not so much of Afghanistan but of its neighbors, especially Pakistan. If the United States withdrew, and the Taliban recaptured Afghanistan, al-Qaida – whose fighters are currently perched along the Af-Pak border in the frontier territories – would have much more freedom of movement, a much larger base of training, supplying, and staging for cross-border operations, which could threaten, and eventually topple, the secular government of Pakistan and thus hand over Pakistan’s nuclear arsenal to Islamist terrorists.

Even this danger, Biddle says, “should not be exaggerated.” The connection between “U.S. withdraws” and “al-Qaida captures Pakistan and its nukes” is hardly certain; there are many in-between points along this line, each with its own set of probabilities. Finally, even if Western troops did help stabilize Afghanistan, Pakistan may fall apart anyway.

So nothing is certain, not that it matters:

Several columnists, hawkish analysts, and military officers have put out the word that Obama has two choices: go all the way in or get out. The motive here is to get Obama to go all the way in, since it’s extremely unlikely that he’ll withdraw completely.

Kaplan suggest that’s nonsense, and “it may be that a more modest goal can be accomplished, though less efficiently, by some option in between.” But obviously you first have to escape the sunk costs dilemma.

That’s not helped by a chattering class that “treats foreign policy like a theater of machismo” – or so says Gene Lyons in Is Obama Man or Mouse?

…it’s in Afghanistan where the Obama administration has to decide whether it can summon the political courage to reverse the primal error of the Bush administration’s vaunted “war on terror.”

It’s simply not possible to make war on an abstract noun. Having panicked after 9/11, Bush/Cheney magnified al-Qaida, a band of stateless fanatics capable of mass murder, but not of warfare, into an existential threat as grave as the Soviet Union.

Failing to capture or kill Osama bin Laden, they attacked Iraq instead. That left U.S. and NATO troops underequipped and overexposed in remotest Afghanistan, previously a synonym for the end of the earth – a land of 40,000 remote mountainous villages, extreme poverty, near-universal illiteracy, religious zealotry and endemic tribal warfare.

And this odd place is where you have to be a man, not a mouse:

Afghans don’t merely hate occupying foreigners; they see large numbers of their “countrymen” – Uzbek, Tajik, Hazara, Turkmen, Baluch, Pashtun – as foreigners, too. If Iraq would divide itself into three countries, Afghanistan might become eight or ten.

Unlike the relatively educated, urbanized Iraqis, moreover, most rural Afghans have nothing to lose but their honor. They see the Kabul government – quite accurately – as a nest of smugglers and thieves. They’re historically as difficult to seduce as to subdue; bribery works best.

Can “nation-building” work there? Stanley McChrystal wants to give it a try. Lyons says it’s doubtful. And there is the cost.

Lyons wants to look at it this way, that the real stakes aren’t strategic, they’re political:

Terrorists can’t defeat the United States; the United States can only defeat itself. So long as the United States has a large, costly military presence in Afghanistan, however, it’s harder to blame future terrorist attacks on Obama.

Whoever leaked McChrystal’s report wanted him reminded of that publicly. It’s political blackmail and should be disregarded.

So it seems everyone is stuck in the sunk costs dilemma. And the only way out is if everyone starts singing that Kenny Rogers gambler song. But these days half of America would stone the guy for singing such things.

About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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