Let’s say you spend $25 on two movie tickets, popcorn and a soda. You settle in to the movie and you quickly realize it stinks. What should you do? Do you leave and accept that you’ve wasted $25? That concept is hard for a lot of people.
Another important economic concept is opportunity cost. What are you giving up by staying in the movie? Would you rather go get ice cream or go to a bookstore or go for a walk? The money you spent on the movie is gone. You won’t get it back if you stay and watch the movie any more than you’ll get it back if you leave. Sunk cost tells us that past costs that are irrelevant to future decisions should be made just that – irrelevant.
The lesson here is important. It can seem kind of silly and trivial when we’re talking about movie tickets, but what if we’re talking about a war? The Washington Post has an article that speaks right to this subject. On discussing the recent decision to end combat operations in Iraq, the Washington Post says,
“America has spent so much blood and treasure in Iraq that it would be wrong to walk away completely, however attractive that may seem politically.”
When so many have died because their country asked them to, it can seem almost callous to call their sacrifice a “sunk cost.” But the antiseptic term aside, it makes no sense for the United States to stay in Iraq simply because we have paid such a price to be there.
In fact, far from being callous or uncaring, recognizing that we have no further need to be in Iraq is the greatest way to honor the ultimate sacrifice made by so many. If we continue to engage, for no other reason than that we’ve been engaging, we face the great likelihood of more deaths. I don’t see how we can honor past deaths by ensuring more. The troops and civilians that have died, I have no doubt, will rest in peace knowing their sacrifice paved the way to ensure that their fellow brethren don't have to die.
There are two popular arguments for continuing combat operations in Iraq. The first, which we just discussed, is that it would be dishonorable to the fallen troops to leave before the “job is done.” The second, related argument is that we can’t leave until Iraq is able to stand on its own. As stated in the same Washington Post article,
"The Iraqi people gave everything for the democratic system, but so far, they have not tasted the fruits."
There is another important economic lesson to be learned here. Economics, despite its depth and breadth, despite its complex formulas and theories, is very simple. In the end, even at the highest, most complicated levels, it always comes back to Econ 101 – supply and demand. Democracy will only take root in Iraq if people demand it. How can we tell if people demand it or not? Stop subsidizing it.
The American presence in Iraq is propping up the government and even democracy. We will never know if the “job is done” unless we leave. Only when the Iraqis have to pay for it themselves, only when it’s not being given to them by someone else, will we find out if they have a true demand for the democratic system.
If we constantly say to ourselves that we can’t leave until the job is done, we ensure we’ll never leave because, as long as we’re there, it will be impossible to tell if the job is done or not. If we pull out and democracy stands on its own in Iraq, then we will know we’ve succeeded. If democracy falls, it means –ignoring other complications – that the Iraqis never valued democracy that much anyway and we were wise to stop fighting for something that wasn’t valued.
If we recognize some important economic concepts inherent in the war in Iraq, sunk cost, opportunity cost and subsidization, the tough decision to end combat operations becomes a little bit easier. Not only is it the economically smart thing to do, it is the most humane thing we could do for our troops and the most honorable thing we can do for the fallen. Finally, and not unimportantly, we owe it to Iraqis to give them a real chance at self-determination.
