Sunk Costs And Old Guys
I’m an old guy. I hope that I am wiser and make better decisions than I did when I was younger. One of the ways I learned to make financial decisions in business school was to ignore sunk costs, those resources already spent and which cannot be recovered. That you spent money on something should not affect whether or not you invest more money in the thing you already invested in. That’s what is known as throwing good money after bad. The bad money is the sunk cost and sunk costs should never affect your future investment choices.
I’ve been thinking about this in the context of events in Israel and Gaza.
Israel and its allies, if they have any real ones besides the United States, need to be focused on what the goals of the next several moves are. If the major goal of any further military operation is to eliminate Hamas, Israel can stop right now. They will not be able to do that by invading Gaza. They can surely kill a lot of people, many of whom will be innocent Palestinians who weren’t around when there was last an election in Gaza (2006) and many will be Hamas fighters, although undoubtedly none will be the Hamas leaders who are probably in Beirut or Qatar. Furthermore, Hamas is alive and well in the West Bank as we saw with our own eyes in Ramallah recently.
If the goal is to avenge the 1300 dead Israelis, Israel has probably already done that with its bombing of Gaza since October 7.
The real goal is how do you make Gaza the Singapore of the Middle East under the control of a duly elected, non-terrorist government. That’s a tall order and perhaps it’s time for Mr. Biden to use that aged wisdom that is considered a vulnerability by many as our election nears, and suggest to Mr. Netanyahu that killing ten thousand more Palestinians and probably hundreds of Israeli soldiers, is not the answer to the sunk cost of the already dead.
This is going to be a tough sell in Israel where all the population wants is the hostages back and to feel safe again. And revenge. It is likely that once the immediate crisis subsides, Mr. Netanyahu and his right-wing government will be called to task for not doing the most important job of any Israeli government, keeping its people safe. There can be no doubt that Mr. Netanyahu’s attempts to stay in power, remain out of jail, and emasculate the judiciary caused him to drop his guard. His strategy of trying to weaken the Palestinian Authority by allowing Mahmoud Abbas to remain in power during the seventeenth year of his four-year term was a mistake as was believing Israel had Hamas in a box.
In the attached op-ed from The New York Times on October 16, Lydia Polgreen calls for Biden to exert some wisdom on this volatile situation. It’s not about restraint or vengeance. It’s about doing what is best for Israel in the long-term. That is making peace and doing business with as many of its Sunni neighbors as possible while trying to weaken the forces of religious zealotry and repression guiding Iran and its surrogates, Hamas and Hezbollah.
Democracy and freedom are under attack on many fronts—in Ukraine, in Tehran, in Gaza, and even in the United States if we here give in to the desire for greater autocracy as a solution to the problems on the border, in the streets, and in the schools. It is time for cool heads to prevail.
It is not at all clear to me that a full-fledged invasion of Gaza by the IDF is a superior strategy to slow, intense diplomacy among third parties to get the hostages out (remember it took 444 days in Iran in 1980) alive. If Netanyahu can do that, his legacy might be preserved. If he invades Gaza and kills thousands, the ire of the world will be increased against Israel and Israel will have gained nothing in this horrible situation.
What’s the long-term goal? What’s the best strategy to get there? And sunk costs, even if it is human lives, should not affect what has to be dispassionate decisions going forward.
Could the older, wiser Biden help? We’ll see. He’s there now.