Business Lesson From the Vietnam War
I just finished watching the PBS series on the Vietnam War and found the experience powerful and educational. My only disappointment was that every soldier they interviewed and followed through the war ended up in the anti-war movement (or in the case of one POW, his wife did). I agree with their perspective, and see the whole war as a giant waste, but unlike most people on campus nowadays, I like hearing from people with points of view that are different than mine. I get nervous just having my expectations reinforced. Surely there are veterans who thought the war was winnable and the US largely honorable -- I know some of these folks -- but we really do not get to hear their voices very often. But with this proviso, the series was terrific.
One of the most important -- and hardest -- lessons of business is to think at the margin. Perhaps the toughest corollary to this is: Sunk costs are sunk. I don't care how much we have already spent on that factory -- that money is gone -- if it is going to take another $100 million to finish, are the benefits of the factory worth that $100 million? If not let's stop work on it no matter how much has already been spent. I have worked to teach this to my wife. I don't care how much the tickets for the show on Sunday night cost -- that money is gone -- isthe enjoyment we expect to get from the show worth the remaining costs we face (getting in the car, fighting for parking, etc)?
Transit projects thrive on the sunk cost fallacy. Agencies explicitly try to get some money, spend it, and then claim the rest of the money has to be spent because we have already "invested so much". Here is an example:
But what is really amazing is that Chicago embarked on building a $320 million downtown station for the project without even a plan for the rest of the line -- no design, no route, no land acquisition, no appropriation, no cost estimate, nothing. There are currently tracks running near the station to the airport, but there are no passing sidings on these tracks, making it impossible for express and local trains to share the same track. The express service idea would either require an extensive rebuilding of the entire current line using signaling and switching technologies that may not (according to Daley himself) even exist, or it requires an entirely new line cut through some of the densest urban environments in the country. Even this critical decision on basic approach was not made before they started construction on the station, and in fact still has not been made.
Though the article does not mention it, this strikes me as a typical commuter rail strategy -- make some kind of toe-in-the-water investment on a less-than-critical-mass part of the system, and then use that as leverage with voters to approve funding so that the original investment will not be orphaned.
It amazes me that no politician in California has shut down the insane California high speed rail project, but I will bet you any amount of money that when they do the rail agency will be screaming that it can't be shut down because they have already spent billions of dollars and shutting them down would waste all that money. Sorry, but that money has already been wasted, the point is to avoid all the additional money that will be wasted going forward.
The government decision-making around the Vietnam War seemed like nothing so much as a series of sunk cost fallacies. We can't give up now, not after so many brave men have already died! That last sentence could be the title of about half the episodes. But sunk costs shouldn't matter in a go-forward decision -- but they do matter to ego and prestige. Politicians talk about things like "the nation's honor" but what really matters at its heart is their own ego and perception. Abandoning sunk costs, for the real humans making decisions (whether Presidents or CEOs) is about confessing past errors of judgment. Its a hard thing to do, so hard a lot of extra people had to die in Vietnam before it could happen. I can't find a transcript but Kissinger had some amazing quotes in Episode 9 that pretty baldly outline this problem.
MJ:
That link to the Heartland Institute's page isn't working.
April 12, 2018, 9:15 amCR:
If you look at Vietnam not as a war but a battle in a war (the cold war) does this change your view. The battle was over SE Asia. If not Vietnam where or was it not worth fight for SE Asia. It was a terrible place to fight but generals don't always get to pick where battle take place
April 12, 2018, 9:36 amGeorges Lacombe:
You are probably aware of the excellent book from Barbara Tuchman, "The March of Folly". There she tells about Vietnam war and other history events when leaders insisted in a error despite of all evidence that they were wrong. One of the reasons she mentions is exactly this "We have invested so much already".
April 12, 2018, 9:48 amsteamboatlion:
"The government decision-making around the Vietnam War seemed like nothing so much as a series of sunk cost fallacies."
Not to mention Iraq and Afghanistan. How else, other than the sunk cost fallacy, can you explain us still being there 15-16 years later with no idea what victory actually looks like? And despite all the criticism of Obama's Syria policy, looks like Trump is taking us further down that rabbit hole as well...
April 12, 2018, 12:13 pmSamWah:
Is what Chicago did surprising to anyone? The California "high-speed" rail line? Certainly not to me.
April 12, 2018, 12:17 pmNot Sure:
"the rail agency will be screaming that it can't be shut down because they have already spent billions of dollars and shutting them down would waste all that money."
They sure will. They might even believe it, but what they're really saying is shutting them down will put their phony-baloney jobs at risk.
April 12, 2018, 4:58 pmirandom419:
Vietnam taught us the value of precision bombing to avoid civilian casualties. One pilot recounted how he bombed barrels of fuel and flew over the tanker on the way back, leaving it intact.
April 13, 2018, 3:28 amJohn Moore:
I've studied the war in some detail, and served there in 1968. I know that the war was winnable, because the war was won - on the battlefield - by 1973. But, it was too late - the media had turned against it, and Nixon was in trouble.
Specifically... The Johnson/MacNamara/Westmoreland war plan was a failure. The war against the North was based on slow escalation until they caved. That failed to take into account the willingness and ability of a totalitarian regime to take horrific destruction and casualties. The war in the South was fought as an exercise in killing enough of the enemy, in large unit engagements, that he would quit. It failed for the same reason.
In mid to late 1968, Westmoreland was replaced by Abrams. Johnson was replaced by Nixon. Other important personnel changes happened. The strategy in South Vietnam was changed to protecting the populace and turning the ground fighting over the the ARVN (South Vietnam Army), and body counts were banned. The strategy against the North was badly constrained by political realities. Also, contrary to the received wisdom, the Tet Offensive (and two subsequent 1968 offensives) had been a terrible failure as a military operation - the Viet Cong was basically destroyed. This weakened the efforts of the North operating in South Vietnam.
By late 1972, the South was pacified, except for a few remote provinces. High ranking US officials, including the ambassador, could drive around the countryside without any escorts, and often did so. The North launched a massive invasion, and it was thrown back even though all US combat ground troops had left - the ARVN, aided by US and South Vietnamese air support, were sufficient to again hand the communists a sharp defeat.
I recommend Lewis Sorley's "A Better War" to those who want to get past the smog of disinformation that serves as the majority view.
But, they didn't quit. Nixon finally did what should have been done in 1965 - relatively unrestricted bombing of North Vietnam, combined with mining Haiphong Harbor to interdict resupply. I say relatively because the dike system was still off limits, and civilian targets were prohibited. But, after two weeks of that bombing, North Vietnam decided to agree to a peace.
That peace held for two years, during which time the veto-proof Congress, in violation of agreements with South Vietnam, banned all US combat air operations in the theater, and radically cut supplies to the South. The result, in 1975, was a weakened South, while the North had been reinforced with massive shipments of armaments from the USSR, and of course their morale was up because of cowardly congresional actions. Their final invasion, which included more tanks than George Patton ever commanded, conquered the South in a couple of months of hard fighting.
The shame of US actions - specifically, the Democratic Party - is beyond excuse!
As to whether we should have gone in - my answer is "yes" - we were fighting Soviet expansionism, and the Vietnam war probably saved Thailand and the Philippines. But, with the caveat that we authorize the military to win early.
Vietnam, and then Iraq, have shown that the US has no staying power in a war. Our craven media will enable craven politicians to hand us defeat, every time. The only reason we are still in Afghanistan (remaining is a mistake in my opinion), is that Iraq provided the left a war to hate, so Afghanistan continued to provide a fig leaf that the Democrats were willing to defend the country.
April 13, 2018, 7:13 pmDanSmith:
Outstanding bit of analysis. Too bad many Americans haven't heard it. Lewis Sorley got a few minutes of air time in Ken Burns' Vietnam documentary, not nearly enough to offset the generally negative view expressed by the veterans in the program. I can't blame them since they suffered from the flawed McNamara-Johnson-Westmoreland strategy.
April 19, 2018, 11:31 am