George Rebane

This is a truism in the world of financial decision making, why?  Because sunk costs are just that, irretrievable.  So any decisions about what to do in the future should only consider costs that you have yet to incur; in short, things you can still influence.

How many times in political debates have we heard, ‘Well, where was (Bush1/2, Clinton, Reagan, Carter, …) when (an event similar to one confronting us now) happened?’  The referenced event was evidently a screw-up, and the blame for its occurrence is laid squarely at the feet of the designated politician.  The argument is presented as some type of a self-adulatory winning stroke in a debate about a current politician who has just committed or is about to commit a similar screw-up.

Today we see this kindergarten coup de grace being frequently used in broadcast debates, and most certainly in the printed media that includes the blogs.  The basic message of the retort is that it’s OK for my guy to screw up now, since under similar circumstances your guy screwed up then.  With such irredeemable logic there can be no debate about what correctives could be applied today using what we learned from yesterday.

But if we do want to decide on a better path for tomorrow, then dredging up a sunk cost to justify the intentional payment of one more is just plain idiotic.  Let’s learn from the past, and start with the understanding that, going forward, sunk costs don’t count.