It's encouraging that reports from Washington suggest the administration has settled on a new strategy for confronting the Islamic State. Our reluctance to commit to a strategy as we sought, unsuccessfully, to find a middle ground that would minimize risks while serving contradictory objectives has been costly to the stability of Iraq and to our goal of removing Bashar al Assad's regime from Syria.
Sometimes it is less appealing to confront one enemy than to avoid advantaging another enemy. Thus England tolerated the rise of Nazi Germany, a growing threat, rather than confront it to the advantage of Bolshevism. In the Middle East, the example is quite exquisite because the phenomenon is double-sided: We cannot truly commit ourselves to the removal of al Assad because we believe his ruin will offer rich opportunities to the Islamic State, and we are equally reluctant to take some aggressive measures against the Islamic State in Iraq and Syria because we surmise our success would mean further empowering Iran and increasing Tehran's influence in Baghdad and Damascus. We are paralyzed because we prefer foregoing potential but significant gains to enduring certain losses whose significance is no greater.
I suppose this a kind of strategic "loss aversion." Many studies in behavioral economics have confirmed that a consistent majority of people would rather forego a gain than suffer a loss, even when the outcomes are statistically indistinguishable. For example, psychologists have repeatedly demonstrated that an overwhelming majority of subjects would prefer to avoid a $1.00 surcharge rather than receive a $1.00 discount. Moreover, subjects routinely report that they would rather accept a 50 percent chance of losing $2.00 than a certain loss of $1.00. Similarly, perhaps, states are reluctant to risk giving an uncertain advantage to an enemy, even if inaction means certain gain for another enemy. This irrationality is of more than academic interest when we actually forego potential gains that would exceed our losses.
But, one may object, this can be no more than a metaphor — states don't have "psychologies." Yet their leaders do, and they may identify the wins and losses of the state with their own. Wars fought to defend the national honor may have such a basis (as well as, of course, having practical bargaining effects).
Then one may object that nothing is lost by inaction because states possessed nothing of materiality. Here the answer is: hope. Some of Samuel Johnson's most acute — and disturbing — insights about human nature occur in his remarks on hope. "Hope," he wrote, "is happiness and its frustration[s], however frequent, are less dreadful than its extinction." Giving up something is giving up hope, which is much more costly than foregoing a receipt.
This paralysis is nevertheless approvingly encouraged by the counsels of inaction whenever the available options are fraught. "Don't just do something, stand there!" may be one way of characterizing this advice. By avoiding action, at least we avoid making things worse. But this ignores the fact that things may get worse without our help, and indeed inaction may be more costly to our interests because we have not been able to mitigate our losses through action. It may even be the case that the wrong decision — a decision in favor of a course of action that leaves us less well off than we would have been, had we acted otherwise — might still be better for us than inaction. That is often the case where the costs of inaction to the strength of our alliances outweigh the immediate costs of acting. It's often said that our alliance partners do not accord their relations with us more weight when we act recklessly, and that is doubtless true. But on whom would you rely in a crisis: the partner who comes to your aid even when, in the short term, it may not be in his interest, or the partner who carefully weighs the benefits of each action?
This is tricky; after all, didn't the arguments that a withdrawal from Vietnam would undermine our European alliances keep us in South Asia long past a sensible departure date? And how do we measure such imponderables? How does a "gain" for an increasingly assertive Iran measure against a "loss" to the deadly Islamic State?
This example of the phenomenon of "loss aversion" — perhaps it is best thought of as a metaphor rather than as a matter of microeconomic analysis — is also manifesting itself in the debate over the proposed agreement with Iran to restrict its nuclear capabilities. We are rightly concerned that an infusion of more than $50 billion will strengthen the theocratic state in Tehran and find its way into the forces of terror that the Iranian regime has so notably deployed. We are loath to give up a sanctions regime that has been a quite remarkable achievement in its breadth and coherence. Many thoughtful critics would rather forego the conceded benefits of a 15-year hiatus in Iran's nuclear development than lose a sanctions program that restricts so many of the regime's other activities. Alas, we cannot depend upon the endurance of the existing sanctions, and should the treaty fail to be enacted, we are likely to reap the worst of both worlds: an unrestricted program of nuclear development by an Iranian state that has been greatly enriched by the removal of those sanctions that the United States does not control. And here, too, the neglect of the impact on our alliances that is a feature of loss aversion in other contexts could well prove to be the greatest cost of all. By contrast, in the aftermath of the Iran agreement, restoring confidence in their relations with the United States is the first item on our agendas with Israel, Saudi Arabia, Jordan and the Gulf states.
Here, we must depart from the Great Cham, Dr. Johnson. For he warned us to "remember that we only talk of the pleasures of hope; we feel those of possession, and no man in his senses would change the last for the first."
