There is something strange about Americans—equal parts heartening and problematic. Americans believe, perpetually, that today is a particularly good day. In this way, we are unlike the residents of other similarly wealthy nations. And that optimism is endearing, sure, but when coupled with the knowledge that Americans vastly overestimate the potential for economic mobility, it becomes concerting. It may set up a trap: the possibility that a person believes that everything will be okay, despite mounting evidence to the contrary.
“The Benefits of Bankruptcy” tells one such story. In 2012, Roddey Player’s family business of sixty years, Queen City Appliances, filed for bankruptcy. Just before the Great Recession, Queen City Appliances borrowed money. A lot of it, enough to expand from six stores to seventeen. Then the housing bubble burst, and no one was in the market for new appliances.
The family business did the best it could to weather the storm. At one point in the episode, Player says, “I don’t want to be called the eternal optimist, but I always just felt it couldn’t get any worse and it couldn’t get any worse and it couldn’t get any worse.” But it did. In 2012, Queen City Appliances declared bankruptcy; Player and his eighty-three year-old mother went into a lawyer’s office, and signed the papers.
Within minutes, a short story about the embarrassing event went up on the local newspaper’s website. Worse still, bankruptcy is an open matter—how much you owe and to whom you owe it is now a matter of the public record. Player’s mother felt so much shame that she was terrified to go to church the next Sunday.
According to Planet Money, in most countries, this would have been the end of our story: the business would be liquidated to service its debt, and the Player family and the business’s employees would need to find a new source of income. But in the United States, occasionally things work out differently. Enter “Chapter 11.”
Chapter 11 refers to chapter eleven of the bankruptcy code, which allows a bankrupt business, with the approval of the court and its debtors, to stay open and restructure in order to pay its due. The list of debts Player provided to the court was 138 pages long and included line items that ranged from freight bills for hundreds of thousands of dollars to forty dollar customer refunds. Accordingly, he developed an incredibly specific repayment plan, which was then approved by the court and his debtors—Queen City Appliances was allowed to stay open.
Planet Money suggests that this system of forgiveness is relatively uncommon and one of the factors that led the United States to bounce back from the recession more quickly than other nations. In the wake of the downturn, France, Ireland, Germany, Spain, and Italy have all made changes to their bankruptcy codes to incorporate an element of this American forgiveness.
The thought here is that it should be okay, in some circumstances, to take risks—to attempt to grow your business, in order to grow the economy and create jobs. And if it doesn’t work out, well, sometimes that’s okay.
I would never be so brazen as to say that Chapter 11 bankruptcy laws are the reason that more Americans are having a particularly good day today, and everyday, but in a sea of gerrymandering, unregulated political spending, and mass incarceration, it was nice to learn about something new that someone can be proud of.
When writing the Declaration of Independence, Thomas Jefferson adapted John Locke’s idea of fundamental rights from “life, liberty, and estate [property]” into “life, liberty, and the pursuit of happiness,” a change I’ve always been quite fond of. It is hard to define what “the pursuit of happiness” means in practice, and I mourn that its definition is not debated more often. Perhaps, if we talked about it, the right to pursue happiness would come to mean that one must have a real opportunity to be upwardly mobile, or to earn a living wage, or to have access to affordable and adequate healthcare; perhaps it wouldn’t. And yet, maybe the notion does live, latent, quiet, an essential part of American optimism. The reason that today is a particularly good day. And Planet Money seems to have found a chance at happiness in an unexpected place—a place that one might typically expect to be, well, bankrupt.
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