“Even legislators recognize that the $2 trillion stimulus passed by Congress won’t be sufficient to sustain the American economy in the face of the coronavirus pandemic…”
American University Professor of Economics Mary Eschelbach Hansen and her co-author and spouse Bradley A. Hansen, University of Mary Washington Professor of Economics, have co-published an editorial in the April 24th Washington Post about the severity of the current economic crisis and one possible solution: making it simpler for businesses to petition to reorganize their debts in bankruptcy. This measure, they write, “automatically stops debt collection and can prevent what President Herbert Hoover called ‘futile and destructive’ liquidation of businesses.”
The op-ed received the very first Stanton Foundation award for the Applying History to Clarify the COVID-19 Challenge. The selection committee wrote that it was “particularly impressed with the detailed legal history of bankruptcy in the Great Depression that makes a clear, compelling argument for a concrete policy prescription.”
Hansen said that she and her spouse are honored to have received the prize. “I am particularly grateful that the Stanton Foundation established the prize to promote useful history. When a problem is large, or rare, deep knowledge of economic history is essential for developing policy solutions.”
Mieke Meurs, professor and chair of American University’s Department of Economics, says that the award was well deserved. “Professor Hansen and her co-author highlight an important way that the COVID-19 downturn differs from normal recessions, destroying the strong small businesses along with the weak, creating particularly widespread devastation that will dramatically slow economic recovery after the epidemic recedes,” said Meurs. “Their analysis of the ways that failure to protect small businesses helped to fuel the Great Depression is an excellent example of how understanding of history can provide the tools to prevent its repetition.”
Stanton Foundation Prize
The Applying History to Clarify the COVID-19 Challenge was established in response to a call by the American Historical Association (AHA) and was judged by the Applied History Project at the Harvard Kennedy School’s Belfer Center.
In early April, the American Historical Association issued a call for historians to apply their skills to help illuminate the challenge that COVID-19 poses to our nation and the world. As the AHA Council wrote: “Historians can…play an important role by providing context, in this case shedding light on the history of pandemics and the utility of that history to policy formation and public culture.”
To support the AHA’s call to action, the Stanton Foundation launched the weekly contest to recognize the best new article or op-ed that illuminates current challenges and policy choices during the coronavirus crisis by analyzing the historical record, especially precedents and analogues.
Bankruptcy in America
Hansen and her husband also co-authored Bankrupt in America: A History of Debtors, Their Creditors, and the Law in the Twentieth Century (University of Chicago Press, 2020), which traces how and why bankruptcy was transformed from an infrequently used provision in the Constitution, to an indispensable tool for businesses, to a central element of the social safety net for ordinary Americans — all in less than a century.
“The op-ed is based on a chapter of our new book,” said Hansen. “Over the past weeks, we watched our neighborhood businesses board themselves up. We knew from our study of bankruptcy in the Great Depression that many would not reopen unless they got relief from the collection efforts of their landlords, mortgage holders, and other creditors. We wanted to draw policymaker’s attention to a tool that was already in the toolbox and just needed to be plugged in.”
Hansen is a well-known expert in US social policy. She is widely published in the fields of child policy, bankruptcy, and economic history. Her work addresses key issues in race, gender, and economic inequality. Her research has been funded by the National Science Foundation, the National Institutes of Health, the Alfred P. Sloan Foundation, and the Institute for New Economic Thinking. She has been quoted or cited by news outlets including WAMU, The Economist, Fortune, CNN, and the LA Times. She has given public testimony before the DC City Council and in Federal District Court.