Bankruptcy's Home Economics

Abstract

This essay began its life as a commentary on Elizabeth Warren’s article “The New Economics of the American Family” at the American Bankruptcy Institute's 25th Anniversary Symposium of the Bankruptcy Code in 2003. (Both the Warren article and my commentary were published in the symposium in the American Bankruptcy Institute Law Review.) “The New Economics of the American Family” was drawn in many respects from then-Professor Warren’s co-authored book, The Two Income Trap. The essay refers to both, though it puts particular emphasis on the article. The essay begins by briefly describing the basic thesis of the article-- that today's two-income families are actually worse off financially than their single-income counterparts of a generation ago--and by assessing both its power and its potential limits. The essay then considers then-Professor Warren's proposals for responding to the most obvious causes of the financial predicament that so many American families find themselves in. It concludes by exploring several of the myths and morals of bankruptcy, and by outlining several of my own candidates for reform.

Keywords: Debtor-creditor, bankruptcy, law & economics, Elizabeth Warren, two-income trap, The New Economics of the American Family, causes of financial predicament, reversing special treatment for home mortgages, usury regulation, disability insurance, universal school vouchers, myths & morals of bankruptcy

JEL Classification: G51, K35, K36