Failing Better

Abstract

Puerto Rico. Detroit. Stockton. Arkansas. Each of these places stands as a testament to the import of municipal debt crises and their capacity to immiserate millions of people. Such crises gut core public services, devastate economies, and turn places into shadows of their former selves. So new scholarship that grapples with those crises, promising to better understand and ameliorate them, well deserves the public’s attention.

All the more so is David Schleicher’s new book, In a Bad State, worthy of such attention. The book offers a novel conceptual framework for understanding municipal debt crises, one that will lay a foundation for the field going forward. More than that, Schleicher translates that framework into recommendations for officials facing a municipal debt crisis, offering ways to ameliorate those crises and the very human catastrophes they wreak.

But there is also much more to be said. Using Schleicher’s work as a jumping-off point, this Review details the causes of municipal debt crises. In doing so, it reveals the structure of modern municipal finance, how that structure lends itself to crises, and what the causes of those crises tells us about how best to hone the responses to crises to minimize the inevitable human suffering that arises in their wake.

Keywords: municipal finance, bankruptcy, local government, public finance, federalism