August 08, 2011
In an August 8 op-ed written for Project Syndicate, HLS Professor Mark Roe looks at the current U.S. debt crisis through the lens of what he calls ‘America’s first debt crisis:’ the one following the Revolutionary War. Roe argues that the U.S. needs leaders “with the authority and willingness to repeat a modern version of the deal-making example set by Hamilton, Jefferson, and Madison 200 years ago.”
“After independence from Britain in 1783, America’s states refused to repay their Revolutionary War debts,” writes Roe. “The country … could not solve its financial problems, and eventually those problems – largely recurring defaults – catalyzed the 1787 Philadelphia convention to create a new United States.”
An expert on corporate law, finance, and bankruptcy and reorganization, Roe was appointed David Berg Professor of Law in 2001. Roe has written several books, including the casebook “Corporate Reorganization and Bankruptcy: Legal and Financial Materials” (Thomson Reuters/Foundation Press 3d ed. 2011). He is also the author of the article "The Derivatives Players' Payment Priorities as Financial Crisis Accelerator," which was published in the Stanford Law Review in 2011.
Roe is a regular contributor to the Project Syndicate series ‘The Rules of the Game.’
America’s first debt crisis
By Mark Roe
The West is ensnared in a debt crisis. The United States, as everyone knows, came perilously close to defaulting on August 2, and Standard & Poor’s downgraded US debt from AAA on August 5. In Europe, the outgoing head of the European Central Bank recommends more centralized fiscal authority in Europe in order to deal with likely defaults by one or more of Greece, Portugal, and Spain.
Both Europe and America can learn a lesson hidden in American history, for, lost in the haze of patriotic veneration of America’s founders is the fact that they created a new country during – and largely because of – a crippling debt crisis. Today’s crises, one hopes, could be turned into a similar moment of political creativity. … read the full op-ed on Project-Syndicate.org »