Okay. So would you like to start by saying your name and your time?
Sure. I'm Kristen Van Sweetnam in the law faculty here at Oxford, and my title is Professor of Law and Finance.
Wonderful. And without telling me your entire life story,
but just going from where you first got interested in the subject or interested in now to how you got to be here in Oxford?
Sure. I'll do my best to make this a short story.
Well, I never intended to become an academic,
so I grew up in Australia and I did my undergraduate studies in Australia and I only came to Oxford because I
received a scholarship called this Robert Menzies in Law Scholarship that enabled me to do the Bachelor of Civil Law,
the BCL degree, which is a taught degree, and then the MPHIL,
which is a one year the master of philosophy and law degree, which is a one year research degree.
And it was in doing that second degree that I discovered how much I enjoyed research.
And so I applied to stay on here to do the dphil and thought of becoming a practising lawyer.
Yes, I had planned to go I planned to do what many people plan to do when you graduate in Sydney,
which was to to go to the bar and be a barrister in Sydney.
And I really had no I think I had no idea what it even meant really to, to be an academic or to do research as your job.
And it was only really being here and in particular having that chance to do that one year research degree,
which I never would have been able to do without full funding.
That is what opened my eyes to what it means to to be a researcher.
And I could see more clearly than I could as an undergraduate what academics did and why what they did was exciting.
And so, yeah, then I stayed in Oxford. I was again very fortunate to get funding to stay, this time from the Clarendon Scholarship Fund.
And so I stayed in Oxford for the Dphil and my dphil was on corporate insolvency law in India.
So I had become interested in corporate insolvency or what you might call corporate bankruptcy law.
When I was in Sydney and I worked for, for a judge who was then the head of the corporations list in the New South Wales Supreme Court.
I then studied that subject here in Oxford on the postgraduate talk program, the BCL, and then made that the focus of my mphil in dphil studies.
And at that time I was and I remain very interested in understanding the operation of these rules in what is sometimes called emerging markets.
And so I focussed in that research project on India and halfway through that process I
decided actually that I'd quite like to have the opportunity to do research for a job.
And after I finished the Dphil,
I then applied for my first academic job and I went to Cambridge and I was there for two years and then I came back here to Oxford.
I hope that's short enough. That's brilliant. Absolutely perfect.
So what they said was one sort of overarching question that gets you back to bed in the morning.
What would you say? Well, how does law and legal institutions so how do laws and legal institutions impact?
Transactions in the real economy. And in particular,
how do laws and legal institutions influence the decision to pursue entrepreneurial projects and the ability to do that in the real world?
So people have a good idea, an entrepreneur has a good idea,
but will that idea ever be pursued, turned into a project that could be beneficial for society?
So my overarching research interest is in how laws and the legal institutions that support laws such as courts.
How does that bundle of rules and norms influence the ultimate decision of the entrepreneur
about whether or not to pursue a project that could be beneficial to society?
For that project, that idea is pursued and their ability to do so very, very succinctly.
Well, I mean, I think that's what most corporate bankruptcy scholars and corporate law scholars are ultimately interested in understanding.
Mm hmm. Mm hmm. And what sort of methodology do you pursue that?
So I work mostly in corporate bankruptcy law, so my broad interest is in what's sometimes called law and finance.
So the interaction between legal rules and institutions on the one hand, and access to finance and the decision to take on finance on the other.
And I work in a sort of specific area of law mostly at the moment, which is called corporate bankruptcy or corporate insolvency law.
And that area looks at or tries to understand how businesses that prove unable to pay all their debts,
to meet all their obligations, how they should be treated by it, by the state.
I'm just wondering about how you gather data. Yep. So in terms of methodology.
So I suppose I would say that I'm a mixed method scholar.
So some of the work that I do is what's sometimes called by legal scholars to be
doctrinal work or what others might call internal analysis or analytical work.
And what that basically means is approaching a body of rules from the perspective of an insider,
someone who understands how the primary sources of law are to be interpreted in accordance with the conventions that that system imposes.
And then working out how you fit those rules together and making claims about the optimal way in which
those rules could be better reconciled or further developed in a world in which laws constantly change.
But again, from the perspective of an insider, so appreciating the limitations that govern the behaviour of each of the players in the
system and essentially abiding by the fundamental rules of the game within the system,
that's what internal or doctrinal work is about.
So some of my work is, is that and that involves basically working with primary sources of law,
particularly cases, but also to some extent statutory provisions,
trying to work out the proper interpretation and to make claims about how they
might be best organised or developed with regard to underlying principles.
So I do some of that work, but because my overarching interest is in trying to work out whether the rules are socially desirable or not,
then that implies that you have to have regard to insights from other disciplines that can help us to work out what
really happens in the real world when a particular rule is applied in the way that you've suggested it be applied.
So I'm not an empiricist myself,
but that means that I have to have a good working understanding of empirical work on the impact of laws in the real world.
And it also means I'm interested in collaborative work so that projects in interdisciplinary collaborative work.
So the project we're going to talk about today is one which involves two people from the law faculty,
me and my colleague Horst Ottumwa, and then an economist from the Side Business School here in Oxford.
And that's been very fruitful in terms of setting the overall direction of the project.
But it's also enabled me in this project to work with some methods which I wouldn't be able to work with on my own because I lack the skill set,
but I can do with a colleague. So I think I'm a mixed method scholar.
I'm not sure that's a very clear answer, but it's the best I can do. And I'm.
So yes, I've written a question here, but it may just show my ignorance and.
And how how does how would you assess the relationship between and I put government policy but it's not just
government policy is it because this case law as well this bundle of of rules and and regulation yeah.
On cases interact with corporate insolvency in let's say in normal times this dealt with.
Yeah this is not a silly question. It's actually a very hard question.
So excuse me. So I should do my best to answer it.
So in, in theory,
you might say that governments could start with a blank slate in terms of how they might decide to treat
businesses or entrepreneurs that have become unable to pay the debt to repay the loans that they've taken on.
You might say, well, anything in theory is available to governments. That's not quite right, because actually most governments around the world,
subject to constitutional or human rights constraints, which govern protection of property.
And that means that to some extent,
governments need always to be thinking about how the rules that they design give due regard for protection of property rights.
And of course, the problem, the key question of interest in any case in which a business is insolvent is what should
a government do about that in circumstances in which there won't be enough to go around?
Right. So how can a government give effect to or give due regard to the protection of private property in circumstances
where you won't be paid in full and you can't be because there just aren't enough assets by definition.
So this is both the property of the business owner and the property of the creditors.
Yeah, yeah. In theory, yes.
But in practice, we tend to say that once a business has reached a point where it's not able to pay all of its debts in full,
we tend around the world to regard the state,
the assets that are there that are of value as essentially now to be given in some way, in most cases, over to the creditors.
Right, to those who've been promised payment. But we know that even if we do that in full, we won't be able to pay all of them.
And the hard question is, what should we do about that, of course, when it comes to individuals rather than corporations?
So an individual entrepreneur,
we also know that there are some kinds of property that we don't think it's desirable be taken from the individual bankrupt.
So all legislative regimes around the world allow individuals to keep some things.
But there is divergence, significant divergence on, for example, whether or not that includes a person's home.
But these are hard questions for policymakers. So in pre-pandemic times, what states tended to do, speaking as a crude generalisation,
is to have on the statute book one or more procedures which were designed to bring all those who are owed money
by the debtor or creditors into a single procedure in which they would participate on a collective basis.
And the idea of such a procedure is is twofold.
So one is by bringing everyone together into a single collective procedure, you can enable any value in the estate to be better preserved,
provided the procedure works reasonably well than if you let individual creditors grab and dismember.
So you bring everyone together so that if there's value in the estate, you might be able to preserve that.
But you also bring everyone together so that when it comes to carving up the pie,
you can decide on a distribution which accords with the states conception of what would be an equitable,
fair distribution, rather than letting those who are most powerful or most informed grab first,
which we would expect to be the position without the imposition of that collective procedure.
So in normal times, governments didn't tend in most jurisdictions, at least the ones that I work in, to intervene very much, if at all.
In the case of an individual business that proved itself unable to pay its debts,
governments tend in normal times to entrust the treatment of that business.
The decision about what to do with the assets and how the pie is to be carved up to the normal bankruptcy law,
which will set out this collective procedure and will make some rules or
priority rules about who gets to be first in the queue and second in the queue.
When it comes to carving up the estate, this not people going into administration.
Exactly what administration is one English procedure?
Absolutely. In the U.S. you might go into something called Chapter 11.
So there are different labels, but basically there is lots in common with these procedures around the world.
And unless a firm was particularly systemically important,
so putting aside financial institutions for now and just thinking about firms in
the real economy unless a firm the failure of a firm was likely to have really.
Significant social ramifications, for example, because of its size or its interconnectedness with other firms in the economy.
Governments would tend not to intervene on an individual business basis if they wanted to change the overall regime.
Then they would reform the bankruptcy law and they wouldn't be interested in individual firms value that would be left to the general bankruptcy law.
So what happened in the COVID pandemic was that governments changed and changed course.
I just want to ask you some more questions. Shall we go on to the actual research?
So, right, you brought us very neatly up to the start of the pandemic.
So now I'm just going back to you as an individual. Can you remember how you first heard that there was a pandemic, that something was happening?
And how long did it take you to realise that actually that was.
Going to work is going to be a threat to everybody, but it's also going to be an opportunity as far as your associates.
Yeah, good question. I do remember the early period where there was not yet a work from home instruction,
but we were all anxiously watching the news every day and each person had to make a sort of individual assessment
about the extent to which they continued to go about life and the extent to which they tried to stay home.
To the extent, though, that that was possible, and I think that was probably about a month long period, wasn't it,
where there was increasing coverage and growing concern, but we weren't yet given much guidance by the state about what to do.
So I think at some point I and all my colleagues shifted to working from home before we were asked to do that.
But we all did. So, you know, on a slightly different day. Having regard to what we were thinking and learning from from the news.
And what was your other question? What about the opportunity? When did I realise it was an opportunity for research?
I think pretty early on it was clear that the pandemic was going to be important from a bankruptcy law perspective.
And the reason for that is if you have a lockdown, which is not something that I had obviously ever experienced in my lifetime,
and it's not really something that scholarly literature talks about.
Right. So, of course, there have been pandemics in the past, but not in recent history.
And so but if you have such an order and if the state in particular requires the closure of particular businesses to in-person trade,
then it's pretty obvious that for at least some of those businesses, there's going to be a very imminent bankruptcy threat,
not for all businesses, because some businesses could pivot to online.
Other businesses could repurpose plant and equipment so that they could start producing essential health care supplies for the NHS.
But they were obviously going to be some businesses,
likely a large number of businesses who pretty early on in the lockdown would face a risk of bankruptcy.
And the reason for that is that they wouldn't be able to generate revenue, but they'd likely still have some fixed costs.
And those fixed costs would continue to accrue.
So unless they were covered by business disruption insurance and it seemed pretty clear early on that there was a lot of uncertainty about this.
And by halfway through the first year, it was pretty clear that businesses would not be fully covered by business disruption insurance.
So if you're not covered by insurance and unless you have very significant cash reserves, then for so long as you have fixed costs,
like paying your rent or paying licence fees,
paying employees under contracts where wage entitlements accrue every month, all of those costs will continue to accrue.
And in the absence of revenue, you'll exhaust your cash reserves and then you won't have cash to be able to pay you all your ongoing liabilities.
So bankruptcy cycle is, I think, worked out pretty quickly that there was going to be a non trivial number of
businesses who would be at risk of bankruptcy within say a three month period.
And the question was what should be done about that? And that's the question that motivated this project.
And I think we began working on it very early in the first wave.
And I think in general that was quite a productive time for me.
Early on in the first wave I think there was some I think several of my colleagues
experienced shifting environments from working in the office to working from home.
But before it became obvious what the gravity of the threat was and the overall cost of the pandemic was,
that was a productive time for me in terms of thinking about policy ideas.
I think that's less true the longer the pandemic went on, because it was a very stark,
sort of horrifying period the first year really before in the pre-vaccination period.
So I don't think I remained as productive for very long, but early on there was a sense in which all options were on the table.
They mattered a lot in the real world, and the gravity of the threat and also its duration was not yet known to us.
And did you immediately have a sense that there was a collective response among fellow academics in the saying,
yes, this was something that needed looking at? Yeah.
I mean, I think I'm quite fortunate to be working here because I'm in a very cohesive research group where we're all interested in,
I think it's fair to say, working with each other, and we tend to try to collaborate anyway.
And in the case of this particular project I had already been collaborating with.
Both of the other members of the team in the past.
So it was a natural fit to do this together. Oh, so they even beat.
I'm sorry. I forgot his name. The Economist? Yes. It already started.
Yeah. I mean, Professor Sussman and I had already been working on a couple of other ideas in the 12 months leading up to the pandemic.
But they were put to one side to do the COVID project because it was urgent and important in the real world.
So we still have our other projects and I hope we do them next year.
So how did you set about collecting the information that you were going to report and
that what what were the steps you needed to take to do the project that you've done?
Okay. So the first stage of the project was a sort of theoretical stage where we tried to understand the nature of the problem,
confront confronting governments, confronting policymakers.
Was there a case for governments to do anything at all in theory,
or could it just be that all these newly distressed businesses could be left to be treated by the pre-pandemic bankruptcy law,
just as in normal times? So the most important thing to do is to the outset was to check our assumption that
there was even a case for governments to consider extraordinary intervention.
So in the first theoretical paper to come out of the project, we explained why in theory there was a case for governments to intervene.
We explained why it was very unlikely that entrusting businesses to be treated by the pre-pandemic bankruptcy law would be socially desirable.
And that was not just because there were going to be loads and loads of businesses that would potentially
need treatment and maybe this would overwhelm the courts or the insolvency practitioners involved.
But also because in our view, bankruptcy laws of the kind that I described a few minutes ago,
very a very poor fit for the peculiar features of COVID 19 related distress.
So in normal times, bankruptcy laws, to the extent they permit you to continue to trade in the process, assume that you were only continuing to trade.
So in in normal times, there'll be a decision to make about whether or not you can continue to trade in a bankruptcy process,
and you'd normally only be able to continue to do that if the revenue that's
expected to be generated by continuing trading is going to exceed your fixed costs.
So if you can't generate revenue sufficient to cover your fixed costs,
then in normal times the state would say, this doesn't seem like a viable business.
This is one that would be better closed early with the proceeds or excuse me realised
and distributed as expeditiously as possible to try to minimise loss to creditors.
But of course in COVID times we had to think in exactly the opposite way.
So the real problem for these businesses was that they were temporarily paralysed from
generating revenue at all in those sectors that were affected by a trading shutdown.
So it was not going to work to put those businesses into a process that was premised on
the ability to continue to generate revenue and to pay your fixed costs along the way.
Now, of course, policymakers could say, well, that's fine,
I'll just tinker with the bankruptcy rules or just change them so that they're better designed to reflect the features of COVID 19 distress.
But we thought that in theory, that that was a bad idea because it was likely to produce bankruptcy rules,
which might be sort of okay for COVID times, but would be bad in normal times.
Right. So as we exited from the pandemic,
what we didn't want to see was a body of bankruptcy rules that have been
changed in in non temporary ways to accommodate the weirdness of the pandemic,
but ended up actually serving businesses poorly in the post-pandemic period.
So it seemed to us that was a case for governments to intervene, to try to minimise the amplification of the shock.
There was nothing that policymakers could do to recover that revenue that was lost in a period of trading shutdown.
No one can magic that and recover that.
But governments did have good reason to try to intervene to minimise the additional costs on top of that revenue
loss that would flow from each of the affected businesses and sectors being pushed into financial distress.
Having established that, the question was, Well, what's on the table for policymakers?
If they're not going to use pre bankruptcy, pre-pandemic bankruptcy law, what can they do?
So in this early stage of the project, we mapped the options and in short, we said, well, this.
There's three things policymakers can do. They can rely on pre-pandemic bankruptcy law, which we said for the reasons I've given, was a bad idea.
They can offer bailouts. That is, taxpayer funded cash, loans or other forms of benefits designed to keep businesses.
Excuse me. Excuse me afloat. Or they can impose bail ins.
That is, they can try to ask those private creditors who are capable of shouldering losses to bear some of the losses straight away.
Now, we argued in our first theoretical paper that there were costs and benefits of using either bailing out or bailouts.
But there were some principles that should guide policymakers in choosing between them and in their design,
including that any intervention had to be proportionate, do more, no more than was necessary to minimise the amplification of the shock.
So we set out what was on the table and we tried to articulate some principles to help policymakers to make this choice.
And then, of course, our attention turned to what they actually did. And that's the next stage of the project that you asked me about.
So did your theoretical work feed into government decision making in any way?
So at the time that that work was published, governments had already intervened in some ways in the first wave.
So in that sense, no. However, we were invited to present that paper to institutions that are involved in policy.
And I think it is right to say that that paper has influenced debate about the optimal design of pandemic relief for distressed businesses.
So I cannot point you to a direct application of that paper in a particular piece of legislation,
but I think it has had influence in in the debate around what governments ought to have done and whether what they did do was desirable.
So a bit of a fluffy answer. But yeah, I mean,
I suppose the better answer to your question is governments didn't have time to consult anyone in the first early part of the pandemic.
And the evidence of this is is everywhere in terms of the way in which policies were designed.
They were introduced using emergency powers, often without the usual cost benefit analysis that would accompany major legislative change.
So no, in normal times, governments in many jurisdictions can't make significant changes without what's called a regulatory impact assessment,
where they have to undertake an analysis of the costs and benefits,
usually with consultation that might involve consultation with committees on which academic which have academic members,
which could go on for years, which can go on for years.
And the idea is to quantify to the greatest extent possible, the costs and benefits of the proposed government intervention.
And then if you think that the costs are likely to exceed the benefits to understand why you're doing it anyway,
you may have a good reason for doing it,
but you're forced to go through a sort of a methodology before you get to the point of of making a change in significant legislative reform.
And in the early pandemic, governments were faced with a monumental crisis, and they had to do their best.
And I think in many policymakers were unsure, doing their best, but they had to do this with very limited information,
with no ability really to predict how long the pandemic would go on for and
what the ultimate scale of the of the human of the cost into life would be.
So they had to do their best.
And I definitely don't think they had much, you know, ability to go and consult us working away now in our bedrooms in Oxford.
So yeah, I suppose I think it's had an impact on how we think about and try to evaluate what governments did,
but it didn't impact what governments were doing early on in that first wave.
And I'm not sure it really it could have given the circumstances.
So you went on to look at what governments. Yeah. So then we wanted to know what governments actually did.
And at the time we thought this would be relatively straightforward because we had no sense of how long
the pandemic would go on for and of the complexity of the government response as a as a corollary.
So we said we would we applied for funding from the COVID 19 Research Response Fund to appoint a group of research assistants.
Oxford based. Yeah, it's a philanthropy funded.
EU funding, which set up by philanthropists interested in supporting COVID 19 research at Oxford.
And without that funding, we wouldn't have been able to do this. The empirical part of the project at all.
So we're very grateful to have that funding. So the idea was that we would appoint a group of research assistants who would go out,
who would work on jurisdictions with which they're already familiar, because the three of us in the project team,
the three academics, we each had knowledge and experience of the corporate bankruptcy laws of a small number of jurisdictions,
but we wanted to go beyond the jurisdictions that we normally work within.
And we knew we couldn't ask a non-specialist to do that because laws, legal systems are complex systems.
So you can't really ask outsiders to those systems.
Realistically, I don't think to get granular information about what's happening within that system during an emergency.
So the idea was we would appoint research assistants who they'd be based in these overseas.
Know actually most of our research assistants were based here.
But we're very fortunate in Oxford that our postgraduate community is extremely geographically jurisdictional.
Is that a word, diverse? And so we were pretty confident that given the project had real world significance and given we have this incredible body of,
you know, highly capable postgraduate students in the law faculty that we would be able to put together this team.
And we were very lucky. We had loads of fantastic people apply who had expertise in various jurisdictions.
So we had to be a little bit relaxed about which jurisdictions we focussed on,
because the most important thing was to get someone to work together the data who had a really sophisticated understanding of that system,
so we couldn't be too prescriptive. So we appointed these research assistants and we asked them to go out and to get information,
build a spreadsheet which would basically chart the range of bail outs.
So taxpayer funded assistance by aliens, orders to forgive.
So asking private creditors to bear some of the pain and bankruptcy law changes.
So using pre-pandemic bankruptcy law and perhaps altering it to offer relief to newly distressed businesses, we asked we sort of built a taxonomy.
We asked them to go out and and put all the policies they could find that were
implemented by the state essentially during the first wave into a spreadsheet.
And we had absolutely no idea just about the scale of this at the time, you know, how many jurisdictions.
So we in the end, I think we covered about 25, 20 something jurisdictions.
I should know that exact answer for you, but we had no idea about the complexity of of the response in, in one jurisdiction alone.
So you'd have a research assistant come back having it having worked on this and say, well that found 55 relevant policy interventions.
You know, we had and this is just in the first seven, eight months of the pandemic and this created a number of challenges.
First, it was more time consuming than we expected to do the initial data collection.
Secondly, it was much more complicated than we expected to then do what we had planned to do next and what we are still doing at the moment,
which is to code all of that data to turn it into zeros and ones so that we could
actually do something which was more than purely descriptive with that dataset.
And the reason for the reason it takes so long to do that is a combination of a large number of policy interventions.
So there might be 50 or 60 different things that government did one thing for hospitality in
April and then a new policy for hospitality in May and then a revision of that policy in June.
And that's just for a subset of businesses in one sector, you know, and then you've got to think about what was happening across that whole economy.
So there's lots of stuff that was going on. And also to code it, we as a research team now as we code this information to code it,
you have to have a reasonably good understanding of what was going on in that particular intervention.
And that means that we've had to go back to all the primary sources. So we've had to do that at two stages.
First, to get the initial information, a research assistant has had to go out and find what's happened and put in a list of sources,
but then to be able to turn those sources into something that we can work with.
We've had to go back to all the primary sources to understand whether we've correctly interpreted the intervention as a bailout of a particular kind.
And so, for example, we didn't know at the time that we sent the research assistants out to do this
work that there would be hugely complex forms of relief by way of guarantee.
So we had in mind that governments might give cash or they might offer loans, but we didn't.
I don't think really have in mind was the scale of programs where governments would guarantee new finance, which was given by others.
And the terms of these guarantees are very different.
And those terms are important to understanding whether or not that intervention was sensibly designed.
But it takes us a long time to go back to the sources that governed the terms on which a particular form of relief was offered to
interpret it properly and then organise it into our taxonomy in such a way that we can actually make sense of what we observe,
because it's all very well to produce a massive spreadsheet of hundreds and hundreds of interventions,
but actually to be able to evaluate these is much more useful if we're able to to identify key trends.
And to do that, we need to be able to reduce this massive words, qualitative information into something in summary form.
And that's turned out to be super hard. So a project that should have finished three months ago would finish until the end of July this year.
But that's an output. Yes, yeah. We've had some outputs and we have a fantastic dataset.
So it's you know, I'm confident that we're able to make contributions with this work.
I don't think there's a a similarly granular dataset out there.
And what our data shows, among other things,
is just how hard it was for policymakers who tended as a generalisation when you look at our data overall to rely on bailouts rather than by-lines.
So there was a tendency to go for taxpayer funded relief rather than to try to work out today whether someone
could help to shoulder the pain and would defer the pain to the future by giving you a tax funded bailout.
But once you do that, then policymakers have some really hard choices to make.
To what extent do you offer relief? How do you determine the eligibility criteria for relief?
How do you weed out bad businesses? How do you control fraud?
So there's enormous complexity in the design of these instruments,
but that complexity is really important to lift the bonnet on and look at in detail because that's going to help us to
work out whether the policymakers could design something which does a better job in a future shock of this magnitude.
So I think the overall motivation for the project is really to try to articulate the lessons
we can learn whilst fully appreciating the constraints policymakers were working on.
So the idea is not to rake policymakers over the coals and say, how silly.
We know that policymakers were working in emergency conditions with limited information.
But the overall motivating question is in a future shock or crisis of this magnitude, maybe a pandemic, but it may be another type of shock or crisis.
Can we do better than what policymakers had to do in these conditions during the COVID 19 pandemic?
Is that something we can build into the system that might be more likely to produce an optimal result than what we've observed?
Because we know that there are downsides and costs associated with what has happened during the COVID 19 pandemic.
And we know that in particular, the the scale of the bailouts poses real problems for states going forward.
So the level of relief that's being offered to distressed businesses,
that that will have implications for tax policy, for state spending, for future generations going forward.
So yeah, that's our overall motivation is to work out whether we can learn from what happened in this
pandemic and develop insights that might help policymakers in a future shock of this scale.
Yeah. So you mentioned fraud. Yeah. I mean, the public accounts committee has said that in this country there was a high level of.
Yeah, I mean, things like applications for bounce back loans. Yes. Is that something you address particularly or is that.
Yeah, so it's a very good question. So it's not something that our data can tell us about at the moment,
because all our data set does now, for now is show us what governments actually did.
But we do include we do include some variables in our taxonomy that are designed to test how governments controlled the eligibility for relief,
so how they tried to weed out businesses that were non-viable before the pandemic,
how they tried to focus on businesses that were actually trading prior to the pandemic,
which is an issue with some of the forms of relief you've referred to.
So we look at what was built into the policy at the time,
and what we're doing now in writing up a paper connected to this coding exercise is what you suggested,
which is to try to to show how governments varied in the terms of these eligibility criteria and what implications that might have for fraud.
But that won't tell us the scale of the potential fraud risk.
To do that,
we'd need phone level data where we where we try to compare the extent of the relief that was offered with what we think the actual firm need was,
if any. And that is something we're interested in doing.
But getting the data is hard. So this is something we've been discussing as a project team.
Yeah, it's a good question. Yeah. Yeah. So, I mean, do have you come to any and I know it's very difficult because every jurisdiction is different.
But did you come to any overall conclusions about, say, the balance between bailouts and balance and and what was working best?
Yeah. So I don't think we're at that point yet because we're still analysing the data.
So it's sort of premature for me to say anything conclusive about that.
But I think it's fair to say already that.
We do observe some forms of bailout in some for some sectors in some jurisdictions that appear, on the face of it, staggeringly generous.
Right. And so there may be good reasons for that generosity.
It may be that it's not possible to design a more calibrated, tailored form of relief.
But that does raise your scholarly eyebrows.
Right. Given that there's a real cost associated with this, the extension of this relief.
So in terms of your question about balance between bailing and bailout, I mean,
from what we can see in the in the jurisdictions that we've already created, bailouts really dominate.
So there are very few experiments with balance in that.
In the jurisdictions we've coded so far, and at least some of us in the project team are really interested in understanding whether governments
should have done more to try to allocate the cost of the pandemic at an earlier point in time,
rather than leave it to future taxpayers to bear the cost of this relief.
So what we're doing now in in another paper so I've referred to the paper where we're trying to to chart how governments set the terms,
the eligibility criteria for bailouts. But in another paper coming out of the project, we're looking in much more detail at the concept of a bail in.
Is it actually operationally feasible for governments to do what we proposed in theory at the outset?
Can they do it? And what might be the virtues of attempting to do it compared to wholesale reliance on bailouts,
which I think in many jurisdictions will prove to be what actually happened?
So I can't say for sure, but I think it's fair to say our intuition is that the scale of some bailouts appears to have gone beyond,
at least on the face of it,
what was necessary to minimise the amplification of the shock and will introduce additional costs that have long run effects.
And meanwhile, there were some businesses we read in the paper. Yeah, we did incredibly well.
Sure. Yes. Super profits. Yes. Excellent.
They weren't actually creditors of the small businesses.
Is that something you looked at, whether they could have paid a higher share as opposed to the government?
Yes, excellent question. So this is something that we're looking at at the moment.
And there are a range of proposals that have come from different policy institutions and INGOs around the treatment of the winners of the pandemic.
And so in the paper where we look at in the paper where we look at the feasibility of balance,
we address this question, the treatment of pandemic winners.
But I can't give you the paper because we're writing it at the moment, but soon the paper will be available, right?
Yeah. So this is something that we're looking at at the moment. Yes.
So overall, you're looking at money flows, really, aren't you?
Correct. Winners and losers and how correct can be just equilibrated.
So that's right. And that's what bankruptcy scholars do all the time.
It's just that normally they do that within a pretty stable framework,
a body of rules that of course, they change from time to time, but they've been fairly stable.
So normally the parameters of this debate are pretty fixed.
So you might have a debate about recalibrating or reforming some particular aspect of your bankruptcy regime,
perhaps introducing a new form of procedure.
But in the pandemic, when governments realised that the pre-pandemic bankruptcy law was probably not best used for the treatment of this distress,
a whole range of new options that bankruptcy scholars don't normally get to think about, even though they probably should, are on the table.
And I think the most exciting thing intellectually for me about this project has been being pushed
to see the relationship between that pocket of rules and everything that happens outside it.
Because often when you work within a particular area, you tend to focus on quite specialised questions that are important questions,
but the sort of interest system questions that are important for those who are working in a particular body of rules.
And what this project has done is force me to understand better the characterisation of those rules,
but also the interaction between those rules and other forms of policy relief.
And so maybe some of the questions I was most interested in previously are not the questions I'm most interested in at the moment.
And that's very rewarding. And of course, that's why people become academics, so they can learn about things they didn't previously understand.
Hmm. Yes. Get into the question is going to come to the world. We might we might come back to it.
Yes. Just so. Yeah.
So you were. You were also you said you were already working collaboratively.
Did did did you work on this project?
Would you say it was much the same in terms of the level of collaboration, not your previous work?
No, I would say this is probably the most truly interdisciplinary work that I've done because it has so heavily involved.
Professor Sussman. And what's great about working with financial economist, if you're a legal scholar,
is that the way that you frame things is not the way as a legal scholar.
It's not the way that an economist frames things. And so you're really pushed.
You're really pushed on why it is that certain things are accepted or understood to be to be the position.
And that might be obvious to an inside within a system, but it may be very far from obvious to an observer of that system.
As an economist, yes. And so working with Orin has been hugely valuable to me, my own thinking about my field,
because Arn asks big picture questions about my field from the perspective of of an outsider who has the same overarching academic interest,
which is what do laws do in the real world?
And is that effect good or bad, desirable, undesirable?
But he approaches those rules from a different perspective,
with a different toolkit and less governed by the conventions, which legal scholars tend to work within.
So that has been very intellectually fruitful for me and I've learnt a lot from working with him.
And do you think about the question that coming later, do you think that that experience will change the way you approach your work in the future?
Yes, I do. Yes, I think having these conversations so when we did the theoretical paper,
we had lots of long Zoom calls where one of us would say, But what do you mean by that?
And then the other would say, Well, it's perfectly obvious what I mean,
but it's not obvious actually when you're having a conversation, a real conversation across disciplines.
And so we had to do a lot of work, the three of us clearing the ground to understand, I suppose,
to establish a common language for our inquiry, but also to to learn from each other.
And so there are things that legal scholars can bring I don't think it can bring to a project with an economist.
I don't think it's a one way traffic.
We learn a lot from economists, especially if we as legal scholars are ultimately interested in the desirability of rules in the real world.
Will we? Of course, we're going to learn a huge amount from economists,
but legal scholars also bring something to the table because they understand the real limitations on what you can ask of the system
and the reasons why the legal system is designed in a particular way or requires a particular thing or produces a particular output.
And that means that if you if you can work together closely, then a legal scholar can bring to the table insight about the system,
which is not always, I think is probably very rarely available to outsiders who don't work within that system as a participant in the system.
So I think, of course, I have done work and been involved in projects which are interdisciplinary.
But in terms of my in the past, but in terms of my personal contribution in this project,
it has been more interdisciplinary than my prior work and it has opened up possibilities for me with future research, which I think are very exciting.
So I can see now a line of a long line which I'm progressing too slowly,
a long line of papers connected to this work and projects connected to this work, and that's very exciting.
So for me it has been an academic term, so a good moment, if not, if in many other ways a pandemic has been terrible.
But in academic terms that has been very good for me to have that opportunity.
So that's that was the next thing that's going to and personally the experience of COVID.
Were you personally alarmed about the risk of infection, either for yourself or for family members or colleagues or friends?
Yes, certainly. Yes. I mean, I think I was probably very alarmed for much of the last two years.
I mean, I think I was very anxious in the pre-vaccination period.
And then I think you I could allow myself a slight amount of relaxation once the vaccination programme was rolled out.
But yeah, I think it was a very it was a very anxious time.
I mean for me my I grew up as I mentioned in, in Australia and all of my, my family's in Australia.
So I am married to a British man and we have children here, we have three children, we live in Oxford.
But we were separated from my family in Australia for 2 to 2 years to a nearly two and a half years.
And in the case of my siblings, it was almost three years that I did.
I didn't see them and that was very difficult. My mum has a lung condition I worried a lot about.
COVID in the first year prior to vaccination and mom in particular getting COVID.
And because the Australian borders were closed, I had I knew that if something happened I wouldn't be able to get in to see my family.
And in fact, we were unable to get in to see them until November 20, 21.
So if there had been an emergency, I was aware that I wouldn't have been able to respond to that.
And that was very difficult. Although there was no such emergency.
But it was worrying that something would happen.
So I think, yeah, it was a difficult time, even though compared to others we had it easy, you know, we really did.
You know, I didn't lose my job. We kept our health.
We had childcare where many other people didn't have childcare to get well, excuse me.
So I can never get involved in homeschooling. Yes, I did have a period of home schooling and that was the beginning of 2021, wasn't it?
So the second wave, whether it was three or four months, that was a challenge.
That was a challenge for this project because I was at the moment on sabbatical,
but at that time I was teaching and we were trying to in that term in the second wave,
we were trying to do everything we could for the students because it was very difficult for the students.
I mean, it was really heartbreaking that they they had come to Oxford and they were unable to at least people in the first
wave had had interaction in the first term of the academic year they met that tutors and then we shifted to online.
But for people who came in that second academic year of the pandemic, they arrived and there was pretty much a crisis.
You know, it wasn't long and everything was online and students were spending their academic year in their bedrooms,
you know, with parents, family, perhaps in another country, perhaps grave COVID threats, perhaps bereavements.
And not seeing that was, you know, not having. That ability to build an in-person relationship with with their tutors and their peers.
That was really tough.
So all of the academic staff involved in the delivery of programs at that time we were trying to do to increase what we offered to students.
So offering more one on one meetings outside normal class provision,
anything that we could do apart from hanging out in-person or going for walks in university parks when we're allowed to do that,
or shifting to have revision tutorials on the grass outside or whatever we could all do.
So we had to instead of cutting down and this is a long answer to a question, but instead of doing less for our students,
I think we're all trying to do more than at the same time,
those of us who had school age children were also trying to manage progression through schoolwork and so on.
So that was a very tiring period period, and I didn't make as much progress as I should have on many things.
But one of the one of the many upsides of an academic career is that that's usually okay.
You can usually catch up later. And so it's not like working in a hospital where you can't fall behind.
So it was tiring. But I think, again, we we had it a little better than, than many people in our family.
Yeah, but it was a question about working hours, but it didn't seem relevant really because I think,
you know, as a mom you're working anyway and it sounds as though you were on a treadmill.
Yeah, I think I think everyone, once they make work, you would do it. Correct.
But I think everyone was at that time really. And I think there's a general as we came out of that year, I think there was a real sense,
like a palpable sense of the exhaustion in in the whole the whole team, not just the academic staff, but also the professional support staff that it.
That was very, very challenging time. And I think people will take quite a long time to recuperate from the last two years.
I think we were taken, but that's true across society, isn't it?
I'm just hoping for universities. Do you think the fact that you had a relevant project to work on helped to support your own wellbeing?
I do think that my work, it generally enhances my wellbeing, although of course it makes you busier,
particularly if you have also have caring responsibilities and we have three small kids,
so we have a two, three and a half year olds and a five and a half year old.
So we have a sort of busy life at home. My husband and I and then this is a busy job.
I do think generally I'm much I find my work to be a source of great enrichment and encouragement.
And so I think it is a very positive aspect of this overall busyness.
And I think you're right that in the first stage of the pandemic, it was also.
It was also encouraging to feel like you were doing something however tiny.
I mean, of course, people working in other fields were making much more profound impacts in society than what we are doing in this project.
But still, it was a way to use your skills to investigate something that was happening at that moment and to try to use the skills that
you have to bring whatever limited skills you have to the table to try to help to understand the contours of the problem.
That was encouraging. But as I said earlier, I think in the second wave of the pandemic, I think that that was a more difficult time.
I think that was much more there was a sense that it was sort of never going to never going to end.
And it was much more prolonged, a much more difficult and much more awful than I think any of us could have appreciated at the outset.
So I think that initial surge of energy was replaced with something more mixed as the pandemic went on.
But definitely it has been.
Yeah, you know, I feel happy that we've been able to work on something connected to the pandemic using pre-existing skills,
however small the contribution ends up being in the end. And it's there.
And I think I'm coming to a final question already. Is there anything that your experience of working through this pandemic,
either the nature of the work you were doing or the circumstances that you'd like to see change in the future?
Yeah. I mean, that's a hard question.
So I think. Overall,
the pandemic has probably had the reverse effect for me in that it has given me a greater humility in
understanding how governments must work and the limitations and constraints on government workings.
But at the same time, I do think there is scope for academics working in this space.
To both work to reveal the true cost of pandemic relief outside of the health care setting.
So other forms of pandemic relief, including relief to distressed businesses.
Academics must work to reveal the overall cost to the extent of us susceptible of evaluation.
It must work to do that.
There must be accountability for decisions, not with a view to judgement, but with a view to generating insights for the future.
And I think that academics we can now, with the experience of this pandemic, which is the,
you know, the most sort of seismic shock that that we've experienced in our lifetimes,
but one in which, you know, many scholars working across disciplines think could be replicated if not in the form of a pandemic,
then perhaps in the form of another form of seismic shock.
In our lifetimes, the world is more unstable across many dimensions than it was ten or 20 years ago.
Right. So academics now have a good opportunity to work to lift the bonnet on what happened in the pandemic, to get into the granular detail,
to try to understand why things were done as they were with and with what overall effect,
with a view to the development of prescriptions, the generation of insights that can help policymakers in the future.
Because as I said at the beginning of this remark, I think the pandemic has given us all a sense of the monumentally difficult task that governments
face in making these huge decisions which have important distributive effects in societies,
particularly for the most vulnerable. So academics now I think we need to step up to the plate, as it were,
and be bold in working out exactly what happened with what effects, and then trying from that to generate some lessons for the future.
So yes, I hope that going forward,
academics will engage and continue to engage very seriously in in working out the parameters of this conversation and making prescriptions.
And I hope I can be part of the conversation. Mm hmm.
That was a wonderful final question. An answer. But I just thought the question.
Go ahead. What you think of the level of expertise within the Treasury and other finance ministries in your area?
Oh, I have not I don't know if I'm even really competent to to assess that, as in I don't know if I have the relevant information to do that.
I can say that in normal times in my particular area, government works very closely with with private sector experts.
And I think that is, of course, there are obvious risk in doing so, but I think that is generally desirable that that happens.
So I think the process of law reform in my field is,
is much more collaborative than you might think when you open the statute book involves a very high
degree of consultation interaction with those who work day to day in the implementation of these rules.
Now, of course, that we we know from rich literature that this means you could end up with legislation which is captured by a particular constituency.
And there are obvious reason, I think, that the government in this jurisdiction is, at least in the areas that I work in,
attentive to that that risk, and seeks to consult widely and to strike a balance between the representations by various constituencies.
But I think the work, the area that I work in is highly technical and it would be very,
very difficult for governments to make anything other than very trivial changes to the regime without that degree of consultation and interaction.
And so I think, yes, of course, people working in government in this area have lots of expertise, I'm sure.
But I think they also do a good job of signposting potential changes and then having a very in-depth discussion with insolvency lawyers
who work in this space day to day to sense check whether or not what they propose to do is likely to produce the hoped for effect.
Because in the area that I work in,
it is not uncommon for legislation to be introduced for a particular purpose and then to produce an unexpected effect,
the costs of which exceed the benefits of the original intervention.
So I think the consultative approach is, is a desirable one in this particular.
Area. What's interesting about the pandemic, as I've already said,
is that I don't think that there was really the capacity for governments to do that for good reason.
But I do think that had implications for the design of a policy and the design of the rules that we ended up with.
Yeah. So there are costs associated with that. Based.