The Escape Hatch Archives - Page 2 of 3

A Clear Field for Future Effort

In 1934 the Supreme Court explained what personal bankruptcy is for. In Local Loan Co. v. Hunt, it said that bankruptcy gives “the honest but unfortunate debtor” a “new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.”

The federal courts still describe it in the same terms: “Bankruptcy can provide a fresh financial start for consumers who cannot pay their debts…” In 2025, Americans filed 540,603 consumer bankruptcy cases.

The Exploratory Committee

On January 16, 2007, Senator Barack Obama announced that he would form a presidential exploratory committee. “For the next several weeks, I am going to talk with people from around the country, listening and learning more about…” He declared his candidacy the next month, on February 10, 2007.

Federal election law calls this stage “testing the waters.” A possible candidate may raise and spend money on “polling, traveling and making telephone calls” to decide whether to run. While the person is only testing the waters, an exploratory committee does not have to register or report to the Federal Election Commission. If the person decides not to run, “there would have been no obligation to report the monies received and spent.”

Money in Stages

Venture capital is released in stages. Economists describe it this way: “the infusion of capital occurs in stages, matching investment decisions based on information that arrives over time.”

William Sahlman explained the reason in 1990. “By staging capital the venture capitalists preserve the right to abandon a project whose prospects look dim.”

Good Samaritan laws

Every US state has legislation protecting a bystander who intervenes in an emergency from being sued for the consequences. The legal system identified hesitation as the problem and removed the reason for it.

At-will employment

The default rule across almost all US states is that either party may end the employment relationship at any time, for any reason that is not illegal, without notice. Whatever else it does, it makes staffing decisions fast. A manager who wants to change a team can change it this week.

Bias toward action

Named as a virtue and used in hiring and promotion. Amazon lists it among its leadership principles: speed matters in business, and many decisions are reversible and do not need extensive study. The word bias is chosen deliberately — it concedes that the tendency is not neutral, and recommends it anyway.

No questions asked

The American return policy phrase. Several large American retailers built reputations on accepting returns without requiring a reason or a fault. The product’s reliability is underwritten by the seller’s willingness to take it back.

Second-time founders

Silicon Valley investors are widely understood to prefer a founder whose first company failed to one who has never started a company. The failure is priced as an asset. Whatever else it produced, it produced someone who has already made the mistakes.

The business judgment rule

Under American corporate law, a court will not second-guess a board’s decision if it was made in good faith, on an informed basis, and in the honest belief that it served the company. Directors are protected even when the decision turns out badly. The judgment itself is what the law examines, not the outcome.

Chapter 11

American bankruptcy law lets a company reorganize and continue rather than liquidate. The business keeps trading while it restructures. Iteration written into commercial law: the failure is a state to pass through, not an ending.