Occupy has created a Strike Debt wing, which has a new project: a Rolling Jubilee. There will be a livestream of the Debt Jubilee fundraiser tonight, starting at 8pm ET, that you can access from their webpage. It features Janeane Garofalo, Jeff Mangum from Neutral Milk Hotel, Lee Ranaldo of Sonic Youth, Lizz Winstead, and many more. You should check it out.
To give you a sense why I find this new project fascinating, I’ll quickly review three random projects I’ve been working on recently, all of which are related to this new project.
The first is on what bankruptcy law professor Ronald Mann refers to as the “sweat box” model of consumer debt and bankruptcy. Mann argues that the 2005 bankruptcy amendments benefit creditors “by slowing the time of inevitable filings by the deeply distressed and allowing issuers to earn greater revenues from those individuals” and functions as a windfall for creditors because it “enable[s] issuers to profit from debt servicing revenues paid by distressed borrowers who are not yet in bankruptcy.” More broadly, the distressed debt markets allow debt collectors the right to make huge profits by “sweating” debtors through assessing fees, raising rates, and inflating the debts owed while debtors struggle to pay the debts back over long periods of time. At the distressed end, debts aren’t about recovering what is owed or making sure loans that aren’t being paid turn into good debts that have reliable payments, but instead about the option to harrass small payments indefinitely. Debt collectors don’t want these loans to work. (The same distorted incentives might be in play with those who have missed a mortgage payment.)
Another is focused on student debt, particularly about how the collapse of public higher education has been a planned political project. Rather than student debt levels being the result of individual greed or cost inflation driven by productivity levels, they result from a specific project to shift costs for public education onto the individual that has been consciously planned. This is part of a larger project to dismantle the access and mobility inherent in the centuries-old public higher education system in this country.
The final one is arguing that one explanation for why our recovery is so slow has to do with a debt overhang. Rather than forcing the losses of our housing bubble onto creditors, we’ve left them to stagnate, dragging down aggregate demand. Or we’ve solved it through foreclosures, which have huge costs for communities and municipalities. The financial sector itself understands that these loans aren’t worth much and are fighting among itself over who will eat the losses, but this knowledge hasn’t spread to homeowners or the country at large.
Explaining these issues and how they connect is difficult, but it is now easier with Strike Debt and its Rolling Jubilee project. What is the Rolling Jubilee? “Banks sell debt for pennies on the dollar on a shadowy speculative market of debt buyers who then turn around and try to collect the full amount from debtors. The Rolling Jubilee intervenes by buying debt, keeping it out of the hands of collectors, and then abolishing it.”
The project relentlessly emphasizes the social conditions for the creation of debt: “We believe people should not go into debt for basic necessities like education, healthcare and housing.” Debt in our country evolves in a system of institutions where publicly provided goods are missing or being dismantled in real-time, with private systems designed to benefit the few replacing them, and that is something that can be resisted. And the Jubilee also emphasizes that these specific debts that they are buying no longer reflect something that’s owed, as they were written to zero on a balance sheet a long time ago. These are debts whose real value consists of a harrassment option to try and collect more than the pennies on the dollar that they were bought for.
Strike Debt can only purchase so much debt. What can it do going forward? There’s the obvious ability to use this to highlight how bad debts actually play out in our country and expose the ins-and-outs of this system.
I’d personally like people to make the connection between random groups of people doing this and the government doing this itself through eminent domain. Right now southern California, for instance, is a battlefield between municipalities looking to prevent destructive foreclosures and the financial industry, which is looking to do a capital strike. Other cities are turning to eminent domain to buy mortgage debt at its real value, write it down, and save their communities. It would be great for them to say, “Hey, if cultural studies icon Andrew Ross and some Occupy kids are capable of doing this, certainly we, with our legal powers of eminent domain and power to tax, could do the same!”
And I’m already hearing about people proposing a form of “debt-holder activism” akin to the idea of shareholder activism: exposing wrong-doing, suing debt traders for selling debt without proper documentation, etc. It might be far-fetched, but it is worth exploring.
There are reasonable criticisms of this project. But I’ll start with some that I don’t find convincing.
Doug Henwood, for instance, believes that this is generated by activists’ uncritical populism, or the anarchist anthrology of David Graeber’s Debt, or the reification of Bowles-Simpson’s debt talk. But this is putting the carriage before the horse. A little over a year ago, I wrote some code that went through the We are the 99% Tumblr and parsed it for clues about what was motivating the people submitting their stories. And even I was shocked at how much student debt, medical debt, and debt overall were factors in those people’s misery. It is how they identify the challenges they face, and this was equally so at Occupy sites.
It’s fun to imagine people writing hostile comments on that 99% tumblr saying that all these people’s misery is not useful to the cause because it focuses on the sphere of circulation instead of the sphere of production. But this is what is behind young people’s suffering and it is an important project to address it as such. Linking it to a larger project of broad-based propserity is the work of others, and I believe the Strike Debt people are trying to do so.
Henwood also argues that Strike Debt can’t buy in sufficiently large amount to buy up all the debt. That’s true, but hardly the goal. He also brings up the idea that bankruptcy is a universal solvent here and should be emphasized over other projects. I disagree. To go back to Ronald Mann’s “sweat-box” theory of bankrutpcy, the fees, waiting period, and other charges involved in post-2005 bankruptcy means that the legal DNA of bankruptcy code, while very useful, amplifies these problems. You can see it in the academic research that finds a spike in bankruptcy filings after people get tax rebates, because they finally have the resources to declare bankruptcy. You also see it in this random We Are the 99% tumblr entry, which notes, “I have been trying for the last 4 years to save $2000 to file bankruptcy for $5000-$10000 medical debt. It still hasn’t happened.”
There are other worries that I find to be more important.
First, it’s a big problem that it isn’t clear yet whether those whose debt will be forgiven are stuck with a tax bill. Blogs are going back and forth on this issue, though the IRS should have given a comment already. That there aren’t, say, tax attorneys Occupy can direct people to is a problem. It’s funny that, given Marcel Mauss’ influence on David Graeber and many in Occupy, the tax issue might hinge on being able to legally define what a “gift” is.
Another worry is whether or not this will build a community of people committed to the cause going forward. According to a Strike Debt spokesperson, when they forgive debts they send certified mail containing the Debt Resistor’s Operation Manual and a notice explaining what the Debt Jubilee is. Contrast it with foreclosure activism, where there is a lot of work that goes into building up the person in their community and making sure the person has the strength and the resources to both fight and contribute back. I’ve debated whether or not this is an actual problem, but it is certainly not sufficient to keep me from being excited. The people contributing are more energized than I had expected to see, which means you many see a community of people vested on the donation end as well.
The last issue is debt itself. As Jacob Hacker and Nathaniel Loewentheil argued in the Boston Review forum on debt, “[B]y focusing so much on debt…the challenge of reform appears both smaller and larger than it really is. Smaller because providing write-downs for households with underwater mortgages, while valuable, would not be enough…[yet a debt focus sets] sights higher than necessary… [W]e do not have to change people’s conception of debt or personal responsibility… [A] broad coalition will be based more on effective organizing than on consciousness-raising or cultural change around debt.”
I think in the long-run Hacker is right, which is why I’m happy that the Strike Debt coalition has worked to link its concerns back to larger ones of public health care, free education, and a more robust safety net. Weaving these concerns with broader ones is precisely the work that needs to be done.
Last year, Suresh Naidu sent me the following chart, which is an evolution of different tactics during the civil rights movement, 1955-1962, charted by frequency of occurrences:
This chart is taken from Tactical Innovation and the Pace of Insurgency by the sociologist Doug McAdam. Tactists will come and go. What is necessary to keep in mind are the goals and the spirit of experimentation. I hope you check out the telethon tonight and follow the Strike Debt news to see if this is a wave of experiments worth following in the months ahead.