A conservative friend of mine asked about the Rolling Jubilee effort by Strike Debt (A project of Occupy Wall Street). Here’s what I said:
I don’t instinctively get the Rolling Jubilee, Rek. Then again, Occupy Wall Street comes from a different tradition than I come from, and my doubts about them have been proven wrong time and time again, starting from the beginning.
Here’s what I make of it:
- There’s a prefigurative element to it. You can see that from the name, even. The Jubilee is a biblical reference – and a concept that people have been talking about for a while. Just as the encampments tried to be the society of mutual aid and solidarity of the future, this is supposed to be an enticing sneak preview of a possible world to come.
- There’s a name-and-shame piece to it. There’s a narrative in American thought that has a really harsh view on debt – failure to pay debts is a moral failing for individuals. Meanwhile, there’s no stigma to corporations failing to pay debts – they just file for bankruptcy as a matter of course and keep going. This has been a theme of various strands of Occupy for a long time – see (my favorite chant) “Banks Got Bailed Out / We Got Sold Out”.
- There’s a media/promotional aspect to this: The jubilee is a project of Strike Debt, which is an offshoot of Occupy Wall Street. Strike Debt does a lot of other cool stuff, most notably the Debt Resistors Manual. I’ve read the manual – it’s surprisingly and notably practical for everyday use. The Jubilee is a way of calling attention to both the issue of debt, and also Strike Debt’s other work.
- There’s a policy aspect to this. The fact that people can buy distressed debt this cheaply ties into our larger broken banking system. The banks are never going to get their full money back from these distressed debt holders. Instead of writing it down in their books, however, they’ve kept up the fiction that they’ll get 100% of their returns back. They do this for a few reasons, such as getting a better position in bargaining with the government, desire to seem well-capitalized in the wake of the financial crash, and fear of initiatives such as this. This is holding back the recovery, because we need a massive deleveraging of debt before things can get really moving again. (In other words, we have a demand-side problem because of the recession. This demand-side problem isn’t helped by families paying down debt rather than buying consumer goods).
- There’s a tie in with housing policy (which Obama has been pretty awful on). Millions and millions of homeowners are “underwater” on their mortgages. That means the amount they owe is more than the house is worth. If they were companies, they would just default on the loan, the house would get seized, and they’d get out ahead. Mortgages are non-recourse loans, so banks can’t seize anything more than the house itself. Thing is, these people can walk away from those homes as well. It’s the economically rational (and legal!) thing to do. The problem: people are sentimentally attached to their homes, and there’s this whole Tea Party movement that arose around the idea that “losers” have a duty to pay back their debt. (Again, I find this whole moralization of debt to be disturbing. Taking out loans is a business transaction, with penalties if you default. Sometimes it just makes more sense to choose to default and pay the penalties).
- Banks are acting really evil. Refinancing a mortgage is a normal thing that could and should happen if you are underwater. Right now, though, the banks are refusing to let people refinance. In fact, they will sell foreclosed homes, as is their right, in auction. However, they won’t sell those homes at any price to people/organizations who plan on re-selling those homes at the same price back to the family. Let me say that again in different terms. Family A owes $300,000 on a house that is worth $100,000. Bank B won’t let them refinance. Bank B kicks them out, and sells the house for $95,000 in auction. However, Bank B refuses to sell that house back to the family for $95,000. It demands that anyone buying the house sign a document pledging never to sell that house back to the family. It’s all just so vindictive.
- This has the potential to be awesome on its own terms. We can use this leverage (buying lots of debt for little money) to do disproportionate good in the world! And if it works, it will put into the place the deleveraging that the banks are desperately cheating and trying not to have happen. Even if the “virality” doesn’t kick in, and it fizzles out, we will have done good for the people who do get their debt forgiven.
I’m from the tradition of “electoral politics and policy are the path to victory”, so I’m not instinctively inclined to cheer this on. But cheer it on I will! This could be really cool, and if it puts attention on the malfeasance of the banks, or gets people excited about the Debt Resistance Manual, then I’m quite happy.
Hope that all makes sense, would love to hear your thoughts.