Posted by: Doug Henwood | November 13, 2012

Rolling where?

Rolling Jubilee (RJ) has certainly gotten a lot of attention in the few days since it was launched. An initiative of Strike Debt!, an offshoot of Occupy Wall Street, the Jubilee describes itself as

a…project that buys debt for pennies on the dollar, but instead of collecting it, abolishes it. Together we can liberate debtors at random through a campaign of mutual support, good will, and collective refusal. Debt resistance is just the beginning. Join us as we imagine and create a new world based on the common good, not Wall Street profits.

Anything that attracts attention to the burden of debt and the potential of liberation from it is admirable. But it will not surprise regular readers to learn that I’ve got some serious reservations about the project.

A few words first on the mechanics. Banks and other creditors typically try really hard to collect delinquent debts, but when they give up all hope, they write them off and typically sell the claims for pennies on the dollar to collection agencies and other financial vultures. The new holders are often relentless and ugly in their pursuit of debtors in default. If they bought the bad debt for two cents on the dollar, they’re happy to get five—they’ve more than doubled the money, though they do have to pay the call centers that do the ugly work of harassment. The tools of the trade are relentless threatening phone calls. Many of these techniques are technically illegal, but the law rarely stops a collection agency. According to Strike Debt!, about 15% of Americans are being pursued by collection agents, and there’s no reason to doubt their numbers.

Strike Debt!’s strategy is to raise money from generous sympathizers and buy the debt from the collection agents and then just wipe it away. Debtors might not even know what’s happened—they tell me they’re reluctant to track down the debtors they’ve delivered from harassment, and in many cases might not even be able to—but the phone calls will at least stop.

Sounds great, right? And the scheme has gotten some great buzz. Blogger Alex Moore writes that it’s “a great new answer to all the doubters who ripped on them over the past year for not having a specific enough plan.” To Guardian blogger Charles Eisenstein, it’s a “genius move” with “significant transformative potential.” Celebrants, though, are rather vague on the mechanisms by which the transformation will occur.

So far, both Rolling Jubilee and the commentators have been rather light with numbers. As I’m writing this, RJ has raised $137,688. Since they figure they can buy bad debt for about five cents on the dollar, that means they could “abolish” (the evocation of the anti-slavery movement is no accident) $2,758,584 in debt. Though they don’t say, it’s almost certain that the debt they aim to buy is the credit card kind. Student debt, even if delinquent, isn’t sold into the secondary market. Debt backed by things—as auto loans are by vehicles and mortgages by houses—aren’t generally sold that way either, because lenders can seize the underlying assets. Though there are other kinds of unsecured personal loans (those backed by pledges only, and not things), the bulk of them are credit cards, so we’ll do the math on them.

According to the FDIC, there was $664.3 billion credit card debt outstanding in the second quarter of 2012. Of that, $16.5 billion was 30 days or more past due. Banks had charged off $8.5 billion. They’re required by regulators to do that once an account is 180 days past due, but that doesn’t mean the debt is extinguished. Though the bank removes the asset from its balance sheet and takes a (tax-deductible) loss, the debt still exists. The bank can try to collect it on its own, or sell the bad debt to the vultures described above.

Let’s think about that $8.5 billion. The people who owe that money are probably getting threatening communications from the banks or whoever now holds the claims. If RJ could raise $1 million—they’re more than 1/8th of the way there now—they could buy $20 million in debt, or 0.2% of what’s been charged off. To buy all the charged-off debt at five cents on the dollar, they’d need to raise $423 million. But of course if any more than notional amounts of money were put to this task, the price of the debt would rise dramatically. To buy a tenth of it at ten cents on the dollar they’d need $85 million. In other words, given those sums, the monetary angle for RJ is purely symbolic.

What about larger political points? Strike Debt! says its aim is:

to build popular resistance to all forms of debt imposed on us by the banks. Debt keeps us isolated, ashamed, and afraid. We are building a movement to challenge this system while creating alternatives and supporting each other. We want an economy where our debts are to our friends, families, and communities — and not to the 1%.

Totally marvelous. No argument from me about the goal. But why the intense focus on debt and its relief? Debt could be an excellent point of entry into a discussion about many other things. Why so much personal debt? Because wages are stagnant or down, unemployment is high, yet the cost of living continues to rise. Why so much mortgage debt? Because until sometime in 2007, housing inflation (meaning tax-subsidized homeownership) was practically the American national religion. Why so much student debt? Because higher education is too expensive—in fact, it should be free. Etc. But Occupy has inherited a lot of American populism’s obsession with finance as the root of all evil, without connecting it to the rest of the system.

And their call for debt repudiation also seems not to have been fully thought through. The world economy nearly collapsed a few years ago because maybe 10% of debtors were unable to service their debts. If we were to return to something like that, we’d return to the verge of collapse or beyond. And such a collapse wouldn’t hurt just the 1%. Workers’ pensions would be jeopardized. Banks would fail, and millions could lose their savings. Unemployment would rise towards 1932 levels of 25%. If you’re jonesing for systemic collapse in the hope of building something better out of the rubble, then be honest about it. But don’t expect to get much support for the agenda.

A more fruitful approach to lightening the burden of the heavily indebted would be to proselytize on behalf of filing for bankruptcy. Another project of Strike Debt! is their Debt Resistors Operations Manual. Here’s their description of the manual:

You’ll find detailed strategies and resources for dealing with credit card, medical, student, housing and municipal debt. Also included are tactics for navigating the pitfalls of personal bankruptcy, and information to help protect yourself from predatory lenders. Recognizing that individually we can only do so much to resist the system of debt, the manual also introduces ideas for those who have made the decision to take collective action.

There’s a lot of good stuff in there. But the chapter on bankruptcy is larded with unnecessary warnings and complications. I know, because I wrote the original draft and watched it get deformed by group editing. The opening sentence is a fine example: “Bankruptcy, for some people, sometimes, can be a way to fight back against the creditors and escape a life of indebtedness.” No, bankruptcy is much better than that. My original opening read: “Unlike the other chapters in this manual, which are organized around ways the rich screw debtors (and how debtors can get back at them), this one is almost entirely about how debtors can screw the rich—filing for bankruptcy. To get right to the point: if you have a serious problem with credit card debt, there is absolutely no reason you shouldn’t think seriously about doing that.” Much better, I think.

And the chapter concludes by saying that it’s an unsatisfactorily individualist solution to a collective problem—which is true in some sense, but not of much help to millions suffering from credit card debt today. Many people are unaware of what a deliverance a bankruptcy filing can be, and many others are inhibited by shame. They shouldn’t be. And filing for bankruptcy has a lot more to offer than some lightly funded scheme to buy bad debt on the secondary market. Why the Strike Debt! collective chose to tone down my exhortations mystifies me.

I feel somewhat bad writing this critique. There are a lot of fine people trying to do good things with this initiative. But as long as it focuses on debt without using it as a portal to a larger discussion, it’s not going to do much more than generate some publicity.

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Responses

  1. A quibble and a deeper disagreement.

    Quibble: you’re right for singling out credit card debt for the reasons you state and for the broader reason that people pay for a lot of things on credit cards (so it’s a bit of a catch-all category), but there are other forms of debt on the debt buying market. Health care debt is a prime example, although I can’t seem to dig up any statistic on it.

    Disagreement: you’re also right that the Rolling Jubilee has to be a first step towards a much larger conversation about how the distribution and redistribution (i.e. the circulation) of money works in our neoliberal order. Or, rather, towards a much larger set of actions towards demolishing this order and restructuring the circulation. Seth Ackerman puts it even more strongly, noting that alleviating debt, even if successful, might actually serve to bolster the capitalist system that creates it. But social change does not happen in predictable ways, especially when that change aims to be radical. Occupy forced the mainstream political conversation to acknowledge inequality and even, at times, the inherent class-power grab that is the financialization of the economy, and it did so through a series of actions that were largely ineffective when judged in terms of their own goals. The Rolling Jubilee has to be seen as, at its best, another step in this direction. And if anything like a major debt strike happens, another such step. They are all ways to spread the word about systemic exploitation, to build solidarity among the underclass, etc. At the least, liberals have to react while some people have their debt forgiven. At the more, these first steps lead to more lasting solutions and more tumultuous resistance.

  2. Although I am all for this movement, this was a very insightful, well-balanced article, (which is rare, these days). While they may not be able to transform society with this plan, I guarantee they will transform a lot of individual lives. That alone is worth the effort, in my opinion.

    I do not understand where you came up with a few points, though, such as, “But of course if any more than notional amounts of money were put to this task, the price of the debt would rise dramatically.” How would the price of debt rise if this project raises enough money to wipe out all credit card debt?

    Also, you said, “And their call for debt repudiation also seems not to have been fully thought through. The world economy nearly collapsed a few years ago because maybe 10% of debtors were unable to service their debts. If we were to return to something like that, we’d return to the verge of collapse or beyond.” I do not understand how these points tie together and relate to the whole. Wouldn’t this project wipe out that 10%, best case scenario?

  3. As long as we’re all focusing on 500 small ideas that are not connected to unified grand projects, then that too is not going to do do much more than generate some publicity. It’s important to get a good idea and be able to get alot of milage out of it–but it’s equally key that somebody can come in and narrow down the focus and create an order of operations for what to demand, and how to get it.

  4. Longtime listener and admirer here.

    I do you think you’re off base in this case. Think about it. Filing for bankruptcy may technically be a good idea. But it does not sound attractive to anyone who isn’t an economist. Bankruptcy in popular culture is synonymous with failure and collapse. Period. Occupy would be either ignored or relentlessly mocked if it encouraged people to voluntarily submit to bankruptcy. There’s nothing that sounds remotely optimistic or revolutionary about that.

    I assume you’re familiar with David Graeber’s book on Debt. Your post ignores his entire argument: modern capitalism is built on the moral legitimacy of debt. It’s widely accepted that “you should pay your debts,” as if this is a universal law of nature. Disputing this and de-individualizing debt through the use of mutual aid is inherently a portal to broader critiques of and resistance to capitalism.

    And I have to say, your quibble over the words in the Debtor’s Manual smacks of sour grapes.

    All that said: Keep up the great work and keep thinking about how to improve the movement. I just happen to disagree with you here. Plus, I’d like to see this offshoot of Occupy succeed rather than die off like the encampments.

  5. Thanks for your thoughts, i’ve been having a super difficult time finding constructive criticism of the RJ campaign amidst all the cheers and bandwagon jumping. I care about these issues a lot, and have worked on them full time for many years through the work of beehivecollective.org. It’s incredibly important to me to not have this campaign be a giant liabilty to Occupy or it’s “surprise beneficiaries” and/or a demoralizing public disaster. Voices of reason are hard to find about this right now amidst the extremely polarized buzz. I’m nervous, at best, to see what happens… Thanks for taking time to write this.

  6. [...] View original post here: Rolling where? « LBO News from Doug Henwood [...]

  7. PERSONALLY, I DON’T HAVE ANY DEBT .. WHAT TO DO .. SHOULD I GO BORROW SOME MONEY? .. I GOTTA SMILE THINKING ABOUT MY MOTHER, THE ACCOUNTANT TEACHING ME NEVER TO BORROW SINCE I WAS A LITTLE BOY .. SHE WAS RIGHT ABOUT HOW DEBT CAN BITE YOU IN THE ASS .. LOL

  8. Nice to see more people discovering Strike Debt and the Rolling Jubilee.

    My only misgivings about their actions is that they can be misconcieved as a substitute for, rather than an accompliment of, more direct social action. Relieving and forgiving debt can make a sizable difference, but if a person is trapped in a minimum wage job with few or no benefits, then forgiving a debt only goes part of the way. Also, there will come a time when those businesses who profit from harrassing debtors will discover what Rolling Jubilee is doing to remove their profit taking, and they will probably resort to going to the State for preventative action to maintain their rights to collect on their “debts”.

    And in addition, some wingnut will probably argue that since poor people’s debts can be forgiven, we don’t have to respect debts we owe for past discrimination and exploitation, either. So, let’s just eliminate affirmative action or pensions or even the minimum wage…because, after all, small businesses are people too, right??

    I’m not saying that Strike Debt isn’t doing a much needed service; only that in the absence of broader Left social activism, they bear the danger of both coming up well short of what is needed, or being coopted and shifted for much more nefarious and reactionary purposes.

    But, that’s only me.

    Anthony

  9. [...] Doug Henwood, among other things, challenges the strategic wisdom of a campaign focused on debt. [...]

  10. Could you post your original version of that chapter? I just found out a friend is struggling with ~$10,000 of healthcare bills and might need it.

  11. I donated to RollingJubilee, I’ll probably donate again however let me say that I found your article refreshing and a very level headed approach to critiquing the ‘movement’. Thank you!

    I was getting frustrated at the string of comments and articles saying ‘This sucks why bother? I ain’t payin for nobodys LCD TV!’

  12. Although I am enamored with the spirit of the Rolling Jubilee, I agree with your concerns about its focus. From a systems perspective my initial thoughts were along the lines of: “If we try to mitigate one outcome of the system (debt), while not addressing the goal/purpose of the system (capitalism), the goal will still be in full-swing, recreating the outcome that we tried to mitigate”.

  13. The Rolling Jubilee isn’t the answer, it’s a strategy trying to raise consciousness about debt and how it is used to control and manipulate us. But together with the Debt Resisters’ Operation Manual we hope to raise people awareness about the oppressiveness and absurdity of our current failed economic system. As you know one of our goals is to build a debt resistors movement and for next addition to the Debt Resisters’ Operation Manual we are expanding into alternative and solidarity economies as well as other forms of social exchange based on mutual support and collective enterprise.

    Some of these issues were addressed in a panel that you were on at this summer’s Socialist Forum. As you know these are complex issues since you didn’t agree with all of the other panelists. But as Strike Debt moves forward with these and other strategies we will learn and improve, hopefully with the continued support of you and other fellow travelers.

    in solidarity

  14. Thanks to what you propose, I’m more motivated to file for bankruptcy now, lessening the minuscule 1:10,000,000 chance that Rolling Jubilee spends even a penny towards randomly wiping out any of my debt, as I wouldn’t want good money thrown after bad. By the way, I’m struck that you may be the first person I’ve come across who bluntly advocates declaring bankruptcy–you really lay it bare. Please don’t throw away that draft chapter, as you may need to develop it more. Still, Rolling Jubilee has turned into a great publicity tool. Win-Win, for now. Interested in seeing where this goes.

  15. you hit the target directly on bankruptcy – as a two-timer myself, i recommend it

  16. Good companion piece to your Charles Juntikka interview, which taught me a lot I never knew. Thanks for talking up bankruptcy and actually presenting it as one of the few (legal) ways to fight the rentiers, all the more needed now that debtors prisons are coming back into style, http://www.nytimes.com/2012/07/14/opinion/return-of-debtors-prisons.html?_r=0.
    Why should RJ buy tiny bits of debt when instead they could encourage mass bankruptcy claims and raise questions about the whole debt system, Frances Fox Piven-style?

  17. From what I’ve heard from some of the organizers in the satellite Strike Debt chapter in Chicago, they’re going to start with buying medical debts. I imagine that doesn’t really change your calculations too drastically.

  18. From what I’ve heard from some of the organizers in the satellite Strike Debt chapter in Chicago, they’re going to start with buying medical debts. I imagine that doesn’t really change your calculations too drastically.

  19. HI Doug, I found this post through Jacobin. Could you please post your original draft of that chapter? I’d like to have some more details on your opinion about it.

  20. Rollingjubilee.org clearly states that they are going to begin with medical debt, and go from there. I don’t know where you get credit card debt right off the bat.

  21. [...] Certainly focusing on debt is a logical continuation of Occupy’s concerns. But there are some major problems with the whole concept. I’ll let Doug Henwood explain: [...]

  22. I would wish that someone would do the simple arithmetic showing that a family living at the median income has no choice but to go into debt if the family wants to pay for the necessities of life. People are always nattering on about getting rid of the car (yeah, three hours on the bus to and from work), cutting out cable (oh, that would save $20 a month). There are a couple of ways to cut expenses substantially. First, move to a converted garage and, second, abandon your health insurance. Oh, and if you have children, you could have your 5-year-old take care of the toddler.

    People without debt (and except for the car, I am one of those) either have lots of money or escape two or three of the major expenses above. It’s not rocket science, but arithmetic.

  23. Doug, when I mention Rolling Jubilee to friends outside Occupy, they laugh and say, “That’s great!” Why? It says something about how creditors dehumanize defaulting debtors, as if to say, “They are only worth pennies on the dollar.” And now Strike Debt has figured out “We can use that.” I think the political message of Rolling Jubilee is a good one, and the reference to the biblical Jubilee does not hurt either in this church-going country. It also says that Occupy lives on in this and other projects (like Occupy Sandy). Although it builds on an actual practice used to cancel sovereign debts of poor countries, I do not think it is meant as a specific policy strategy, revolutionary or otherwise.

    I think we should see Rolling Jubilee as further challenging the legitimacy of the institutions of the powerful, raising public consciousness and opening a public conversation. The media have already begun to take notice. I hope somebody gets on Jon Stewart or Steven Colbert.

    As to the long run, you are doing exactly what is needed in raising questions about where this should this go or how far or long it can run. I see Rolling Jubilee as similar to setting up tents outside Wall Street banks. That was not going to end capitalism any more than the mass effort to levitate the Pentagon in 1967 was going to end the Vietnam War. But I think Rolling Jubilee can change the national conversation just as the “occupations” have done. That cannot be bad.

  24. The Handbook is great but it should be a wiki rather than a .pdf…

  25. Forgive me if you have addressed this already, I have only been a listener for a few months and I really like the show, but is there a place where you have the unmutilated draft available to look at. I would like to recommend it to some people that I know. I know there is the episode where you discuss bankruptcy but the essay sounds like it goes into more depth and is easier to reference than an episode.

    Also thank you for posting this. I wanted to take a look at the debt resistors manual but now I have to wonder how seriously I can take it if it is watered down in the way you described.

  26. Doug,
    Why cant we go after all those filing fees the Banks never paid to the respective states because of MERs?
    1. Sue the Banks to collect the fees
    2. Fine the banks for every fee they avoided by using MERs–hey we can learn from them too–late fees anyone?
    3. Take the cash and distribute

    Why haven’t the states AG gone after recovering these fees which seems a blatant disregard of the law?

  27. [...] comradely critique of the RJ campaign and the focus on debt more broadly. Next up, another friendly critique from Doug Henwood who highlights the technical trappings of the campaign and stresses that the most effective way to [...]

  28. Seems to me that broader use of bankruptcy runs into the same problem Doug identified with the Rolling Jubilee idea: the debt is an asset to someone, so its disappearance through court order could cause a financial system collapse.

  29. It seems odd that debt would be bought and eliminated and the debtor might not even know about it. Shouldn’t debtors be organizing, or if a person’s debt is to be gotten rid of or if the debtor is to be shown how to declare bankruptcy, shouldn’t the debtor be drawn into the movement against debt. As with the Chinese Staff and Workers Association in NYC, which helps workers get backpay, etc. but demands that the person actively participate in the case against the employer and then be active in the organization.

    Also, what about all the people who are unbanked, and who are daily victims of the loan sharking enterprises that cash checks, make payday and tax anticipation loans, sell rent to buy furniture, sell cars and financing to the poor, etc.?

  30. [...] for the more principled critiques. Doug Henwood’s, for instance. He [...]

  31. I agree with you on the obsession with finance capital, and certainly debt is just the visible symptom of vast unmet social needs and inequalities; but I think this effort is largely symbolic, and intended to re-ignite Occupy.

    I was disappointed that you didn’t ask some hard questions of Sara Jaffe who you interviewed about Occupy Sandy. Relief work is great, and it certainly can’t be criticized, but its not political work. Any more than Doctors Without Borders is political. And why not question why this ridiculously inadequate patchwork of uncoordinated volunteer efforts anyway? Is this mutual aid? Poor and working people have been engaging in mutual aid for a long time before Occupy. Maybe horizontal decision-making works better when you are delivering charity. Certainly avoids issues of ideology and direction.

  32. [...] * Doug Henwood is unimpressed with Rolling Jubilee. [...]

  33. Hi Mich. Some counties ARE suing MERS. For example, Multnomah County (Portland, Oregon) http://www.oregonlive.com/portland/index.ssf/2012/11/multnomah_county_gears_up_to_s.html

  34. The whole thing seems misconceived, poorly thought through and anti-political. A media event like John Stewart’s awful “March to Restore Sanity”.

    This debate between Seth Ackerman and Andrew Ross would seem to confirm those fears. There’s just no strategy to this, other than the vague hope that something may emerge out of it.

    I’d hoped that Occupy was the birth of something new. Increasingly its looking like the senility of the old, apolitical, left. I hope I’m wrong about that.

  35. Will, the number of people who’d be eligible for bankruptcy and the sums involved wouldn’t crash the system.

  36. Bought the house (old church) for 140K 9 years ago, put another 50K into it – more to do, look forward to it – custom built to our needs – by us. Ignored the BS about mortgages – best bull headed move ever. Got 2 lofts – luxurious space – one for sleeping and reading (giant TV for movies and NY Giants), one a studio, workshop in the basement. After spending 20+ years of hard-earned savings – cheapest rent we ever had. 700 a mo. ea. and that’s it, 5 acres included, property tax, school tax included. Installed 2 pellet stoves – 1/4 spent on oil, heating bill part of the $700 a mo., all in the planning. We don’t give a damn if the housing market goes up or down – this is our place for good.

    Don’t have a credit card, debit card will do, thank you. Buy used cars 5 years old or less – get financing on them – not crippling. No kids – by choice. Friends in McMansions paying a monthly nut that exceeds our annual one – being hounded by banks by their leveraged out triple mortgages – with IRS troubles to boot. How much space do people need? Fools.

    A freelance merchandiser/fabricator and an artist here – screw the 401K – both of us turned down the opportunity, we know what we need to retire with – WS gets no action off us if we can help it. Second best move we ever made. Can’t have a life with a job, choose a life – takes some hard work to get there and solid planning but it’s worth it. Have time to fly fish 100+ days a year – more than all my fat cat buddies combined whom I out-fish every time – with flies I tie myself. The old lady likes playing with the 3 dogs, making cool furniture out of old wood and funky country geehaws and gardening and following music. Except for the music never saw that side of her when we were city hipsters… downright pioneer woman!

    But I do still have a friggin’ student loan debt, my gal doesn’t. Paid over 10X what it was for – down to 5K now – soon gone. Can’t imagine what it’s gonna be like for kids now. My advice to them – become a First Global and get the hell out, do some good in the big wide world and take off the blinders. American exceptionalism is pure BS. But if you gotta stay – learn how to make things and fix things, stay off the usury! Live richly by wanting less stuff! At any rate soon you won’t have much say in the matter.

    Or you buy into the scheme and it’s, “My, my, my, said the spider to the fly…”

  37. Why so much personal debt? Here are some leads to consider that are not mentioned in the explanations you give. The debt-money system is based entirely on debt. If corporates are not borrowing, then who else will borrow money into existence? US corporates are sitting on record levels of cash that they are not re-spending back into circulation. As a result, demand for goods and services is low. But, according to insiders in the global finance business, US corporates have been disinvesting from the US since the late 1990s. The allure of Asia and cheap labor costs with their concomitant exorbitant profits was just too great. Money borrowed into existence here was used to buy assets abroad instead of being re-spent back into circulation here.

    Who else was going to pick up the slack and borrow money supply into cirucation if US corporates were no longer interested in doing business here? During that time we saw major legislation moves in WDC to 1. get the guarantees they needed to go further and further down the credit score tables with subprime mortgages, under a guise of course of “homeownership for all”. 2. Federal student aid cut and replaced with whole new swathes of loans, also guaranteed. 3. Bankruptcy laws strengthened to make sure consumers are as good of sources of loan collateral as corporates used to be. What we see is the skyrocketing of consumer debt compared to corporate debt as a total source of money supply.

    Of course, with QE, we see Treasury Debt now monetized and now taking up a greater share of money supply in circulation as the bank balance sheets are unloaded of both Treasury Debt and other kinds of paper like subprime loans the banks created themselves. They use their shell company the Fed for that purpose, since they aren’t supposed to really own it now anyway. Meanwhile, should the US govt default, their balance sheets and shareholder capital will remain unscathed.

    Another question to ask about why so much consumer debt, is why are US corporates sitting on so much cash? How if there is competition in the marketplace do these corporations amass so much cash? How do they get away with not having to re-invest to keep up with their competition? How do they end up amassing so much cash from their revenues they take in from the American consumer? Here is the short answer. There is no longer adequate competition in US markets. There is instead weak competition in every sector of our economy, just like Michael Bloomberg said about private health insurance a few years ago. That goes for every other industry where since mezzanine finance for M&A became so readily available since de-reg in the 1980s, huge mega corporations could buy up all the household names into a few mighty oak trees and too big to fail corporations in every sector, like Pharma, food, gasoline, telecoms, media, etc.

    None of these explanations for high consumer debt factor into your calculus so I hope you will consider them and look into them. At the core lies the fractional-reserve prerogative to focus lending (aka money creation) on the biggest and best known and cheapest to service. You could also examine the unprofitable cost dynamics around mid-market and small business lending that drive bigger and bigger banks toward bigger and bigger corporate clients as they shut down small business lending groups to raise profits. It becomes obvious why the system itself is driving toward bigger and bigger, less competition, stagnant wages, entrenched fossil fuels, bad food, unaccountable telecoms surveillance, electric utilities that slowly imperceptibly disinvest from infrastructure so that 130,000 metro New Yorkers are still without power 2 weeks after Sandy, etc.

    There are alternatives to this kind of privatized debt-money system and it is time we learned about them and re-educated ourselves. Defending the existing system under any basis is serving the Reactionaries against Revolution in new knowledge. Slurring the populist movements of the 19th century is also very retrograde and isn’t becoming a real thinker or informed person. There were some amazing books and treatises written during that time that got buried by the AEA and other arbiters of economic “education” what we learned over the last 50 years at Yale!

  38. Yves Smith points out that RJ could be buying up unenforceable debt since “A great deal of the debt sold by banks isn’t even legally valid” and “Buying the debt actually perpetuates this corrupt system.” RJ is a seductive idea, but I worry about the unintended consequences and the missed opportunities. Perhaps Strike Debt will focus on this aspect of the issue (included in their ‎Debt Resistors Operations Manual) at some point; it may not be as sexy, but I suspect it could have an even greater real impact.

  39. [...] que corre o risco de ser visto como caridade em vez de gerar mobilização política contra problemas maiores na [...]

  40. [...] que corre o risco de ser visto como caridade em vez de gerar mobilização política contra problemas maiores na [...]

  41. [...] Rolling Where? [...]

  42. Reblogged this on With The Sun I Rise Up and commented:
    Excellent critique providing a bit of perspective of scale on the Rolling Jubilee

  43. Those NYer “activist” “artists” sure are good at catchy press coverage, getting $, padding resumes, breeding and doing workshops… what else. who knows…

  44. [...] 11/19/12]  Click on Rolling where? for thoughtful criticism from radical economist Doug [...]

  45. Thanks for an important contribution to this complicated issue. I made the point about buying of debt driving up the prices in a message I sent myself to Rolling Jubilee, although I did also make a small contribution. You are absolutely right that there are underlying problems – stagnant real wages coupled with the deeply entrenched ethical principle that it is good to constantly consume more, as well as own one’s own home. I’m not sure, though, that paying rent to a private landlord, in return for temporary lodging rights, is superior to paying rent in the form of interest to a bank in return for gradually acquiring permanent property rights. We need other solutions (cooperative housing? loans from credit unions only?). One interesting point the Strike Debt UK website makes is that debtors’ collective power is analogous to the power of miners’ unions in the nineteenth century, which went on strike successfully to obtain better working conditions, more pay etc. The trouble today is that, as we all know, unions are generally weaker, with more restrictive legislation, fewer members, and a long history of complicity in corporations’ restructuring projects. Even when unions were strong, however, we could argue that collective bargaining simply ensured the ongoing success of the corporate-dominated economy, since workers were locked in to a system that gave them decent wages and benefits, enabling them to become the kinds of consumers whose needs from the 80s on could increasingly only be funded by debt. You are also right that workers still have a vested interest in the preservation of the current order e.g. through their pension funds – but then finance comes back in, since there is no reason workers’ pensions absolutely have to be invested in stocks and bonds (or to a lesser extent securitized property vehicles etc.). Of course, there are massive institutional and legal reasons for it, and investment managers and others do very nicely out of it. But is it too far fetched to imagine pension funds that are invested in a variety of local, community-based, cooperative/mutual businesses, renewable energy projects etc. etc. rather than in GE, Microsoft, and government debt?

  46. [...] my point. Doug Henwood has articulated the most persuasive objections debt-based organizing (see here, here, and here), but bracket that for a second. If we grant that debt is a [...]

  47. [...] as Doug Henwood cautions, this may be over-focusing on a symptom of larger problems, rather than trying to directly [...]

  48. Why so much student debt? Because higher education is too expensive—in fact, it should be free.

    How would you propose to pay for universal education?

  49. [...] basic explanation, is here. Doug Henwood’s widely circulated critique of the project asks: rolling where?. Finance blogger Felix Salmon likes it. Naked Capitalism has called it well-intentioned but [...]

  50. It would take about 1% of GDP – about a quarter of the Pentagon budget. In other words, no big deal.

  51. Its not a matter of paying or not paying, its a matter of how education is paid for. Paying through taxes would be cheaper and more efficient since it cuts out the middle man- the banks, who levy billions of dollars in interest on people- most of whom are making little more than minimum wage. Paying through taxes would also allow students to have a life of their own, instead of living like slaves, doing only schoolwork or work-work every waking moment.

  52. [...] Jubilee, which purchases personal debt in secondary markets and retires it, has been subject to withering critique in some quarters of the left. One of the major criticisms, that it involves so little money that [...]

  53. Go ahead – make it impossible for creditors to ensure repayment of loans.

    We’ll just bring back Indentured Servitude, like we did the previous times debts weren’t being enforced by the courts.

    It’s amazing how many liberals think they can repeal the Law of Gravity if they just click their heels hard enough…..

  54. [...] more direct approach. In one of several attacks published on social media and on his blog, Henwood wrote that, by urging “debt repudiation,” Strike Debt was ignoring the danger that mass debt [...]

  55. [...] The second failing is that the scale of this effort is likely to be too small to have much impact. That reduces the risk of OWS’s operation leading to much in the way of price increases of junk debt, but it renders the activity more like handing $5 bills to homeless people: it provided random relief but doesn’t address root causes. Doug Henwood does some calculations: [...]

  56. I believe this website has got some rattling excellent information for everyone. “I have learned to use the word ‘impossible’ with the greatest caution.” by Wernher von Braun.


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