Charity or Mutual Aid?: A Conversation with Organizers of the ‘Rolling Jubilee’
Occupy is back in the media's good graces with two big relief efforts—one to aid New Yorkers abandoned in the aftermath of Hurricane Sandy, and the other to free debtors from harassment at the hands of collection agencies. The latter campaign revolves around a clever premise: buy up defaulted personal debt and then instead of collecting on it, “abolish it” through crowdsourced donations.
The “Rolling Jubilee” went viral after the fundraising page opened last Friday. It has already far exceeded its fundraising goal of $50,000 (which Occupy offshoot Strike Debt calculates will eliminate $1 million of debt, since it is sold for pennies on the dollar.) As of Wednesday, the average donation was just $40, but thousands were donating. Tonight, organizers are staging a star-studded telethon and variety show featuring big-name musicians such as Jeff Mangum of the band Neutral Milk Hotel.
The initiative has won praise from a wide variety of pundits, but it's sparked just as many questions. Foremost among them has been: How exactly does this work? I spoke to Strike Debt organizers Pam Brown and Yates McKee about the nitty gritties of how one becomes a buyer of defaulted debt, and whether a telethon could mark the start of a bigger movement.
What does the Rolling Jubilee illustrate about the way debt works?
Pam: What we're doing with this campaign is buying is defaulted debt—debt that the original creditor has given up on collecting and sold to a collection agency. One of the things we want to get people asking is: Why can someone just buy up defaulted debt for pennies on the dollar and then collect on it?
Yates: And on a broader level, this action also highlights the fact that our system runs on debt. Most of us go into it for the basic things we need to survive—healthcare, education, housing, etc. We want to encourage people to break out of the moralism – this is your fault because you overspent, or you're irresponsible – and see that it’s actually built into the system that you’re forced to go into debt to live. The banks got bailed out, so now it’s our turn. But we don’t think the government’s going to do it, so we're calling this the 'Peoples' Bailout.'
People have brought up a number of concerns about the technicalities of this effort, including that waived debt could be counted as income and cause a tax problem for the beneficiaries. Can you give us an idea of the preparations, legal and otherwise, that have gone into the Rolling Jubilee?
Pam: We have a legal team and an accounting team in place, and they've advised us that they don't believe a beneficiary would incur tax liability. There's been an enormous amount of research and preparation. It's amazing to see people on the internet trying to figure this stuff out on their own, and that's a wonderful part of the process.
Yates: And part of the broader agenda of Strike Debt is to come up with new forms of research and intervention. This is a form of direct action. The process of learning about these shadowy markets and their tax consequences, and the fact that people are falling all over themselves on Facebook to figure out how this works—those are ways to get people to talk about debt. But there's also been extensive consultation on the process, and we're confident that we're not putting the beneficiaries at risk.
This idea involves stepping into the shoes of debt collectors, and then flipping the idea of debt collection on its head. But by buying up the right to collect the debt, you're still completing a transaction with financial firms in the way that it would normally be completed. So is it fair to say that this idea hits collection and credit rating agencies harder than it hits Wall Street?
Pam: The collection and credit rating agencies are very much part of the system that makes debt so crushing—they assign you a number that determines whether you can get a new apartment, sign up for utility bills, or buy the car that you need to travel to work. There’s an intimate connection between Wall Street and the secondary market where they sell defaulted debt.
But you're planning to buy up defaulted debt that its originators are already looking to offload. Could this be construed as a small-scale financial bailout, funded by civil society instead of federal funds?
Pam: One of the things we want to do with this action is to reveal the system, and allow people to see it for what it is. In the process of doing that, there's no real avoiding that we're engaging in the system. But the other component of this is about mutual aid, and alleviating suffering. People really, really suffer when they're being hounded by a collection agent. So a project that eliminates some of that anxiety and psychological torture will allow a lot of people to see what this system is so that they begin to resist it.
The financial industry loves to talk about the danger of “moral hazard.” We're told that if we lower the principal on underwater mortgages, or forgive overly burdensome debts, it could create a situation where people default intentionally to try to get a better deal. Are you hoping that abolishing some debts could, in fact, create a “moral” moral hazard, and embolden more people to engage in collective defaults or take other riskier actions?
Pam: Well I certainly hope that it helps people to examine the debt system. But beyond that, I’m hopeful that we can continue to build a movement where people have the kind of mutual support necessary to take bigger actions. We’re not encouraging people as individuals to default on their debt. But certainly as a long-term strategy, some collective form of economic resistance is crucial.
Yates: And it’s important to remember that there’s already a lot of debt resistance de facto. The question is: How do you build that into concerted acts of economic noncompliance? The Rolling Jubilee can help start that conversation.
How will you be informing people that their debt has been abolished?
Pam: There’s a simple answer to that one! By mail. They’ll have evidence that we really did abolish their debt, and we’ll tell them how to make sure their credit report actually reflects this.
Is it possible that the holders of the debt will just stop selling to you? Is this a long-term strategy or just a way to raise consciousness?
Pam: We’ll see what happens. But the people who are selling distressed debt generally buy it from the original creditors, and then bundle it and determine how to unload the stuff. It doesn’t seem like they care what happens to the debt, or if the debt itself is legitimate in any sense. As the Rolling Jubilee continues, I think people are going to start to really question this.
Yates: The telethon hasn’t even happened yet, but this is moving and growing much more rapidly than we'd imagined. So the possibilities of what to do with this tactic are expanding by the day, and I think the main thing we’ve done so far is generate this amazing discussion that’s highlighting how the system works. There's a lot of discussion around the technicalities—people online debating the fine points of how this works—which is absolutely crucial. But on the other hand there’s also a kind of tipping point where people are talking about debt and what we really owe in a way that hasn't happened before.
This initiative is getting more praise from the media than almost anything else Occupy has done—even Forbes likes it! But it seems like the concept of a “jubilee” is a double-edged sword. A jubilee is in some sense a way to reset the system, and keep deepening inequities from upsetting the status quo too much.
Pam: Yes. Within the Occupy Student Debt Campaign, one of the precursors of Strike Debt, we really talked about the distinction between saying “forgive student debt,” and actually making radical changes in the higher education system. In Strike Debt, we’re looking towards having a national and perhaps international conversation where we can talk about exactly this question: What is the vision that we can collectively agree on for the future and how could we implement that? And we think that the way that that needs to be implemented is through a massive debt resistance movement—a global one.
Yates: And it's important to note that the whole system pivots on our consent to pay. So there’s this amazing potential to not give our consent to the system and not pay. It’s actually very fragile and vulnerable in that respect. If we can spread that conversation about the possibilities of not paying, that could really reorient things.
I don't think the debt system is solely consensual, though. It's also based on coercive structures that impose real consequences when people don't pay up. In most cases, it's not something that people can just opt out of by seeing it for what it is. So how can Strike Debt start to create the conditions for people to be able to resist debt, as you're calling for?
Yates: On the one hand, it's a consent issue. But on the other hand, yes, if you don’t pay, the repo man and the sheriff can show up. Or in extreme cases, you can end up in debtors’ prison. So there is coersion involved as well, and also fear. The fear is related to being isolated and atomized in the shadows. And so breaking out of the isolation, and losing fear by acting together, becomes really important. In terms of the infrastructure we need to build, I think it involves creating alternative economies, alternative kinds of debt. Debt to your friends and family and community rather than to the 1%. So that’s another thing that’s on the horizon: What alternative debt systems might look like.
Pam: I think it's a really important question. We don't really have a safety net, so people understand that they're one step away from the street. I think that the greatest challenge for us is to figure out how to build an infrastructure where we could actually sustain each other if we did have true economic resistance to the system.
Since student debt is government-backed, it isn't sold on the grey market, and can't be abolished by this method. Does this suggest that different tactics are needed for different forms of debt? What might be some next steps for student debt relief?
Pam: When we started the Occupy Student Debt Campaign (OSDC), it was backed by a pledge of refusal. The pledge said that once we got a million people to join, we would stop paying together. There was a lot of criticism, saying that even a million people defaulting wouldn’t make any difference—maybe it would make symbolic difference, but not an economic one. That led into a conversation about how we could unite all forms of debt. They do operate differently, but if we can unite them, we’ll have a lot more power. One of the reasons that OSDC was interested in starting Strike Debt is that student debt is so difficult to resist economically—the government is in partnership with the banks on this issue.
The debt that's taking up the most space in our political discourse right now is the federal debt. There's even a fake grassroots group of young deficit hawks calling for us to lower taxes, cut “entitlements” and reduce the deficit—kind of an anti-Strike Debt. What contribution could Strike Debt's analysis have to the fiscal cliff debate to which we're all about to be subjected?
Yates: The U.S. national deficit is not comparable to the household debt or even to municipal debt. It’s a different kind of system altogether from what households and, increasingly, cities face because their federal funding is being cut. So there’s a false analogy between “getting our house in order” at the national level and at the household level. The way municipal debt operates is part of Strike Debt’s analysis as well. We see how a certain moralism and the whole discourse around fiscal rectitude justifies further cuts and austerity. So we’re well-poised when this fiscal cliff discussion hits the news cycle, to disseminate a more radical analysis of the underpinnings of the system than ever comes through in the partisan policy debate we'll be hearing.
Finally, why a telethon? It brings to mind Jerry Lee Lewis-style charity drives.
Yates: I think of it as a “post-modern” telethon! Through a telethon, you mobilize star power and media visibility to channel peoples’ imaginations and desire to help with a crisis—but typically for one-off acts of charity that contain the crisis but don't really politicize it. So we’re appropriating that format, and pointing it towards collective action against debt.