A few months ago an offshoot of the Occupy Wall Street movement did something fairly amazing. After raising money from an all-night variety telethon the group calling themselves “Strike Debt” began their “Rolling Jubilee” project. Their approach was to raise funds through donation and then buy out the debt of people who were under water on their mortgages. These people had been pressured into purchasing homes on credit by a combination of government home ownership projects and the banks who were told the government would throw some bones their way if they helped get people into houses —creditworthiness be damned. For a time, they thought they were untouchable. Convinced by the assurance of the authorities that real estate prices would always rise, no one was worried about how these loans would affect them down the road. Now, many of them were threatened with eviction, or had been evicted, their houses seized by the bank and their debt still outstanding. This debt had been sold from one bank to another until it ended up in the hands of huge clearing houses for subprime debt that in the bailout were bought up by government backed banks. These banks and the government funds backing them were not trying to make life easier for the individual families crushed by the subprime mortgage crisis they had created. Because of the loss of their houses and massive debt many of these people were forced to go on government assistance such as food stamps, Medicaid, and to move into government owned housing. I don’t think it necessary to stress to this audience the dangers associated with so many people flooding into the welfare system both in terms of the entrenchment of the system, its effect on people’s lives, and the stress put on an already failing system.
Yet, these occupiers saw a way out. Although the actual debt numbers stretched into the stratosphere, the cost to a bank or individual investor to buy that debt was quite low. Since the chances of it being paid off are slim, the asking price for the right to gain that pay off is tiny. So, in a move they have called “the people’s bailout” the Occupiers bought back hundreds of individual debts. There are two reasons we should view this move as important. First, it brings attention to the problematic way we deal with debt in this country. Secondly, it provides an example of the kind of revolutionary engagement which changes the status quo in a real and meaningful way.
The focus of economic policy for the past fifty years if not longer has been to encourage credit growth and debt accumulation on the assumption that the consumption made possible by credit expansion drove economic growth. The idea that we could lead economic growth in a sense by pulling on the economy, stretching it until real industry was stimulated to fill in the gaps. But for years little real value has been created to pay back that debt or, that which was created was captured into small pockets through favoritist regulation. So what little wealth was created pooled around those best at lobbying and never made it’s way to the families now stuck with all this debt. By showing how worthless, meaningless and empty this expansion of credit has been, the occupiers are showing the world that it didn’t create any real value. It only created hardship. While buyouts like this won’t solve the deeper problem, they do bring much needed attention to this issue.
Now, what do I mean by revolutionary engagement? I mean that by thinking about problems in a new way and working outside corrupted systems we can actually start making things better. These people have influenced, in whatever small way, the seemingly untouchable sources of funding and openings for government control from the system and in a very meaningful way. When the people own their own debt, the decision of what to do with it is made based on real human considerations. The occupiers’ forgiveness of this debt could never have been officially sanctioned, but makes some intuitive sense in the current system. Not only that, but it allows individuals and small social groups to determine their own future and standards for dealing with debt. This allows very important factors to be considered that an aggregated view of debt misses. Those who were forgiven were those with many young children, with expensive medical conditions, with injuries that prevented them from working. This form of charity was especially useful because rather than giving all these people enough to pay of an inflated debt, it simply fixed avoided the problematic institutions which caused this in the first place.
This is the sort of charitable project that we as libertarians should be especially interested in because it allows individuals and communities to retake control and simultaneously reveals the way in which governmental systems don’t actually benefit those the least well off. For all the time we spend criticizing the welfare system, it’s important to remember that its only one part of a two-pronged system of corporatism and dependence. While I want to reiterate that I don’t think this will solve any of the long term and macro level economic problems we face, it does show us a good way of dealing with them on an individual or community level. A similar project (also an occupy spinoff) was initiated to help victims of Hurricane Sandy when it became clear government help was not coming or was insufficient and deeply flawed. Using volunteer hours and crowd sourced funds a small group of people was able to make a huge impact in the hurricane cleanup effort. Once again, we need to look for ways to opt out of governmental “solutions.”
On a personal level, I’ve struggled with the question of whether to take on student debt. I hope we can all agree that the student debt market is another that is deeply flawed by government intervention and massively distorted. But how can someone like me keep funding their education without buying into this system and thereby contusing the cycle and driving the bubble higher? Do I give up and drop out? I don’t think so! Rather, I’m looking for ways to raise the money in a community setting. For hundreds of years communities came together in mutual aid societies, friendly societies, church groups, and brotherhoods to do exactly this sort of lending. Health care costs were shared this way. Education costs were shared this way. There were insurance systems that functioned on a small community level. Rather than the huge integrated and regulated insurance markets of today, loan decisions were made on a personal basis, a human basis. So, I was pleased to find that things like this have started to pop up in education too. This is only the beginning. As our insurance and investment markets begin to break down when all the distortions and regulatory costs finally come to roost, I for one won’t be out in the cold. I’ll be plugged in to as many friendly societies and mutual aid set ups as I need to be to keep functioning. We forget that there was a way people did these things before government programs captured and controlled these markets. In my humble opinion, we had best relearn these things before it’s too late.