On Debt and the Rolling Jubilee from Occupy
The Occupy mouvement that took hold in 2011 has transformed its efforts into something quite interesting. They recently launched the Rolling Jubilee, a program to use past and new donations to purchase and forgive distressed debt from individuals (see Guardian article). The aim is to relieve pressure from people who are being chased by debt collectors and allow them to rebuild their lives. Because it targets distressed debt being sold on secondary markets, the Rolling Jubilee can be purchase debt for pennies on the dollar. They claim to be able to purchase $1ooo of distressed debt for only $50.
Few doubt that debt loads are serious problem in our society. With consumer and household debt near record highs, this financial ball and chain inhibits investments in businesses, harms communities, slows new purchases and reduces our ability to relaunch the economy. As described in the amazing article “Debt: The first five thousand years“, debt forgiveness has been with us since debt itself, “Biblical prophets instituted a similar custom, the Jubilee, whereby after seven years all debts were similarly cancelled.” A modern massive debt forgiveness program would have a significant impact, freeing millions of people to reinvest in our societies.
The Rolling Jubilee from Occupy and debt forgiveness programs in general should not be employed for everyone at once. Instead, debt annulments should target people who incurred large medical expenses, unforeseen accidents or who invested in education. Debt incurred during times of duress is the classic path towards bondage and indentured labour. Releasing people from their debts is akin to blowing fresh air into society. The Rolling Jubilee claims 62% of US bankruptcies are due to medical accidents, so their program should help individuals who needed medical assistance, but lacked insurance coverage. However, because student debt cannot be resold on secondary markets, the rolling jubilee is not capable of purchasing and forgiving student loans.
Student debt, currently over 14 billion dollars in Canada, is a huge restriction on economic growth (see article). Young people, looking to invest in a home, have children and make big purchases after graduation inevitably have to put those decisions off until they can relieve some student debt. This harms all of us. And, as a nation we could accelerate that debt repayment. Similar to Occupy’s Rolling Jubilee, the government and individuals could create a debt matching program where any student loan repayment is matched, or more, by a fund, allowing individuals to pay back their loans much faster.
Such a repayment matching program would encourage responsible individuals to prioritize student loan repayment and would reward people who spent their money on education. The freed individuals will be more likely to purchase homes, buy cars and have children – helping lift the economy out of the doldrums, grow tax revenues and restore confidence in our country.
A massive debt forgiveness program for students, individuals with medical issues and other unforeseen accidents would be a noble and efficient path towards a renewed Canada.
P.S. Of course, a long term solution to student loans would be to reduce tuition fees and innovate in education delivery mechanisms, but one thing at a time! (see my other article in french here).
P.P.S. Also watch the Al Jazeera series on modern slavery to see how 27 million modern slaves were often entrapped through debt.Published on November 24, 2012