Over the last few months, I've been involved in the Rolling Jubilee, an initiative of Strike Debt, to purchase defaulted debts for pennies on the dollar and abolish them. Recently, we announced our latest purchase of over $1 million in emergency room debt. We paid just over $21,000 to buy it. The average debtor owed around $900, and we will be abolishing the debt of over 1,000 people. More announcements of additional purchases are on the way.
Since we launched Rolling Jubilee in November, the attention it received has taken us all by surprise. There was not a lot of time to consider what it all meant. Five months in, I’d like to reflect on what we did and why.
Rolling Jubilee required the tireless effort of many unpaid organizers who spent months researching the debt industry, building relationships with debt buyers and attorneys, developing websites, and planning a star-studded telethon in NYC. Throughout the process, we did not know whether the campaign would be a success. Would people want to help abolish the debts of total strangers? We set the modest goal of raising $50,000 to erase approximately $1 million of debt and hoped for the best.
From the moment the Jubilee launched, our expectations have been wildly exceeded. Contributions flowed in. We smashed our initial goal in the first 36 hours. At this writing, we’ve raised over $573,000 to abolish more than $11 million of debt. The campaign also attracted media attention and was featured in many publications, including the New York Times, Forbes, and Mother Jones. In addition to raising money to abolish debt, the Rolling Jubilee has succeeded by an equally important metric: advancing a public conversation about the predatory debt industry and raising critical questions about how debt functions as a centerpiece of capitalist exploitation.
Now that the Jubilee is up and running, I’d like to explain why the campaign is important and respond to some of Strike Debt’s critics on the Left. As I don’t speak for Strike Debt, these views are my own.
First, the basics: when a debtor defaults, the lender can sell the debt for pennies on the dollar to buyers and brokers on a secondary market. In some cases the lender is required by law to sell off defaulted debt. That means that if you owe $100 and don’t pay it back, the lender can sell your debt for between $5 and $20 (and sometimes even less) to the secondary market. Selling the debt allows the original lender to get a tax write off, a kind of mini-bailout. Then, collectors try to get you, the debtor, to pay the full amount. Many different kinds of debt – from credit cards to payday loans – are sold this way. Lenders and debt collectors essentially traffic in human misery.
In some ways, those of us involved in Strike Debt were unprepared for the avalanche of emotion that followed the launch of the Jubilee. We heard from uninsured people whose lives had been ruined by one grim medical diagnosis. We received desperate letters from former students whose loan payments had ballooned to amounts unpayable in a lifetime. We heard from families trying against all odds to save their homes in foreclosure. Some wrote to ask for help that we cannot provide, as all debts are sold in anonymous bundles. For the most part, though, debtors wanted only to release their shame and tell their stories.
Yet, not all responses to the Rolling Jubilee have been positive. Shouldn’t people have to pay their debts, some wondered. Aren’t you encouraging irresponsible behavior, others wanted to know. Of courses, both of these claims are ridiculous. Why should people have to go into debt for basic needs in the first place? And why should the little people have to pay their debts when banks receive bailout after bailout? In fact, the Rolling Jubilee poses an even more fundamental question: which kinds of debt are legitimate and which are not?
Surprisingly, some critics on the left chose not to engage these questions and, instead, expressed deep reservations about Rolling Jubilee. Economist, Richard Wolff, declared the campaign “misdirected” and suggested that Strike Debt open offices across the country to help student debtors apply for forbearance. Unfortunately, forbearance is not necessarily a good, long-term option for student debtors and opening offices around the country is more easily proposed than done. More frustrating about Wolff’s suggestion is that it does not engage the campaign as designed and offers the easy advice that Strike Debt should have, all along, been doing something completely different.
Nation writer, Doug Henwood, chose a more direct approach. In one of several comments published on social media and on his blog, Henwood wrote that, by urging “debt repudiation,” Strike Debt was ignoring the danger that mass debt refusal poses to the larger economy. Apparently, those who don’t pay their bills are more to blame for financial meltdown than the people who issue credit lines, cause a global recession through fraud and speculative investments, and then blame everything on schoolteachers and pensioners.
Equally perturbed was Yves Smith, of Naked Capitalism. Smith devoted no less than three lengthy posts to discussing the alleged tax implications of Rolling Jubilee. Strike Debt has said repeatedly that Rolling Jubilee was created in consultation with tax attorneys. (Indeed, a recent article about RJ in Tax Analyst magazine makes our case.) Odder still, Smith went back and forth between accusing Strike Debt of harming debtors and of doing nothing of consequence.
I am baffled at the focus on these non-issues. First, these critics seem to know little about how organizing actually works these days. Does Wolff really think student debtors would flock to an office to fill out paperwork? Others from the establishment Left seem intolerant of anything that doesn’t repeat old formulas. On Facebook, Henwood suggested that Rolling Jubilee was somehow an insult to Wal-Mart strikers. And, though Smith spent some time skimming tax law to find bits and pieces that backed up her presumptions, she didn’t reach out to a single Rolling Jubilee organizer, some of whom are known to her, to learn more about the campaign.
Missed opportunities are the most unfortunate outcome of Left critiques of Rolling Jubilee. There is, in fact, a lot more to Strike Debt than a single campaign. And there are many urgent topics related to debt that public intellectuals should be writing about, even if they don’t approve of Strike Debt’s particular tactics. The Jubilee is not beyond critique. The problem is that much of what has been written fails to examine the campaign in the context of a social movement. Furthermore, in the context of the outpouring of suffering, grief, and outrage that the Jubilee has prompted, the assessments cited above seem jarringly dissonant.
I am not sure yet what this dissonance signifies. But it has made me think a lot about the role of public intellectuals and about the state of Left critique in America. I want to discuss some of the core issues that we all ought to be talking more about, especially since the Rolling Jubilee began.
Race, Class and Debt
While the Rolling Jubilee is not going to buy and erase all defaulted debt, that is hardly the point. Strike Debt has furthered a conversation about the profound injustice of our economic system, especially in relation to race and class. A debt crisis is a gold mine for vulture capitalists in the debt industry who use all sorts of aggressive and illegal tactics to profit from people’s misery. The New York Times reported in August that as many as 90% of lawsuits filed by credit card issuers cannot be proven in court because lenders do not have the proper paperwork. If you’ve heard of robo-signing in the mortgage market, you know what’s happening in other debt markets as well. The debt system affects some more than others. The housing crash was particularly terrorizing for African Americans. In fact, the recession produced a drop in black household wealth so dramatic that it is as if the civil rights movement never happened.
The secondary debt market, where Strike Debt is purchasing and abolishing debt takes advantage of people rendered vulnerable by an economy that has never worked for them. In NYC alone, over a two-year period, debt collectors siphoned almost $1 billion from the city’s poorest residents. Even more disturbing, debt collectors are aided by the legal system. The courts have pronounced default judgments against debtors, even if collectors can’t prove any money is actually owed. Many debtors don’t know they’ve been sued until collectors garnish their wages or benefits. People of color in low-income communities are prime targets. According to “Debt and Deception,” a stunning report by the social justice organization, NEDAP, “Sixty-nine percent of people sued by debt buyers [In NYC] were black or Latino.” Furthermore, the study states:
Virtually all (95%) of people with default judgments entered against them by debt buyers resided in low- or moderate-income neighborhoods, and more than half (56%) lived in predominantly black or Latino neighborhoods.
The idea that people go into debt for luxuries is absurd. Regulating the collections industry is only a small part of the solution, as it would not address the fundamental problem that people are forced to go into debt for basic needs. More importantly, Rolling Jubilee reveals something fundamental about the economy. In the dark corners of the speculative debt market, the essence of capitalism, where everything is reduced to the profit motive, is writ large. It is unreasonable to study the research and conclude otherwise. This is the conversation that public intellectuals and the media ought to be promoting.
Medical Debt
Debt is more than just a symptom. By purchasing and abolishing medical debt, Strike Debt is advancing a discussion of our failed health care system. Medical debt is one of the most odious kinds of debt due to the simple fact that it should not exist. This is an argument that more public intellectuals on the Left ought to be making, especially because medical debt is not exactly exotic. According to a 2006 study in Health Affairs, “a recent national survey found that one out of six nonelderly adults—about twenty-nine million people—had recent or accrued medical debt.”
Millions suffer and millions more are one illness or accident away from financial devastation. Lenders, especially big banks, are poised to profit handsomely from that possibility. If you have private health insurance, there are still plenty of reasons to worry. More than two-thirds of personal bankruptcies are linked to medical debt and most of those people had insurance at the time they incurred the debt. According to Health Affairs, “15% of those who had insurance for all of the past twelve months reported having medical debt, and 70 percent of all those with debt said that they were insured at the time the debt was incurred.”
When it comes to medical debt, having insurance will not protect you. According to researcher Mark Rukavina, rates of medical indebtedness are similar for those with and without insurance.
The private insurance industry is wholly inadequate to providing the majority of people with the care they need to live healthy lives. Our health is at risk because medical care in the US is a profit-making enterprise that enriches the few at the expense of the rest of us. The Rolling Jubilee helps make this fact concrete. It is strange that some are more interested in drumming up controversy to make themselves seem relevant when they could be educating their audiences about something as inhumane and undemocratic as medical debt. This is especially troubling in light the Affordable Care Act, Obama’s attempt to address the health care crisis by expanding a market that has already failed.
The evidence is overwhelming that a health care industry based on private insurance actually promotes illness. People with medical debt, even those with insurance, are less likely to seek out care, fill a prescription, or take a necessary test because they are ashamed and don’t want to incur more debt. A 2004 study in the Journal of General Internal Medicine stated that “over two thirds of those who either had a current medical debt or had been referred to a collection agency reported that it caused them to seek alternative sites of care or to delay or avoid seeking subsequent care when needed.”
The US health care system is making people sick and keeping them that way because illness is profitable. And it’s not just the debt itself that causes harm. Aggressive medical debt collection practices are also common. Many people have been harassed by collectors during and after hospital visits. The New York Times recently reported that one collection firm agreed to pay $2.5 million as punishment for violating a federal law requiring hospitals to treat everyone who needs help. This wrist-slap fine is offensive when one considers the profits involved and the disturbing tactics the firm used, including embedding collections agents inside hospitals and stealing private information about patients from doctors.
Debt is a Trap
By focusing on medical debt, the Rolling Jubilee also illustrates how different kinds of debt are connected. When people can’t pay doctor bills, they often turn to other forms of credit, which compounds the problem. “People with medical debt are often subject to legal judgments, wage garnishment, attachment of assets including bank accounts, or liens on their homes, which can lead to foreclosure,” Health Affairs researchers Robert W. Seifert and Mark Rukavina explained.
Medical debt is a cause of foreclosure. This fact helps shatter the myth that different kinds of debt are distinct examples of consumer irresponsibility. As noted in the Debt Resistors’ Operations Manual (another Strike Debt initiative), people who can’t afford medical care often turn to credit cards, the plastic safety net, to pay for daily necessities. Thus, credit card debt, often assumed to be the result of profligate spending by impulsive shoppers, is actually inextricably linked to the unaffordability of health care. A report by the public policy group, Demos, Borrowing to Stay Healthy, concurred.
“Twenty-nine percent of low- and middle-income households with credit card debt,” the authors wrote, “reported that medical expenses contributed to their current level of credit card debt.” Using the health care industry as an example, the report also illustrated the circular logic of the debt trap.
Because health insurance is tied to employment, a serious medical condition can have the effect of limiting the ability to work, earn income, and remain on an employer-sponsored health plan. Lapses in health insurance are strong predictors of medical debt.
Debt is a rigged system of overlapping and mutually reinforcing types. For many, there is no exit. The Rolling Jubilee is one way to illuminate the problem. Public intellectuals ought to take advantage of the opportunity to lead a conversation about what really matters.
The theorist Alain Badiou, in Philosophy for Militants, has written that conditions and tactics will evolve as new generations of radical actors emerge. An effective philosophy, he stated, is one that “comes in the second place . . . après coup, or in the aftermath, of non-philosophical innovations.” Rolling Jubilee is only one tactic in a broader movement for a fair economy and a more just world. The current moment is not aided by acute critiques of specific interventions. A better role for those with access to public forums is to promote, in the aftermath, a broad discussion of the underlying issues and to articulate how the details fit into a larger vision. In the case of Rolling Jubilee, the issues are the debt economy and the possibility – glimpsed anew in the last few weeks – of turning suffering and outrage into action.