I’ve commented a few times on Twitter that we in the West do not have a debt problem so much as a usury problem. I won’t say that charging interest is always evil: in the case of someone starting a new business and needing to borrow in order to do so, or someone buying a home and needing a mortgage, I believe it is fair to charge some interest.
I do think that punishingly high interest rates are a problem. These seem to be especially prevalent on the sorts of loans people take when they are not trying to buy a home or start a business but, rather, have not been assigned enough hours at their zero-hours-contract job recently and are trying to feed their children, or pay for unforeseen medical expenses, or travel when there has been a death in the family. The argument is that the poorer you are in financial terms, the less likely you are to be capable of paying back a loan, and so the more expensive it should be for you to rent someone else’s money. The unfortunate and unjust side effect of this is that if you happen to be poor, if you happen to need these sorts of loans, they only exacerbate the situation. The interest rates are very high; eventually whatever company loaned you the money in the first place will “sell” your bad debt to someone else, who will try to get the money out of you, and pass on whatever fees they can. Now not only do you owe far more money than you originally borrowed, but your credit rating is shot to pieces and the next time you need to borrow $200 to replace your kid’s broken glasses so they can see what the teacher is doing at school, it’s going to cost you even more. For unto every one that hath shall be given, and he shall have abundance: but from him that hath not, even that which he hath shall be taken away. (Matthew 25:29)
So I love what Strike Debt* are doing: They’re planning to act as debt brokers, buying up “bad” debts, and instead of going round with the heavies to take away the furniture or otherwise attempt to intimidate people into paying, they’ll, er, forgive the debts. They’re calling it the Rolling Jubilee and they’re planning to start soon.
I don’t know what effect this sort of thing will have on the market, or on how large a scale it would have to happen in order to be noticeable at that level. But I wonder if it could be applied more broadly: could we set up a debt broker, funded by charitable donations, which would buy third world debts or portions thereof and forgive them? I would rather see legal restrictions on usury, so that nobody is in these terrible situations in the first place, but does this have the potential to make a difference?
I’d love to see the numbers, and an accessible interpretation of them.
*I had thought it was Occupy Wall Street, but on a second reading of the Rolling Debt website I see no mention of them. There is a video, my transcript follows:
Four years ago the banks got bailed out.
Now it’s our turn.
The 99% is under attack. Since real wages haven’t gone up since the 70s, we’ve had to use credit cards and debt to make ends meet. Meanwhile, Wall St is making millions off these loans. They’re getting rich by keeping the rest of us in debt and overworked. Wall St has rigged the system against us. They committed fraud and still got bailed out, walking away from their debts and leaving us to pick up the tab. They buy off our government, manipulate the interest rates, cook the books and fake the paperwork, all so they can profit from our monthly payments.
The debts we have are not legitimate. We shouldn’t be forced into debt to cover basic needs like health care, housing, and education. We need a jubilee, a clean slate, a cancellation of debts for the 99%.
Here’s how we’re going to do it. In America, banks sell debt on the shadowy market full of debt buyers. Debt collectors then turn around and try to extort the full amount from us. That’s where the Rolling Jubilee comes in. It raises money to buy the debt. But instead of collecting on the debts we buy, we’re going to abolish it. Poof! Shazaam! POP! Wow!
The math is on our side. A little bit of money goes a long way. If we can raise fifty thousand dollars, we can buy a million dollars worth of debt and abolish it. If we raise more, we can abolish even more. That’s the Rolling Jubilee. We bailed out the banks, and in return they turned their backs on us. We don’t owe them anything. We owe each other everything.
It’s time for a bailout, of the people, by the people.