As we mentioned last week, an offshoot of the Occupy movement known as Strike Debt recently wrote a little book to help people fight their way out of debt. But they’re not just stopping at that. They want to do it for you, too. The group seeks to abolish debt by actually picking up the tab for people through a program called The Rolling Jubilee. How exactly are they doing this? Is this “bailout for the people, by the people” a viable solution to the debt problems plaguing millions of Americans? Can you just stop making payments on your MasterCard now?
Here’s how The Rolling Jubilee works. Banks sell debt to buyers for pennies on the dollar. Those speculators then try to collect the totality of the debt (and then some) back from individuals. But Strike Debt aims to stop that from happening. To do it, they’ll buy the debt from the banks – but instead of trying to make a profit on it, they’ll just forgive it.
You’re probably wondering how people from the Occupy movement are able to buy debt from banks, and that’s a good question considering that the two aren’t exactly BFFs. Strike Debt’s strategy so far has been to rely on “moles” within the industry who are sympathetic to the cause. Strike Debt provides the funds, the moles purchase the debt on behalf of the organization, and then – poof! It’s gone. If it’s your debt that magically disappears, you’ll get a form letter in the mail to congratulate you.
The Rolling Jubilee is not only for the people, but by them too, because it’s based entirely on donations. You can contribute on the website, but they’ve come up with some more exciting fund-raising ideas too. The most recent was a televised concert featuring performances by members of Neutral Milk Hotel, TV on the Radio and rock ‘n’ roll legends Sonic Youth and Fugazi. So far, they’ve raised over $500,000, which has paid off over $10 million worth of debt – an incredible bargain.
While the idea of the Rolling Jubilee may seem novel, even radical, it’s actually an ancient concept. Jubilees are associated with many old religions, and particularly with the big three. But will this tried-and-true practice really have any impact in the 21st century? That depends on where we go from here.
Erasing several million dollars of debt is certainly awesome, but it’s kind of a drop in the bucket when you consider the multi-trillion dollar consumer debt problem that Americans now face (what’s more, because there’s no secondary market for student debt, the Rolling Jubilee can’t do anything about that). Critics say that giving the donations to real people would be more effective, partly because statistics show that people who aren’t well off enough to pay off their debts often never do – they just ignore them. So wouldn’t it be better to help them with things like living expenses instead of helping with debt they’d never pay off anyway? There’s also been talk of potential tax problems created for people whose debts are paid off by the Rolling Jubilee. The forgiven debt could constitute taxable income.
But supporters say that if you’re focusing on the negatives, you’re missing the point. Rolling Jubilee organizers themselves have said that this is basically a way to get the ball rolling. It’s about experimenting, getting people’s attention and starting a dialogue. Whether the Rolling Jubilee ends up being a viable solution to the debt problem or not, the conversation it has spawned is an important one. We’ll certainly be following it closely.