Rolling Jubilee: Proclaim Liberty Throughout all the Land

Rolling Jubilee: Proclaim Liberty Throughout all the Land November 13, 2012

Ezra Klein describes a scene from the documentary The Queen of Versailles:

David Siegel, CEO of Westgate Resorts, the largest time-share company in the world, is hosting a party. The party is in his huge mansion. But it’s not in his hugest mansion — the 90,000 square foot, still under-construction “Versailles” — which is, at that moment, falling into foreclosure because Siegel can’t keep up on the payments.

Siegel, slumped in a ratty armchair, is regaling some friends with a tale that is, simultaneously, a sob-story about the desperate state of his finances and an extended boast about his skill at financial engineering. As Siegel tells it, he owes the bank $18.5 million, and he can’t pay. But the bank won’t write down the loan. So Siegel tapped a third-party to approach the bank about buying the loan, which they were able to do, for a mere $3.5 million. And then Siegel bought his $18.5 million loan back from the third-party at barely more than a sixth of its original value.

It’s nice to be rich. Millionaires like Siegel, being millionaires, don’t usually have to worry about being trapped by crippling debt, but even if they find themselves in that unusual situation, they have neat little tricks like that to liberate themselves from debt for a fraction of the cost. Matt Yglesias describes how Siegel’s little scheme worked:

All kinds of debt gets “securitized” these days. Instead of a bank just lending money and collecting interest, it sells the rights to that income stream as an Asset Backed Security. By buying up a diverse array of ABS you can end up with less exposure to idiosyncratic risk than if you’re just lending. But what happens when securitized loans go bad? Well they become “distressed debt” that can be purchased for pennies on the dollar.

That’s what Siegel’s “third party” friend did. Unfortunately, that’s not a solution available to most of us — or to the people who really need it. A time-share mogul who makes a string of bad bets during a bubble can slip away from $18.5 million in debt. But a working-class family hit by job loss or injury can be permanently impoverished by an $18.5 thousand debt, with no means of escape.

Until now.

Because the merry mischief-makers of Occupy have come up with a scheme to help free working-class families from enslavement to debt by using the same tricks employed by the Siegels and Trumps of the 1 percent.

They call it Rolling Jubilee:

Rolling Jubilee is a Strike Debt project that buys debt for pennies on the dollar, but instead of collecting it, abolishes it. Together we can liberate debtors at random through a campaign of mutual support, good will, and collective refusal. Debt resistance is just the beginning. Join us as we imagine and create a new world based on the common good, not Wall Street profits.

(Thanks to lonespark and alienbooknose and others who alerted me to this very cool idea.) So far, according to the Rolling Jubilee site, they’ve raised a little over $100,000 and used it to abolish about $2.2 million in debt — which is an even better return on investment than Siegel got. Here’s their video explaining the idea in simple terms:

Patrick Nielsen Hayden cuts to the core of what this means:

That this isn’t just an attempt to render charity to the needy; it’s an attempt to undermine a specific kind of power relationship. As understood and practiced today, debt is a kind of servitude. If you have to take on unsustainable debts — or if you have the misfortune to live in a country that took on unsustainable debts — you’re just supposed to quietly accept that your life is permanently f–ked, and that your creditors get to dictate its terms.

That’ll preach. That’s exactly what Jubilee — the biblical, theological Jubilee — is all about. It means liberation from debt — liberation from having “to quietly accept that your life is permanently f–ked.”

The quote in the title of this post is from the Jubilee passage in Leviticus 25 — the one engraved on the Liberty Bell. But it’s a mistake to think that because the biblical Jubilee first appears in Leviticus and Deuteronomy it must be some obscure and ancient law — something akin to dietary rules or sacrificial prescriptions. Jubilee is woven throughout the whole of the Bible. It’s a refrain that echoes all through Isaiah and the other prophets. Jesus announced his ministry by declaring himself the fulfillment of Jubilee. It pervades his parables. And, as Richard Beck notes, the Lord’s Prayer is a Jubilee prayer.

And spare me any bloody penal substitutionary horror scenarios, Jubilee is the essence of atonement. Jubilee is who Christ was and Jubilee is what Christ did.

All of which is to say that Jubilee is pretty important for us Christian types. And I think Bethany Keeley-Jonker is right to call the Rolling Jubilee a “beautiful step” and a reflection of “God’s economy.”

The Rolling Jubilee is limited, small and quixotic. It can’t address government-backed student loans. And, unlike Siegel’s buddy, it’s not set up in a way that lets it choose — or even know — who will benefit from its random compounding Jubilee.

Natasha Lennard also describes and anticipates some of the ways that creditors may push back to make this effort more difficult. She notes that the Rolling Jubilee is “just one tactic” but “quite a clever one”:

It might erase some crippling debts; it might forge new networks and affinities. It’s certainly an intriguing experiment.

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  • WalterC

     …creditors might be leery of any situation they think will cause them to suddenly have a bunch of distressed receivables on their books all of a sudden, kind of like 2008 redux…

  • If the US Government had simply  deposited $300k in every homeowner’s account and said “Here, your house is now paid off”, it probably would have been a lot less hassle.

  • Also, not mentioned in the Forbes article is that the Rolling Jubilee people say that they’ve done the legwork. Here are their responses to concerns over on Hacker News:

  • vsm

    Isn’t the idea of private charities rather than the state solving social problems common in current conservative rhetoric? I’m not saying this is a bad idea or that it shouldn’t be supported, but as several people here have pointed out, this will not be enough to solve the debt problem.

  • It is still telling that even the other BBC link has people who basically say, “The people of a country have to suffer so the elites can continue to live high off the hog.”

    Not in fundamentals so different from Reaganite thinking, just applied without the mask of gentility.

  • The gospel was *all* about *economic* debt forgiveness? Is that the “Word of the Lord” that “us Evangelicals” have been missing all this time?

    I assume I’m being a bit too reductive here. But if anyone really does believe that, can you share with me some literature that goes into a bit more depth?


  • The Lord’s Prayer explicitly says to “forgive our debtors”. Why would money be excluded from that?

  • Wednesday

    Alas, that depends on translation. The Catholic churches I’ve attended have all said “forgive us our trespasses, as we forgive those who trespass against us”, as did my spouse’s Lutheran church, but my sister-in-law’s new Lutheran pastor says “forgive us our sins, as we forgive those who sin against us”.

  • GuestPoster

    Sadly, publicizing this was probably the worst thing they could do for their cause.  Or, for keeping the operation going, anyways.  It gets people thinking about the nature of debt, which is good.  But Banks, and Wall Street, and the 1%, REALLY hate it when the little people fight back.  Last time somebody tried something like this, the banks stopped selling the debt to those entities that were just trying to forgive it.  I think that effort focused upon mortgages, but still.  

    Banks SHOULDN’T care who buys the bad debt, but they do.  Because they rely upon a ‘moral understanding’ where you’re supposed to pay your debts, no matter what.  If there’s a well-known get-out-of-jail free clause, people might just stop paying the bank, and donate to OWS instead, and hope that their debt gets picked soon.  It’s like the mortgage market, and how business just walks away from mortgages of huge spaces (why bother paying for it if you don’t use it?) but regular people are very much encouraged to keep paying for their underwater house, even though they’d save gobs by just letting the bank take the house back, and buying a new one.  Two different sets of rules.

    It’s really a great idea, and makes me very happy…  but I suspect the 1% on the other end of it to shut it down right quickly.  Because they stand to get less rich if this catches on, and that can’t be allowed now, can it?

  • Buck_Eschaton

    I believe it means both sin and debt. But the idea of monetary debts and Jubilee have been translated out of a lot of our English translation in other places too. At Jericho the NIV says something along the lines of they were blowing the trumpets of rams horns when the walls fell, but I don’t think that’s an accurate translation. The Israelites were blowing the Trumpets of Jubilee when the walls fell down. Circling the fortified city, kind of like the politicial fortifications around Wall Street, chanting and shouting and marching around the city blowing the Trumpets of Jubilee until the walls came tumbling down.

  • AnonaMiss

    Except that it’s my understanding that when the walls came down, they slaughtered everyone in the city.

  • Well, why shouldn’t the Gospel be about economic behavior as well as moral behavior? To borrow a line, “Human behavior is economic behavior.”* You can’t escape economic activity so long as you exist in connection to other people. At the same time, moral activity only really has any meaning in connection to other people. Short of genuine self-abuse (and not the dated euphemism for masturbation), there’s very little you can do in an absolute social void that’s really particularly immoral. There must be actors with agency (defining “agency” fairly broadly to encompass environmental atrocities, though those likely impact other people too) on both ends of the moral equation.

    One could say that economic behavior cannot escape morality (look at the “fair trade” movement for people trying to be morally responsible economic actors), but equally one could say that moral behavior cannot escape economics. A person’s capacity for moral behavior is ultimately limited by their means. How many homeless people can you take in before you can’t support them? How much money can you donate to disaster relief before you can’t pay your bills? How much time can you put in at the soup kitchen before you’re fired from your job and end up on the other side of the kitchen’s counter? Even people who dedicate every waking hour of their lives to helping others must have their lifestyle supported by people who donate money and other resources to charity, allowing the charity worker to work.

    Donating to charity isn’t really a donation, it’s buying moral access to someone else’s charitable work. You’re purchasing morality. But this is okay. In an economy like ours, funding specialized actors is the most effective way to get something done, be that paying a trained electrician or funding a charity’s employees.

    A modern Jubilee, much as Fred has advocated for before, wouldn’t just change how we act economically, it’d change how we act morally. Some people could afford to fund charity work that they couldn’t before. Other people would be freed from the need to benefit from that kind of small-scale charity work, lightening the load on so many small charitable enterprises that are overwhelmed by unemployment and poverty. People would no longer be locked into the death-spiral of debt, easing countless mental and emotional burdens (as well as health burdens caused by stress), making divorce and domestic violence less likely in a number of situations.

    I’d recommend instituting mandatory debt-management courses for anyone who has a sufficiently large debt forgiven by Jubilee, or at least fund free courses for anyone to take advantage of, teaching people how to be more effective economic actors and reducing their likelihood of suffering like that again. Imagine a whole generation rigorously taught how to handle money more wisely. There’s no way that wouldn’t have profound economic consequences, and I think for the better. At the least, it’d put a hurt on some scam artists and corporations in the financial sector (but I repeat myself).

    Okay, yeah, that turned into a much longer thing than I originally intended.

    *From Sid Meier’s Alpha Centauri, stated by Chairman Morgan, the head of the “capitalist faction” on Planet. While I don’t necessarily agree with too much of his actual philosophy on what is morally and ethically right and valuable (I align more with the University and the Gaians, particularly where their philosophies interlock in ethical transhumanism that values information and novelty (University) while maintaining a solid, sustainable relationship with the ecosystem (Gaians)), I think that the only way a human cannot be an economic actor is to avoid all contact with all other humans.

  • JennR

    There is no way for them to know whose debt they are buying as they are buying bundled debt. The only thing they know is what type of debt it is. For this first jubilee kickoff, it is all medical debt.

  • JennR

    Personal, yes; but corporate, no. We are using the 1% trick for the benefit of the 99%.

  • Thanks Kenneth. My objection was to statements that could be interpreted as *entirely* reducing the Gospel to an economic message.

    Rather than sketching the few disagreements I have with your post, I think I’ll chew on it for a bit.

    It’s so rewarding to come across a post that seeks to educate rather than to (only) engage in polemic.

  • Oh, I’m sure there’s more than a little room to disagree and even some definite holes I’m not quite seeing in what I’ve said. I think I let a bit of my (for lack of a better term) utopian ideals leak through, particularly in the endorsement of Jubilee as Fred has suggested. Who knows what kind of unintended consequences it’ll have, and the kind of work necessary to mitigate even the known consequences in the short-term.

  • Consumer Unit 5012

     I haven’t finished reading it yet, but the book “Debt: The First 5,000 Years” has a fair bit to say about the social presumption that paying debts is a _moral_ requirement, not just a financial one.

    Pretty interesting, so far.

  • Consumer Unit 5012

     IIRC, the Bible also strongly condemns usury, but that particular bit of scripture doesn’t get much airtime these days.  Gee, I wonder why?

  • Consumer Unit 5012

     Ah, but think how much MORE hassle there’d have been from all the people who didn’t need this and would have THEIR TAX MONEY going to pay off some filthy MOOCHER LOSER… 9_9

  • Martin

    This would be something for the Jubilee organizers to consider. I am not real familiar with how credit reporting etc works, but I know a little about the tax laws. If Jubilee actually forgave the debt – wrote the debtor to say you’re debt is wiped clean, reported to credit agencies that the debt has been eliminated, then that would indeed trigger a taxable event.

    If however they continued to hold the debt but just made no effort to collect it, it wouldn’t be taxable. But again I’m not sure what the credit implications of this are.