The American Bear


The Problem with (Strike) Debt | Doug Henwood

What about larger political points? Strike Debt! says its aim is:

to build popular resistance to all forms of debt imposed on us by the banks. Debt keeps us isolated, ashamed, and afraid. We are building a movement to challenge this system while creating alternatives and supporting each other. We want an economy where our debts are to our friends, families, and communities — and not to the 1%.

Totally marvelous. No argument from me about the goal. But why the intense focus on debt and its relief? Debt could be an excellent point of entry into a discussion about many other things. Why so much personal debt? Because wages are stagnant or down, unemployment is high, yet the cost of living continues to rise. Why so much mortgage debt? Because until sometime in 2007, housing inflation (meaning tax-subsidized homeownership) was practically the American national religion. Why so much student debt? Because higher education is too expensive—in fact, it should be free. Etc. But Occupy has inherited a lot of American populism’s obsession with finance as the root of all evil, without connecting it to the rest of the system.

And their call for debt repudiation also seems not to have been fully thought through. The world economy nearly collapsed a few years ago because maybe 10% of debtors were unable to service their debts. If we were to return to something like that, we’d return to the verge of collapse or beyond. And such a collapse wouldn’t hurt just the 1%. Workers’ pensions would be jeopardized. Banks would fail, and millions could lose their savings. Unemployment would rise towards 1932 levels of 25%. If you’re jonesing for systemic collapse in the hope of building something better out of the rubble, then be honest about it. But don’t expect to get much support for the agenda.

A more fruitful approach to lightening the burden of the heavily indebted would be to proselytize on behalf of filing for bankruptcy. Another project of Strike Debt! is their Debt Resistors Operations Manual. Here’s their description of the manual:

You’ll find detailed strategies and resources for dealing with credit card, medical, student, housing and municipal debt. Also included are tactics for navigating the pitfalls of personal bankruptcy, and information to help protect yourself from predatory lenders. Recognizing that individually we can only do so much to resist the system of debt, the manual also introduces ideas for those who have made the decision to take collective action.

There’s a lot of good stuff in there. But the chapter on bankruptcy is larded with unnecessary warnings and complications. I know, because I wrote the original draft and watched it get deformed by group editing. The opening sentence is a fine example: “Bankruptcy, for some people, sometimes, can be a way to fight back against the creditors and escape a life of indebtedness.” No, bankruptcy is much better than that. My original opening read: “Unlike the other chapters in this manual, which are organized around ways the rich screw debtors (and how debtors can get back at them), this one is almost entirely about how debtors can screw the rich—filing for bankruptcy. To get right to the point: if you have a serious problem with credit card debt, there is absolutely no reason you shouldn’t think seriously about doing that.” Much better, I think.

And the chapter concludes by saying that it’s an unsatisfactorily individualist solution to a collective problem—which is true in some sense, but not of much help to millions suffering from credit card debt today. Many people are unaware of what a deliverance a bankruptcy filing can be, and many others are inhibited by shame. They shouldn’t be. And filing for bankruptcy has a lot more to offer than some lightly funded scheme to buy bad debt on the secondary market. Why the Strike Debt! collective chose to tone down my exhortations mystifies me.

I feel somewhat bad writing this critique. There are a lot of fine people trying to do good things with this initiative. But as long as it focuses on debt without using it as a portal to a larger discussion, it’s not going to do much more than generate some publicity.