Committee for the Abolition of Illegitimate Debt

When Occupy Wall Street sprang up a year ago, one of its most aptivating features was that it was one big tent, an overarching idea linking together a long-fragmented left. Today, bereft of the encampments—all the little tents—there’s no denying that Occupy isn’t as powerful a connector as it once was. Given this knowledge, Occupy organizers have been searching for a next step: a way to marshal the political energy that still exists without starting from scratch or denying all that their movement has achieved. This process has recently given rise to an initiative called Strike Debt.

Debt, a growing number of organizers believe, has the potential to serve as a kind of connective tissue for the Occupy movement, uniting increasingly dispersed organizing efforts around a common problem (debt) as opposed to a common tactic (occupation). Already, organizers on the East and West Coasts have taken up this idea. Activists from Occupy Boston are rallying around the city’s indebted public transit system, calling attention to the way state subsidies have been replaced with profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. -hungry private capital by chanting, “Our trains, our tracks—get this debt off our backs!” Occupy activists in San Francisco are planning a debt burning for September 17, one that unites foreclosure fighters, student debtors and other drowning citizens under the motto “Hell no, we won’t pay!”

“Debt is the tie that binds the 99 percent,” Occupy organizer Yates McKee has written: from the underwater and foreclosed-upon homeowners who were first pummeled by the economic crisis, to the millions of debt-strapped students who are in default or on the brink, to all those driven into bankruptcy by medical bills, to workers everywhere who have been forced to compensate for more than thirty years of stagnating wages with credit card debt, to the firefighters and teachers who have had to accept pay cuts because their cities are broke, to the citizens of countries where schools and hospitals are being closed to pay back foreign bondholders. Given the way debt operates at the municipal and national levels, the issue affects us all—even those who are fortunate enough to be debt-free, as well as those so poor they don’t have access to credit. Debt is one of the ways we all feel Wall Street’s influence most intimately, whether it’s because of a ballooning mortgage Mortgage A loan made against property collateral. There are two sorts of mortgages:
1) the most common form where the property that the loan is used to purchase is used as the collateral;
2) a broader use of property to guarantee any loan: it is sufficient that the borrower possesses and engages the property as collateral. payment or a subway fare hike or a shuttered clinic.

“This is why we’re not talking about a debtors’ movement, but a debt resistance movement,” says 28-year-old Chris Casuccio, otherwise known as “Winter,” a Strike Debt member whose student loan debt has swelled to more than $100,000 since he graduated. “The simple fact is, not everyone owes money directly to the banks and governments. Debt resistance is more inclusive, more accurate, and moves from the personal to the structural. When we say ‘debt resistance,’ we think of people forced to go into debt to survive, but also everyone else who is affected by their towns, cities and countries owing money to Wall Street—not to mention both those excluded from credit altogether and those thrown to payday lenders and other predatory scams.”

Since the beginning of Occupy Wall Street, debt has been a kind of subterranean theme of the movement. This makes sense, given that the protests were born of the economic crisis (which was all about Wall Street bundling mortgage debt and betting on who would default) and led by young people being crushed by educational debt. An alarming number of them are stuck in a vicious circle: toiling at low-wage gigs to pay off loans they took under the false promise that the debt would lead to meaningful and fairly compensated employment. Young people are supposedly investing in their future when they go into debt to get an education, but once they sign on the dotted line, the banks have enormous power over their lives. “In a very neat trick, our future is now owned by them, as we are forced to make decisions about our existence in light of our debt,” explains Amy O., an Occupy organizer from San Francisco. “We take a job we wouldn’t otherwise want because it pays well, has good benefits, et cetera.”

Taking a broader view, the issue of debt also forms a point of solidarity with anti-austerity movements abroad (a popular slogan in Europe is “We won’t pay for your crisis”; student protesters in Montreal adopted the red square to signify that tuition hikes would put everyone “squarely in the red”) while also connecting the current uprising to the global justice movement of the late 1990s, which mobilized against the devastating conditions attached to loans taken out by third world countries. “Debt has become the means of subjecting everyone—from sovereign nations to homeowners and victims of payday loan sharks—to a mixture of ersatz morality and threats,” says Nicholas Mirzoeff, a New York University professor who has been active with Occupy Wall Street since last fall. As he points out, “Pay your debts or else you’re a bad person or bad country, and so bad things will happen to you” is the message that creditors send debtors to maintain control. Individuals are kept in line through the prospect of foreclosure, higher interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…

The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. and damaged credit scores, while entire populations from countries teetering toward collapse have been punished with cuts to wages and social welfare programs.

* * *

What’s surprising, then, is that debt hasn’t been made more of a central issue of Occupy organizing until now. Though the Occupy Student Debt Campaign has done some important work (particularly around what it called 1T Day, when student loan debt hit 
$1 trillion), the issue took center stage only after a series of small Occupy Theory assemblies that were held once a week beginning in May in Washington Square Park, attended by some of the same people who were at the Tompkins Square Park gatherings that planned the initial occupation. A few weeks in, the group found its focus; on June 10, during the inaugural NYC Debtors’ Assembly, there was a palpable spark. People testified through a cardboard “debtors’ mic” for more than two hours, many noting that they had never spoken publicly about their burden before. A deeply personal issue—one that is often a source of private shame—was being politicized before everyone’s eyes. The epiphany that suddenly connects the individual to the collective speaks to one of Strike Debt’s best slogans: “You are not a loan.”

Jerry Ashton, a thirty-year veteran of the credit and collection industries, was heartened when he first showed up at one of the debtors’ assemblies. “My impression was that smart people were gathering to try to figure how we got where we are and how we could get out. The fact that someone was thinking of other ways of dealing with the debt instead of accepting it as a burden was interesting to me.” Speaking from experience, Ashton explains that debt collectors refuse to face the fact that most of the bills they’re chasing are unjust. These unjust debts, in Ashton’s view, range from loans taken out by poor students to attend for-profit diploma mills to a surprising amount of credit card debt, which recent exposés have shown is riddled with fraud on a scale akin to the foreclosure scandal, including the robo-signing of documents. One judge told the New York Times that he suspected a full 90 percent of credit card lawsuits were “flawed and can’t prove the person owes the debt.” For this reason, Ashton reserves a special kind of rage for debt buyers, who purchase written-off debt and proceed to hound people in order to collect on it. “These are the bottom feeders of the industry,” Ashton says, his voice rising. “They are buying people’s pain and proceed to inflict more pain on them! They don’t care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. if there’s legitimate debt or not.” When asked about Strike Debt’s potential, Ashton is optimistic: “Of course people are outraged. The problem is, everyone is fragmented—
whistleblowers in their world, victims of debt collectors in another. How do they communicate with each other and create a united front? It will take something like Occupy and the enthusiasm Occupy can engender to get this in people’s faces.”

The issue of unjust or “odious” debt applies at the national level as well. The phrase is typically used in connection with corrupt dictators who take out loans and profit from them without their subjects’ consent. “But what do we call a democracy, like the US, which allows its financial elites to hold the citizenry in near servitude through extortionate debt contracts?” asks Andrew Ross, who has been working on debt-related issues for the last year. “As the 2012 election approaches, along with the fourth anniversary of the financial crash, the power of creditors to make usurious demands on the US population remains largely unchecked.” The label of odious debt Odious Debt According to the doctrine, for a debt to be odious it must meet two conditions:
1) It must have been contracted against the interests of the Nation, or against the interests of the People, or against the interests of the State.
2) Creditors cannot prove they they were unaware of how the borrowed money would be used.

We must underline that according to the doctrine of odious debt, the nature of the borrowing regime or government does not signify, since what matters is what the debt is used for. If a democratic government gets into debt against the interests of its population, the contracted debt can be called odious if it also meets the second condition. Consequently, contrary to a misleading version of the doctrine, odious debt is not only about dictatorial regimes.

(See Éric Toussaint, The Doctrine of Odious Debt : from Alexander Sack to the CADTM).

The father of the odious debt doctrine, Alexander Nahum Sack, clearly says that odious debts can be contracted by any regular government. Sack considers that a debt that is regularly incurred by a regular government can be branded as odious if the two above-mentioned conditions are met.
He adds, “once these two points are established, the burden of proof that the funds were used for the general or special needs of the State and were not of an odious character, would be upon the creditors.”

Sack defines a regular government as follows: “By a regular government is to be understood the supreme power that effectively exists within the limits of a given territory. Whether that government be monarchical (absolute or limited) or republican; whether it functions by “the grace of God” or “the will of the people”; whether it express “the will of the people” or not, of all the people or only of some; whether it be legally established or not, etc., none of that is relevant to the problem we are concerned with.”

So clearly for Sack, all regular governments, whether despotic or democratic, in one guise or another, can incur odious debts. , argues Ross, “should be extended to individuals and households targeted by lenders in predatory ways, and also those compelled to privately debt-finance the provision of basic social goods.”

Before Occupy Wall Street arrived on the scene, the country was paralyzed by the debt-ceiling debate in Congress. Now Occupy Wall Street, and Strike Debt in particular, aims to take the conversation in a radically new direction. A video that recently went viral may show the way. “Most of our debt, in the future, comes from our entitlement programs,” vice presidential candidate Paul Ryan intones at a public event, provoking a 71-year-old man in the back of the room to interrupt him. 
”I paid into them for fifty years! My unemployment, my Social Security, my Medicare,” the man says, before being tackled to the ground and arrested by security guards while Ryan cracks a joke. Like the elderly man in the video, Strike Debt must make the case that entitlement programs are not the problem, but—in radically expanded form—actually part of the solution. As individuals, many of us are in debt because we have to borrow to secure basic social goods—education, healthcare, housing and retirement—that should be publicly provided. Meanwhile, around the world, debt is used to justify cutting these very services, even as the game is further rigged so that the 1 percent continues to profit, raking in money from tax cuts, privatization schemes and interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. on municipal and treasury bonds.

Some worry that debt is primarily a middle-class concern; others that it is too individualizing, or that it may accidentally play into the hands of the right. But, looking around the world and at the economic crisis we’re facing, there are reasons to believe that the opportunities outweigh the risks. “If the struggle over wages was a defining feature of the industrial era, the struggle over debt will be the battlefield of our times,” Ross predicts. The Occupy generation has come of age against the backdrop of mounting personal and government debt Government debt The total outstanding debt of the State, local authorities, publicly owned companies and organs of social security. coupled with a shrinking labor movement and high unemployment. Few young people will grow up to be unionized workers, but many will be debtors. They may not be able to bring production to a halt and build up social power by withholding their labor, but perhaps they can influence the circulation of capital by refusing to pay.

Consider Cara, 28, who owes about $45,000 in student loans, a number that has relentlessly increased since she graduated from college in 2007. “I was 17 when I started school and didn’t understand the difference between private and federal loans or the way the system worked—I just needed money to attend,” she explains. “The thing is, I didn’t get what I thought I was paying for. In my mind, there was a promise that I would take this debt and get a better job.” Instead, she’s working in the service industry, and the $350 a month in interest on her loans is more than she can afford. “I’m not going to choose between a meal or a place to sleep and paying this evil company that does predatory lending,” she told me. Like other young Occupy activists I’ve met, she has chosen to become a resister.

* * *

Even if some people have already taken the step of refusing to pay, building a debt resistance movement won’t be easy, not least because creditors have found ways to gouge those who are struggling by adding fees, increasing interest rates, and even—depending on the type of debt—garnishing wages, tax refunds and Social Security payments. Yet all of this only underscores the urgent need to make debt a political issue. It is clear that some debts will be written off; the only question is whose.The banks and big corporations have been bailed out with a sum that will approach a mind-boggling $16 trillion in the end; regular people and their communities have been left holding the bag and will be paying for a long time to come.

The first thing Occupy Wall Street and Strike Debt must do, then, is fransform our understanding of the morality of debt. Is it moral for the 1 percent to extract money from the 99 percent for things like college and cancer treatments? Why should the 99 percent honor their debts when the 1 percent have walked away from theirs without remorse? Framed this way, Strike Debt is not advocating debt “forgiveness”—which implies a benevolent creditor taking pity on a blameworthy debtor—but rather the abolition of the current profit-centered debt system and the development of socially productive forms of credit. For now, refusing to honor immoral debts may be the only way to save our democracy, Strike Debt’s members argue. And as Occupy Wall Street enters its second year, the popular chant still applies: The banks got bailed out, we got sold out. So why should we
give them another dime?

Source: Copyright © 2012 The Nation