Having set up a bit of an ambitious goal in the previous post, I’m going to start with an idea that wasn’t mine at all, but it’s timely so it gets to go first. A contingent of Occupy Wall Street is promoting what they call the Rolling Jubilee. The idea is beautifully simple: since “distressed debt” is sold on public markets for a fraction of the money owed, buying it and simply writing it off is a form of poverty relief with an extreme multiplier. Apparently at current prevailing rates, the multiplier is around 20, so a dollar donated allows $20 of debt to be written off. That favourable ROI in turn means that if the average beneficiary then channels just a small proportion of the debt they’ve just been released from back into the fund, it can keep going, hence the Rolling Jubilee. I think this is brilliant for a number of reasons.
First of all, unsupportable household debts are a massive problem at two simultaneous levels: they keep individual households trapped in poverty, and when they become widespread as they are at the moment they stop enough people from spending money that they actively obstruct economic growth. Canceling the debts of those most unable to repay them helps at both levels. By making households less likely to become bankrupt, it also makes them more able to stay in their homes, to get access to health care, to educate their children, and generally to access all the infrastructure that residents of a wealthy country should be able to take for granted. At the same time, by randomly selecting some number of households to free from their debts, this frees up a great deal of money to go back into circulation and help us actually escape recession. It’s well-established that a marginal dollar in the hands of a poorer household does much more for economic growth than in the hands of a richer one, because they are more likely to actually spend it. In the long run, economic growth is itself a problematic notion, but right now the recession is causing enormous amounts of misery, so let’s fix that first and then slay the bigger beast.
Secondly, many of the debts that will be written off in this way will inevitably be health care related: expenses the debtors had no meaningful choice about incurring, and wouldn’t have had to incur in a humane system. Hospitals in the US expect such a low repayment rate from uninsured patients that they charge them around triple the rate they charge insurance companies for the same procedure. If you have health insurance and don’t believe me, look over some of the Explanations Of Benefits they send you after paying for anything; it’s all clearly itemised there, and it was looking over those that made me realise how inescapably I would have been bankrupted by a short hospital stay a few years back if I hadn’t had insurance. Unfortunately there are far too many people who can’t remotely afford health insurance for me to just look down on the uninsured and say they caused their own problems.
Thirdly, I love self-regulating solutions. The engineer in me finds them intrinsically beautiful, but more importantly they are a lot less vulnerable to abuse or scaling problems. This one’s self-regulating in two brilliant ways. It doesn’t need to do any credit analysis (in fact it can’t, because the debts are anonymous when purchased), because choosing the cheapest debts on the market responds to a price signal set by the creditors, that this is the debt most likely to be defaulted on, which in turn means its the debt most likely to cause bankruptcies. At the same time, the whole process is self-limiting. In theory if the rolling jubilee really snowballs, it would ultimately write off all the worst debt and gradually start working its way up to writing off debts that would otherwise be repaid comfortably. I’m not convinced that would be a good thing—unless and until we also bring about some sort of utopian gift economy first this would break things too badly, and we’re some way from that—but it also doesn’t matter: because each dollar of debt would get more expensive as this starts to happen, the process would also naturally grind to a halt.
Finally, I think the simultaneously peer-to-peer and anonymous nature of this is incredibly important. Any wealthy person probably could do some good by just picking a debt-struck household and paying their debts for them, but that inevitably creates its own messy set of unequal power relationships. This appeal is asking for the relatively well off to donate to seed the fund, but after that it has a realistic plan for channeling its own beneficiaries’ funds back in to keep the process rolling; as the organisers keep saying it’s mutual aid, not charity. This is very much more empowering to everyone involved. At the same time, there is a direct kind of anonymity, in that the beneficiaries will only see that “the Rolling Jubilee” helped them out, rather than individuals, and no-one involved in organising the Jubilee gets to choose beneficiaries. This removes avenues for corruption and discrimination, along with the possibility of a disempowering benefactor relationship.
Dear world, more like this please.