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Andrew Ross: The Debt Resistor’s Operations Manual

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November 9, 2012

Natasha Lewis speaks with Strike Debt member, professor, and author Andrew Ross.

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Image from Flickr via Elizabeth Brossa

“To the financial establishment of the world, we have only one thing to say: We owe you nothing. To our friends, our families, our communities, to humanity and to the natural world that makes our lives possible, we owe you everything. Every dollar we take from a subprime mortgage speculator, every dollar we withhold from the collection agency is a tiny piece of our own lives and freedom that we can give back to our communities, to those we love and we respect.”–The Debt Resistors’ Operations Manual

In the aftermath of last week’s hurricane, Occupy Sandy—a volunteer network coordinated by Occupy Wall Street activists—collected and delivered supplies to some of the worst hit areas of New York City.

Organizers used the existing OWS network to spread information about how, when and where time or money could be donated, and people responded generously. Banks offered loans to storm victims in difficulty; Occupy Sandy brought necessities to stricken communities. Their work goes on.

Like Occupy Sandy, Strike Debt is a group that owes its existence to Occupy Wall Street. The collective began as a fusion of the Occupy Student Debt Campaign and Occupy Theory, which joined to pursue radical political goals—Strike Debt wants debt abolition, free universal healthcare and education, and offers support and practical assistance to debtors.

Currently, Strike Debt meets weekly to discuss projects, which include a long-term ambitions to create a “Debtors’ Union.” They are also experimenting with ways of abolishing debt. Next Thursday, musicians from Neutral Milk Hotel, TV on the Radio, Fugazi, and Sonic Youth will perform at the launch of a scheme called “Rolling Jubilee” in which funds raised by the group will be used to buy debt, sold on a secondary market, usually to debt collection agencies, for pennies on the dollar. Strike Debt will then declare the debts forgiven. Funds raised at Thursday’s concert will be used to buy medical debt. Debt will exist one minute, and then it will be gone. Creative financial fiddling will be democratized.

Strike Debt is attempting to reclaim the conversation about debt from the right, where it is used so often to justify austerity.

The group learned this was possible while researching their first book: The Debt Resistors’ Operations Manual, an investigation into how debt works in the United States today, which was released on September 17 (the one year anniversary of Occupy Wall Street). You can download and read it here. The manual is written in plain English, with clear visual depictions of debt, and draws on unlikely sources, like working debt collectors. 10,000 manuals have been printed, and more than 5,000 distributed.

The first half of the manual is about personal debt—credit card, medical, student and housing—and includes practical advice how to manage your debts and, in some cases, reduce your payments; alongside historical and economic analysis the country’s history of indebtedness, which is at an all-time high. Chapters in the second half are broader: two investigate fringe finance services, which prey on poor communities, as if a “poverty tax;” others cover bankruptcy and debt collection.

A chapter on municipal debt explains how everyone—even if you’re lucky enough to not have personal debt—is a debtor. When cities shrink essential public services in response to municipal deficits, it affects everyone who lives there: “The burden of sustaining ‘life’ gets shifted from the state to the individual and household.” This is, ideologically, a key part of the manual. Strike Debt is attempting to reclaim the conversation about debt from the right, where it is used so often to justify austerity. The manual’s historical analysis shows that debt was created in part by institutions with profits to be gained. It questions the received wisdom that an indebted city logically must pursue cuts by showing that the money that is now considered “owed” did not magically disappear; it was transferred to the 1 percent and should be taken back.

Despite the group’s name, Strike Debt is not (yet) advising readers to burn their debt letters. The manual has full respect for the circumstances of real people with real fears. But the authors challenge the notion that repaying debts is a moral duty; in fact, they argue, debt resistance is the moral choice.

The Debt Resistors’ Operations Manual is a “living document,” which means Strike Debt is looking for ideas and research to add to a second edition and beyond. There are issues to address missing from the first version, such as an exploration of the relationship between debt and the environment: who will pay for the environmental damage caused by climate change? Simultaneously ambitious and grounded, the manual is essential reading for anyone in debt and anyone interested in how economic structures can be changed through political choices.

Andrew Ross, member of Strike Debt, NYU professor and recent author of Bird On Fire: Lessons From The World’s Least Sustainable City, has been involved in debt resistance since last fall when he helped found the Occupy Student Debt Campaign. I spoke to him about the manual and the group’s multiple projects.

- Natasha Lewis for Guernica

Guernica: Who is the intended audience of the manual?

Andrew Ross: Everyone is a debtor so there’s no limit to the audience. When Strike Debt formed during the summer months of this year, there were some criticisms that this was an elitist enterprise, that debt is something that really only applies to middle-class people who have the wherewithal to make down payments for their mortgages, or could somehow afford to go to college, or are within the orbit of lending institutions that are federally secured. One of the things the manual points out is that this is far from true. In fact some of the most predatory aspects of the debt economy apply to low-income populations and this is the case with every category of debt in the manual—credit card debt, medical debt, student debt, and housing debt. It’s often thought that student debt is an elite kind of debt—in fact the impact of student debt is really most profound among low-income populations. 

In addition, even if you don’t perceive yourself to be a debtor, everyone who lives in a city is suffering the impact of the debt economy because of a municipal debt crisis: the cost of debt is passed onto us whether we sign an individual agreement with a lender or not. So everyone is a debtor: there’s no one who would not benefit from reading the public service analysis that’s in these pages.

Guernica: The manual is just one of Strike Debt’s projects.

Andrew Ross: Yes. Another project we’re working on is called the Rolling Jubilee. We’re doing a big event to launch it next week (The People’s Bailout, November 15 at Poisson Rouge, will feature music from members of Sonic Youth, Neutral Milk Hotel, Fugazi, and TV on the Radio). The idea behind the Rolling Jubilee is: defaulted debt gets sold for pennies on the dollar on the secondary market; collection agencies buy it very cheaply; and then the collection agencies extract whatever they can from the debtor. That’s the way debt collection works. So our plan is to intervene and buy some of that debt. We can raise a little bit of money to begin with and buy a substantial chunk of debt. We eliminate the debt and then we write to the debtors, tell them that they no longer owe anything. They’re then under no obligation to do anything about it but if they want to kick in some money to the fund it will help us abolish other people’s debt. And if we can establish some kind of momentum, then this rolling fund will scale up and it will show that we can provide debt relief. This is one way. There are other ingenious ways of doing it but it exposes the system to some degree while showing how easy it can be to escape debt.

Guernica: So anyone can legally abolish debt this way?

Andrew Ross: Yes, but most people are not aware of this. So we thought we would turn the whole practice into something for the social good. And, as more and more people learn about Strike Debt, we hope people will send us more ideas like this or work them up on their own. Eventually we’re also talking about trying to build a debtor’s “union” of some sort, with local chapters and the chapters might take on some work like this.

Guernica: Does the collective have a vision of what a debtor’s union would look like?

Andrew Ross: There’s a lot of discussion about it right now. It’s a long-term thing. Some people have an idea for creating sub-unions within the big financial institutions so that if you join a debtor’s union you automatically become part of a sub-union of whatever financial institution you owe money to, so you become part of the Bank of America sub-union or the Sallie Mae sub-union. And when each of these sub-unions reaches a critical mass of memberships, say 100,000 people, these 100,000 people have some bargaining power within the institution and can act accordingly whether to do a debt strike or take some other kind of action that would weaken the institution and perhaps bring it down. 

Conceiving the debtor’s “union” will be a political debate about what relationship it would have to union history; to what degree do we see debt as a form of labor; what kind of network we want to build, but there haven’t been any political disagreements so far.

I see higher education being turned into a debt trap, and highly immoral policies have led the Federal Government down that path.

Guernica: The idea of a debtor’s union is partly built on an idea that comes up a lot in the manual—the importance of debtors realizing that they’re not alone.

Andrew Ross: When we started working on the Occupy Student Debt Campaign, one of the things we noticed last October and November at Occupy locations, not just in New York but around the country, was that some of the loudest voices were folks speaking out about their student debts, publicly. This is a relatively new phenomenon because people because there’s a lot of shame and guilt attached to being in debt. People are coming out as debtors, it’s unusual; does it augur some new kind of political movement? That was a question we were asking at the time and that’s why it was a feature of the Strike Debt’s debtor’s assemblies over the summer, when people were encouraged to come and speak out about their different kinds of debts. It’s often very harrowing for people to do that and very agonizing for people to listen to some of the stories but what did strike us was how interdependent the different debts are within any one household. And we also realized tens of millions of people were already in default and were suffering the consequences in private. So this was yet another reason to do the work that we did—especially around the book—to encourage people to come out of the shadows and publicly empower themselves along with others in a collective group because that’s the only way that debt resistance can really happen in a significant way. But the first public voices in the squares were very important and in retrospect they were also a “coming out” for this movement.

Guernica: In the manual there’s a lot of respect for people’s circumstances and for the shame or guilt people might feel about their debts. But it also made clear that this shame is misplaced, because debt is often a deliberate creation. For example, the chapter on student debt discusses the collusion between student loan companies and financial aid offices. Most people don’t think about their student debts this way.

Andrew Ross: Yes, I think you’re right that most student debtors are unaware that they’re walking into a debt trap that has been laid for them. Some of the collusion between financial aid officers and institutions is so deceptive that people have been prosecuted. But most of it has become normative as a formula for funding higher education. It’s most nefarious in the case of for-profit universities. One of the reasons why the impact of student debt is much greater among low-income populations and minority communities is that funding for public colleges has increasingly shriveled up. It’s these families that are being pushed into the for-profit university system and that’s the most predatory debt trap of all where there’s very low rates of graduation and very high rates of student debt and there’s a very profound structural collusion between financial aid officers and government agencies and private banking institutions. That is just a huge profit engine not just for the owners and shareholders but also for the lending institutions that use them as a vehicle for generating returns. That’s why it’s a shame when media producers feast on stories about students from middle-class backgrounds who are pursuing their dream education at the elite private college and are racking up $150,000 of debt. It’s the typical poster child story that you see in the media and it’s an invitation for the reader to say, “How could they be so irresponsible? How could anyone let that happen to themselves?” You won’t get too many stories about the lower end of the spectrum, which is where the impact is disproportionate. But overall, increasingly, I see higher education being turned into a debt trap, and highly immoral policies have led the Federal Government down that path. The immorality is much more profound in the private banking sector where student debt one of the most lucrative areas of the lending industry.

I see education as a social good, as a right, not as a contractual bargain that’s going to generate returns. But I fully understand how and why students are increasingly viewing it that way.

Guernica: Do you mean the immorality of the banking sector is seeping into higher education structures?

Andrew Ross: I think it’s increasingly being exposed. I would hope folks like myself, whose livelihood is in higher education, are asking themselves some serious questions about our own responsibilities walking into a classroom where we know—we can’t any longer be in denial about the fact—that half the students in the class are being indentured by being there. It’s a horrifying thought. I’ve found it sobering to dwell on this the course of the last year. There’s a lot of profound denial among faculty about this and university administrators are not about to do anything about it because they’re the ones that are personally profiting. Astronomical salaries for senior administrators and presidents is one of the reasons for skyrocketing college costs.

Guernica: Real estate is another. You recently wrote an article for Dissent about the link between student debt and urban growth. It was focused on NYU’s expansion project, which is the university you work for.

Andrew Ross: There have been very few universities in the last decade and a half that have not embarked on a large scale capital-intensive building campaigns and it’s a very interesting part of higher education now that the universities themselves have become a growth economy, physically. The physical component of it depends very heavily on debt financing. The financial industry of course has a great stake in this and in the years since the financial crash in 2008 with credit markets and mortgage markets being in the doldrums, universities have been one bright spot for investors to look at and think “there’s all sorts of opportunities for us here.”

Guernica: You also wrote that this kind of growth benefits from being associated with education, which is thought of as a public good. How long do you think this image can last?

Andrew Ross: I think there are already a lot of folks who quite rightfully ask themselves whether it’s worth it, if they’re thinking about education as a contractual bargain and as a kind of passport to enter the high wage workforce. Certainly in the 1990s and early 2000s you could point to what was often called the income gap between those who had a college degree and those who didn’t. Most college students expected to enter the top quintile of income earners, but that’s no longer the case. Increasingly, as the top 1 percent are siphoning off more and more income and wealth, you’re just not seeing that top quintile being any kind of plausible goal for the college-educated. So on a purely pecuniary basis, just crunching the numbers for themselves, more and more students or their families are saying it’s not worth it to put our children in indenture for the rest of their lives. That’s if you look at education in pecuniary terms. As an educator, I do not. I see education as a social good, as a right, not as a contractual bargain that’s going to generate returns. But I fully understand how and why students are increasingly viewing it that way.

Guernica: As soon as education isn’t free, you’re already being forced to take into account the economic factors and think about whether you’ll be able to pay for it in the future.

Andrew Ross: That kind of thinking, that financialization of the mind, essentially, is what has happened, and it does stifle the optional political imaginations of students. And I think one of the reasons why we do see that students are less inclined to be active politically, to be outspoken, has a lot to do with this debt burden, it has hampered the political mobility and agility of the student body over the years. If one were to be conspiratorially inclined, one would even say that was one of the purposes of building this debt economy around education. Elites looking at student protest movements in the 1960s and ’70s thought, “Well, what’s the most effective way of dampening this?”

Guernica: Interesting. Is this true in other areas of the debt economy?

Andrew Ross: For much the same reasons, home-ownership was promoted in the 1920s in this country as an explicitly anti-socialist measure designed to deliver the masses of population into the position of having a long term relationship of debt with a bank. The long-term mortgage loan, which originated in the 1930s, was a very effective way of limiting the political mobility of a nation of homeowners, essentially, and it’s worked very well. So loans are instruments of social control as well as being instruments of wealth redistribution. Financial elites have manipulated debt to extract a lot of wealth for themselves but it also functions as an instrument of political control very effectively.

Guernica: What did you learn from the manual?

Andrew Ross: There are a few chapters on alternative financial services that really do drive home the degree to which it’s very expensive to be poor in this country. This relates to our earlier discussion about whether or not the focus on debt is an elitist thing: it’s absolutely not. For the people who are unbanked or underbanked, they’re forced into the worst kind of debt trap and they rely increasingly on their engagement with these alternative financial institutions that are not federally insured in any way and are some of the most venal people in the lending business. We’re talking about check cashing outlets, pay day loan agencies, (which can extract from 800 percent - 1000 percent of loan interest annually); rent-to-own financing, auto title loans, PON pawnshop loans, prepaid credit cards. This whole spectrum of fringe finance carries fees, many of them hidden, or gotcha, fees, and rates of interest that are astronomically higher than those that come with traditional loans. 

Guernica: Is there much regulation or are there calls for regulation in this sector?

Andrew Ross: As at all levels of the finance industry, the fringe lenders either lobby very hard or else they operate in the shadows wherever they can. Their rates of interest would be illegal in most societies and have been historically. Even the people who work in that sector of the industry know that it’s fundamentally immoral. I don’t know how they sleep at night. We got a lot of the material for those chapters from guilty industry insiders.

The fringe financing companies don’t like anyone with legal authority scrutinizing what they’re doing and they also don’t like being pestered by debtors who know their rights.

Guernica: People who still work there? 

Andrew Ross: Yes.

Guernica: What was their take on it?

Andrew Ross: They have a lot of ingenious advice about how to escape or evade the debt traps, many of which are highly nefarious, some of which are illegal, and all of which they themselves see as really just wrong. Part of the advice in the book is: if you are talking to a collection agent or if you’re talking to a payday loan officer, just bear in mind that that person knows that what they’re doing is fundamentally immoral. That knowledge gives a little more confidence to the debtor. There’s one statistic, which is cited in the manual, which is for every low-income household—there’s about 40 million households in the U.S. with incomes less than $30,000 a year—alternative financial services as an industry collectively extracts $2,500 on an annual average. That’s a huge volume of profit. These are the poorest people in the U.S.—too poor to have debt from Citibank or from Bank of America, although increasingly the big banks are getting into the payday loan business themselves. 

Guernica: I was amazed to read how much sketchy activity goes on with these companies.

Andrew Ross: The fringe financing companies don’t like anyone with legal authority scrutinizing what they’re doing and they also don’t like being pestered by debtors who know their rights. So a lot of the advice in the book is aimed at this: you should be writing letters, you should be documenting this, you should be making sure you know your rights, you should be taking this kind of action; because we know that the collection agencies or the lending institutions don’t like it when debtors fight back. And often you end up with a much better settlement than you do if you just sit back and accept this as normality. A lot of the time they are lying and misrepresenting themselves so they’re fraudulently trying to extract money from you.

Guernica: The introduction of the manual says, “Laws surrounding debt lending, collection and buying are notably complex, designed to keep debtors confused and afraid.” The writers address this problem throughout the book with clear explanations. The manual explains how banks create money.

Andrew Ross: Most people still think that when you get a loan the banker gets this bag of money from the vault and gives it to you (laughs) and therefore they are the ones who are out of pocket. That’s not at all how it works. Money is created, as interest-bearing debt, at the moment that a loan is signed by you. Lending institutions need borrowers: without the borrowers they cannot create the money. Knowing that alters your whole psychology as a debtor because you no longer have this image of the banker pulling his bag of money out of the vault: There’s a vested interest in having debtors believe that this really is much more complicated than they can understand. This is why the manual is written in plain English.

To learn more or become involved with Strike Debt, visit their website, where you can read the Debt Resistors’ Operations Manual, sign up for updates, and find a calendar of events.

Natasha Lewis is a freelance journalist from London and graduate student at NYU’s Cultural Reporting and Criticism program. She has written for Dissent.

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