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IOU: How Debt Defines the New Millennium

Nicholas Powers Aug 5, 2015

"Hello? Hello?” The debt collector asked loudly. I held my cell phone away from my ear and shook it, as if that might get his voice out. Finally I said, “Sorry, you got the wrong number” and hung up. An hour later he called again, so I blocked his number. Then he called from a new one. I tossed the phone on the bed and left the apartment. My head buzzed like a beehive. I hated the debt collector for harassing me and hated myself for falling into debt. When I got back, I saw my cell phone was quiet and sighed in relief. Then it started ringing again.  

The Divided $elf

“Are you sure?” My friend asked as I put a credit card on top of the dinner bill. Waving the question away, I forced a smile. Every day, I add more debt to my life. The idea that debt is a form of social control echoes across the Left and mainstream media. But I don’t feel controlled, I feel guilty for repeatedly buying what I can’t afford. Even as I wear a mask of ease, behind the nonchalance is anxiety over my $70,000 in student loans and $2,000 in credit card debt.

When I talk to friends about debt, I see how many of us wear that mask. Over drinks, they speak in hushed tones about how much they owe. Sometimes the actual number is left unsaid until night’s end, when roasted drunk, everything spills out. Then we cackle at how little we actually have in this world. But after wiping the tears of laughter away, hard pain can surface. Once, an artist close to me revealed that she did sex work for an older man to pay off her student loans.

The contradiction driving our lives is that we overspend to keep up an image for others, but the more we do, the farther in debt we go. The deeper in debt we are, the more we want to keep up an image for others.

But there is a larger contradiction, one beyond our control. We’re not paid enough to afford “the good life.” Economic jargon is like ice cream: too much too fast and you get brain freeze. But some facts do sink in, and they point to an image of modern life as one long, laborious debt trap. Pay for U.S. workers has flat-lined since the 1970s even as global trade filled store shelves. Unable to live on wages, we live on credit. We bought homes on credit. We went to college on credit.

After nearly three generations of this we are faced with a looming wave of debt that will either get larger or come crashing down. It is driven by those contradictions, one churning within the other: The wage theft at the heart of capitalism that is reversed into debt, and the human need to belong to each other that traps us in a performance of upward class mobility even as we sink into our private holes.

The trick of debt is that the deeper into the hole we go, the less we see how many are trapped right alongside us, in the dark, clutching their masks. In the absence of a social movement, guided by a vision, it takes systemic collapse like bank runs, stock market crashes, food shortages or war to crack our isolation. And those collapses always come.

The Global Debt Domino 

Leading up to World War I, European nations wove military alliances across the continent. When a Yugoslav nationalist killed the Austrian archduke Franz Ferdinand, it triggered a diplomatic domino effect that sent millions into war.

Today, it’s not only interlocking military alliances that threaten the world but also interlocking debt. Governments owe banks. Banks owe other banks. It is a wave of debt that must keep moving between institutions, propelled by payments and if need be, loans, to those in debt to pay their other loans. It can’t stop because if it did, it would crash millions into poverty. People who once spent freely would find their bank accounts closed by the state and food riots exploding in the street.

The global workforce of nearly 3 billion wakes up every day to sow, to reap, to tend children and cook, to lay road and build towers, to hammer and bolt the world together. According to financial scales that measure wealth from hard currency to checking accounts to market funds, just last year the people of the world created more than $75 trillion of treasure.

But since the Great Recession the global debt has increased $57 trillion to nearly $200 trillion. The bright promise of the 21st century has been eclipsed by the age of austerity.

How did we get here? Why do live in a system that has us hustling hour upon endless hour? The present crisis began with banks offering the working class the one thing they wanted — a home. Lenders offered people loans without checking if they could pay or falsified information to sign the deal. Overjoyed at achieving the American Dream, families moved into new homes. The lenders sold those mortgages to big banks, which then slapped false high-grade ratings on the sub-prime loans, bundled them and sold them again.

When the low payments on the mortgages increased, the new homeowners couldn’t make them and defaulted. Terror shot up from the street to the CEO suites as the Great Recession began, spread to Europe and then the world. Banks convulsed. Governments shoveled mountains of cash into their accounts but financiers were still skittish afterward. They demanded higher interest on loans to deeply-in-the-red nations like Greece, sending them into a downward spiral.

The crisis was compounded in Greece by the troika of Europe’s leading economic institutions, which forced the nation to be a transfer hub for international creditors. They gave the country loans to pay them back for older loans. The people saw none of the money, witnessing instead more stores closing, more people losing their homes and the government planning to sell its seaports and islands.

Today the debt crisis in Greece has been momentarily corked, but it surges up in Italy, Portugal, Puerto Rico and elsewhere. And this is life during late capitalism, where whole peoples sink in a quicksand economy. They take out loans to pay for loans with less and less work available to earn real money.

The brutal experience of debt is creating a resurgent class consciousness. People who once lived quiet lives erupt in protest, in the Maoist rebellion in India, in Occupy Wall Street, in the Indignados movement in Spain, in the Greek vote for Syriza. They see that capitalism has become a generational debt trap and are rising against the state and banks, flooding the streets and spilling into the halls of power.

Jubilee World 

The unspoken truth of our world is that we erase each other’s debts all the time. How many times has someone owed you something and you let it go? Money, yes. But maybe you gave them a place to stay? Or clothes? Or just listening? But then you erased it because someday, you might need the same or simply because giving was all the reward you needed.

Debt is erasable. Not just in small everyday gifts but in world history. Ancient kings cancelled public debt in the Jubilee Year. In modern times, nations like Germany were forgiven huge war debts. 

Strike Debt, a movement of debt resisters, has a Rolling Jubilee project in which they buy debt from banks for pennwies on the dollar and then, unlike collectors, simply forgive it. There are also more radical acts, like that of Chilean artist Papas Fritas, who recently stole records from the Universidad Del Mar and burned $500 million of student debt in what he said was “an act of love.”

The sum of these singular acts of protest is an early vision of a debtless society. And we need this vision to be realized just to survive. Too often, techno-utopians imagine that new means of production will free us from oppression, but the myths of technological innovation won’t save us. We live in a digital world that has within it near prehistoric poverty. It’s not new technology that can end this cycle but an old truth that always returns, always repeats itself in our fantasies and art and protests. We are born free.

Years ago, a musician friend perused my bookshelf and found The Social Contract by Jean-Jacques Rousseau. She read it over, humming some of his sentences into a melody. Weeks later, we were at a party and people were talking about work, high rent, the endless bills. Typical New York griping. She pulled out her guitar and began to sing that phrase, “Man was born free, but everywhere he is in chains.”

We tried to talk over her song but she kept singing. We stopped and listened, reluctantly moved by an old quote we knew but were too jaded to say, much less sing. But she lifted her voice higher and louder, until it was the only sound in the room, until we began to believe it.

“Man is born free,” we sang, “but everywhere he is in chains.”


Greece's 'Debtor Prison'
By John Tarleton

Puerto Rico In the Hoc
By Daniel Orsini

Power Outage: Why Left Governments Falter Once in Office
By Stanley Aronowitz

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