New! Debt Resisters Operations Manual

To Whom are We Indebted?

Even among people drowning in debt, typical conversations around the subject are framed in terms of personal responsibility: the debtors have no one to blame but themselves for getting into this situation, and moreover, to not pay one’s debts is an act of blasphemy, shame, and dishonor. To default is to expose one’s callous disregard for all that is decent. Today, morality is bound to debt—the two are inextricably linked.

When we dispose of all the jargon attached to credit and debt, we can see that at its core, a loan is essentially a bet on whether or not that person—the debtor—will make good on their word. It is a risk, and that risk is higher or lower depending on that person’s status in society (defined only in the most narrow economic terms). A debt represents the willingness and ability of one to keep their promise. But a person’s actual ability to repay is often out of their hands. Frequently it depends on powers beyond their control.

Debt further distorts our basic perceptions of ourselves and others; not only is a person’s word on the line, but also their value as a human being. In a way, we invest the value we place on ourselves into that credit arrangement and into our relationship with debt. We measure how and who we are as a human being and then bet on our trustworthiness, our character.

The subprime mortgage crisis is a particularly egregious example of moralistic victim-blaming. Subprime mortgages were concentrated in areas with higher racial segregation and targeted people of color, yet some people blamed the victims of this financial disaster, often with racialized language, proclaiming that, “those people shouldn’t have borrowed so much.” Arguments such as these, however, ignore the whole history of the exclusion of people of color from mainstream financial opportunities that could have led to homeownership. In addition, when many people of color finally got access to credit through legislative reforms, the lending was often predatory in nature.

The effects of the subprime mortgage crisis and the subsequent credit crisis resulted in the further degradation of debtors’ social status. Edmund Andrews, the former economics correspondent at the New York Times, tied the issue together quite well when he reflected on his own credit troubles: “to see yourself plunged down to being a debtor, the likes of which are being made fun of all over the place—it’s just an awful experience” (Sington 2011). This statement makes clear what many already feel (and fear): the debtor is seen as subordinate or somehow of less value than a non-debtor. This is unfortunately held as a near-universal belief and many people are socially and economically excluded because of it.

Debt warps the way we look at each other and encourages us to evaluate one another through a financial lens. Debt serves as a way to classify people, to put them into hierarchies, and to separate and isolate them in the process. Most of us have been brought up in a society where we are conditioned to hold these beliefs dearly, and on the surface it all sounds reasonable. If you take out a loan, you are obligated to pay it back. Focusing on debt at the individual level is a common approach. However, it is insufficient for understanding debt as a system and understanding why one would be right in resisting it. We have to go deeper by examining the terrain on a structural level and explore the circumstances that have put people (and municipalities and entire countries) into debt.

Debt and Income Inequality

Over three-quarters of us have some type of personal debt. At least 14% of people living in the United States are already being pursued by debt collectors, which is more than double from a decade ago. Are so many people really so reckless, so irresponsible? Granted, total household debt has been on the decline since 2008, but it is nevertheless still sitting at a whopping $11.31 trillion. Moreover, the median debt amount has risen substantially over the past decade and a half.

Contrary to popular misconceptions, debt cannot simply be explained as the consequence of financially irresponsible individuals acquiring luxurious items beyond their means. Instead it is quite typically the outcome of people and families just trying to survive under capitalism. Forty percent of indebted U.S. households use credit cards to cover basic living costs such as rent, food, and utilities, and nearly half of indebted households have accrued debt due to medical costs. Indeed, we are told to consume to stimulate the economy and are subsequently demonized for accruing debt.

In the wake of any financial blip or disaster, politicians often implore people to spend money for the sake of economic growth (remember that then-mayor Giuliani’s advice to New Yorkers after 9/11 was to go shopping). After the financial crash, however, we were told that we spent too much. According to a Consumer Reports survey in 2009, over half of the respondents paid off credit card bills each month. The remaining people accrued debt not by living large, but mostly by spending money on health costs, transportation, and other basic needs.

Many credit card-indebted households making under $10,000 per year spend over 40% of that meager income to pay off debt. Demos and the Center for Responsible Lending have also debunked this myth of irresponsibility, stating, “the underlying reason behind some households having higher levels of credit card debt than other households was the occurrence of unforeseen events, such as job loss, medical expenses, or car breakdowns.”

There are myriad factors that explain these circumstances, but a good place to start is by looking at economic trends over the past four and a half decades. The actual value of the federal minimum wage reached its peak in 1968. Since then, the real median hourly wage has basically stagnated, while labor productivity has increased considerably. Notably, the average U.S. debt-income ratio doubled over this same period, with average household debt beginning to exceed income in the early 2000s.

Of course, wage stagnation affects different populations with varying degrees of severity. Compared to 1966, the wage increase for an overwhelming majority of people in the United States averages only fifty-nine more dollars a year when adjusted for inflation. The increase since 1966 for the top 10% of income earners in our society, on the other hand, is over two thousand times this amount, and over ten thousand times this amount for the top 1%!

Looking just at the years since the 2008 financial crisis, the top 1% of incomes rose considerably as the bottom 99% decreased. One-quarter of jobs in the United States pay below the poverty line for a household of four. To make matters worse, job security has diminished over the past few decades with many more jobs becoming casual, flexible, and temporary. The shift from the manufacturing economy to the service economy has contributed to a steep rise in precarious work—insecure jobs with low wages and no benefits (Fudge and Owens 2006, 3-28). As any wage laborer knows, the power exercised over them in the workplace is sometimes absolute. But in today’s unstable economy, where it’s common to hear of people working more than one part-time job without benefits, often just finding and keeping a job is a huge struggle.

Today, even the ability to find a job can be determined by one’s debt. Employers can view your credit reports to determine whether or not you are “responsible,” and therefore “employable.” In other words, prospective employers look to see whether or not your personal circumstances will affect your work or if you have a history of being “financially imprudent.” Credit scores are often the determining factor, and more will be discussed about this in Chapter One.

The extent to which people are affected by precarity and wage stagnation is greatly informed by their gender, race, sexuality, and ability. Women across the globe continue to comprise the majority of precarious workers. On average, in the United States, women are paid less than men, and women of color are paid even less. Median annual earnings for White men are $45,542, while the median for White women is 71% of this amount, 61% for Black women and only 51% for Latina women. For transgender people, rampant discrimination often prevents hiring in the first place, and those who are hired receive significantly less pay. They are much more likely than cisgender people (those who do not identify as transgender or genderqueer) to make under $10,000 per year. According to the report “All Children Matter,” Children of gay or lesbian parents are more likely than children with married straight parents to live in poverty, and a disproportionate number of homeless youth are lesbian, gay, bisexual, transgender, or queer (LGBTQ). Within the LGBTQ community,race and gender contribute to further widening income gaps.

Meanwhile, people with disabilities in the United States are twice as likely to live in or near poverty than able-bodied people. On average, they earn considerably less than what people without disabilities earn. Compared to fifteen peer countries, the United States ranks second-to-last—only marginally better than Australia—when it comes to this particular income gap. Wage stagnation means people in the United States are finding it harder and harder to afford basic necessities, so they turn to credit cards and end up paying even more through high interest rates. As Kelly Gates observes, “The consumer credit industry exploded at precisely the time when social welfare programs were being dismantled and wages were stagnating for large numbers of people, with consumer credit filling the widening gap between the wages people earned and the personal expenses they accumulated in the new economy” (Gates 2010, 427). As the evidence demonstrates, the situation is often even harder—due to income gaps and a host of other factors which are in turn a result of structural oppression—for people who are not White, male, able-bodied, cisgender, or straight.

Looking beyond income inequality

Income alone, however, does not illustrate the gravity of the situation. It is more accurate to discuss wealth, or net worth—the amount someone owns minus the amount that they owe. After all, the United States ranks 138th out of 141 countries in terms of wealth equality. Here the disproportionate impact on Black and Latino/a people becomes even starker. The median household net worth is now twenty-two times greater for Whites than it is for Blacks. One would hope that by now at least some progress is being made, that the wealth gap is slowly closing, but in reality the opposite is true. Wealth disparity is far greater now than it was about two decades ago, when the wealth differed “only” by a factor of seven between Whites and Blacks. Compared to three decades ago, the wealth gap has quadrupled!

Even when one looks at households with similar incomes, White households consistently have a higher median net worth than Black and Latino/a households. It is also true that, compared to Whites, Black and Latino/a families are more likely to lose a home to foreclosure, a disproportion that becomes greater as income increases. According to a recent study by the Institute on Assets and Social Policy, “half the collective wealth of African-American families was stripped away during the Great Recession due to the dominant role of home equity in their wealth portfolios and the prevalence of predatory high-risk loans in communities of color. The Latino community lost an astounding 67% of its total wealth during the housing collapse.”

The particularly severe impact of economic inequality on Black and Latino/a people can be attributed to a long history of structural racism that continues to exist in the form of, among other things, redlining (the denial of loans or insurance to people of color) and reverse redlining (aggressively targeting communities of color with predatory services). Discussing income exclusively is also insufficient when talking about debt as it relates to age. Recently, a new type of loan targeting the elderly known as pension advances has emerged. People sign over their pension checks to companies in exchange for cash, but with interest rates that can exceed 100%. People with a fixed income, such as those on Social Security, can barely keep up with skyrocketing costs of living, but they’re still viewed as a golden goose by creditors.

The problem goes deeper than stagnant wages. While stagnation has contributed greatly to people’s inability to get by and caused them to accrue debt, simply raising wages would not prove to be an adequate solution. Namely, this would ignore those without wages in the first place, including the millions of unemployed people in the United States. And it’s worth pausing here to consider what work gets identified as worthy of a wage, and the many kinds of vital labor that have long been unpaid—labor that is done to create and maintain our lives and to produce and sustain a workforce for profit-seeking enterprises. This work, when performed for one’s own family and which includes child bearing and rearing, cooking, cleaning, and elder care, is often referred to as “housework.” Some feminists call it “reproductive labor” (Federici and Cox 2012, 36). (As women in wealthier countries enter the paid workforce in larger numbers, others, primarily immigrant women, are paid a measly sum to perform this domestic work—either in addition to or at the expense of performing housework for their own families.)

It’s the invisible work that makes “traditional work”—that is, waged labor—possible. Caring for others has traditionally been deemed “women’s work”—something which women are supposedly naturally inclined to do for their own fulfillment. This, it could be argued, has a lot to do with why this labor remains largely unwaged and undervalued. The fact that some men perform reproductive labor doesn’t change the fact that it’s still dismissed as “women’s work” and valued accordingly. If the contribution of this work to the economy sounds negligible, imagine what would happen if those performing reproductive labor went on strike.

Any conversations about the relationship between wages and debt need to take into account the very nature of waged labor itself. There are other forms of unwaged labor as well, including modern day slavery. The issue of unfree prison labor also requires our attention. Global capitalism “thrives on the unwaged labor of millions of women and men in the fields, kitchens, and prisons of the United States and throughout the world” (Federici and Cox 2012, 31). To demand an increase in the minimum wage would benefit a large segment of the U.S. population, but the situation would be unchanged for most wageless workers.

Debt and Capitalism

Livable wages for all workers—including those who do not conform to conventional notions of “workers”—would be a necessary first step toward freeing ourselves from the debt system. But this approach, too, appears insufficient. We have to ask ourselves: is our economic system adequately meeting people’s needs and desires, or do we need to consider other ways of structuring a society? It is under capitalism, after all, that corporations are obligated by law to maximize profits.

Unsurprisingly, then, corporate profits as a percentage of national income are the highest since 1950, while workers’ incomes are at the lowest percentage since 1966. Wall Street isn’t stealing workers’ wages and trammeling our ability to lead dignified lives all on their own, though; legislators and politicians are complicit. Only recently did it surface that taxpayers subsidize big banks around $83 billion per year, a perk for which the financial industry has vigorously lobbied.

Since 2008 and also before, people have said that Wall Street ignored “systemic risk,” or the interconnectedness of the financial system. This muddles the central problem: the problem is systemic because the problem is the system. We know that those who plan and profit from capitalism need us, but do we need them?

An analysis of debt is becoming increasingly relevant in the fight for justice. Economic exploitation and oppression exist not only in the workplace. Through debt we feel this exploitation in nearly all facets of our lives, from the houses we live in to the schools we attend to the hospitals we rely upon. Yet the exploitation is often subtler, and therefore debt requires more careful attention. As will be demonstrated throughout this book, all aspects of the debt system maintain and exacerbate already existing social inequalities, in the United States and internationally. Credit scores (see Chapter One) are not only used in determining access to credit, but these quite arbitrary numbers are impacting decisions regarding utilities, apartment rentals, car costs, insurance rates, and even employment, among other things. Meanwhile in places where credit is hard to come by—particularly in communities of color—a deregulated lending market has set up shop with exorbitantly expensive products and services like payday loans and check-cashing outlets (see Chapters Seven and Eight), ensuring that the poor continue to get even poorer. And in the global South, the World Bank and International Monetary Fund impose structural adjustment programs under the guise of helping governments pay their debts (see Chapter Thirteen).

It is against this backdrop that Jamaica spends more than twice on debt repayment than what it does on education and health combined. Among many African countries, the result of structural adjustment is the privatization of land, the displacement of subsistence farmers, the depletion of social services, a decline in life expectancy, an increase in refugee populations, and the death of millions of people, to name just a few horrific consequences of living under a global system that dictates paying one’s debts is more important than life itself (Federici 2012, 84).

Debt as a social relationship, a weapon, and a form of control

People may feel like most kinds of debt—sometimes including their own personal debts—are far removed from their lives or that they are too abstract to understand. More often than not, technical terms surrounding debt serve to confuse and scare people rather than educate and empower them. In the past, debt and the language employed in its discussion have been used not only as a way to divide those “in the know” from the rest, but also as tools of control and discipline in order to limit and direct people’s life choices.

Debt is a profoundly effective form of social control, and, as many have argued, it has become the primary form of extracting and accumulating wealth for the rich. Debt affects nearly every part of our lives. Not only does it determine the material possessions in our lives, but it also shapes our psyches. Debt is not something that exists outside of us, but rather something that is central in forming our identities, characters, and our relationships.

As demonstrated earlier, debt is used as an oppressive financial tool that entangles class, race, gender, sexuality, age, and ability. It exploits members of marginalized groups, plunging them further into hardship. It is a strategy that impoverishes people and serves as a stark reminder of the power differences in our society. Though the effects of debt are felt across the social spectrum, debt does not “equalize” or make oppression uniform. But as a form of control, it does force us to have similar, sometimes shared, experiences, all of which define our self-perceptions and our relationships with our neighbors.

Perhaps the most notable aspect of debt is the asymmetry in power. Creditors and Wall Street banks use financial markets, the power of the legal system, and the power that comes with having political and economic clout to accumulate staggering amounts of money. Preserving these privileged positions demands that they issue credit and create vast populations of debtors, from whom they gain commission, interest, and ultimately profit. This profit, like all profit, comes at a cost. Not only is our labor the source of much, if not all, of their revenue, but they also rob us of our future by demanding we work more to pay for ever-increasing interest rates that balloon if we miss payment. Beholden to these financial institutions, debtors are pushed to become complacent laborers.

Of course, no one should begrudge people for trying to make ends meet or provide for their families, but what this relationship also deprives us of is an imagination of a world outside the creditor-debtor relationship. The ideas and experiences that fuel our imagination diminish, and it becomes harder to fight for a better, more just world. As a weapon, debt determines where we live, where and how we work, as well as our mental health. From a young age, we are conditioned to feel that being in debt is shameful and worthy of punishment.

To offer a particularly poignant example, recently students at a middle school in Massachusetts were deprived of eating cafeteria food for having as a little as five cents of debt on their prepaid cards. The lesson is clear: debtors, no matter their age or circumstances, don’t deserve to have their basic needs met. In addition to being socially ostracized, debtors suffer from psychological problems that often go unnoticed.

Although there is strikingly little research in the United States about debt’s impact on mental health, there are whole message boards filled with people citing their debt as a source of their depression. We also see an increasing number of people in the United States contemplating or committing suicide because of debt. Deteriorating mental health and personal relationships are common among debtors, as well as insomnia, anxiety, and a slew of physical and psychological illnesses. These harmful effects can be amplified in an unstable economic climate such as today’s.

As if ushering us from one point in our lives to another, debt acts as both a deterrent and catalyst. As a tool of capitalism that is used intentionally to extract wealth from people, debt forces us to take more than one job and to quit school or the things that give us an identity outside of work. Low-income students are more likely to rely on loans to afford college. Faced with skyrocketing tuition, these same students sometimes have to work many jobs to cover the costs. This forces students to compromise their studies in order to work, which affects their achievements and ultimately perpetuates class divisions.

Debt is also used to shape certain attitudes, behaviors, ideas, and actions. For instance, the criminal justice system is seeing a dramatic rise in the number of indigent, or poor, individuals who are incarcerated because of their debt. Once in prison, harsh measures dictate prisoners’ entire lives, while simultaneously their forced manual labor floods our economy with cheap goods and commodities. Although debtors’ prisons were outlawed in the United States long ago, people are still imprisoned because they can’t afford to pay fines for what are sometimes minor infractions. Once in the criminal justice system, people are burdened with more fees that they cannot pay, driving them further into debt. Prisons are continually filled with impoverished people, giving life to a cycle of poverty and imprisonment that is hard to escape (see Chapter Nine).

About Strike Debt

This operations manual is written by an anonymous collective from Strike Debt. For over a year now, Strike Debt has been part of an international debt resistance movement—developing tactics, resources, and frameworks for expanding the fight against the debt system while developing alternative systems based on mutual aid. Strike Debt emerged in New York City as an offshoot of Occupy Wall Street in the wake of May Day 2012, receiving a great deal of inspiration from the student strikes in Québec happening at the time. We soon expanded to organize around all forms of debt. Chapters began popping up all over the country, including in Philadelphia, Denver, Boston, the Bay Area, Chicago, and Raleigh.

The group operates under many principles that were adopted by Occupy participants from other nonhierarchical movements across the world. These principles include political autonomy, direct democracy, direct action, a culture of solidarity, and a commitment to combating all forms of oppression. As we intend to demonstrate in this book, Strike Debt believes that debt binds us all—though it binds some people (people of color, queer and trans people, women, people with disabilities, and the poor) more tightly than others.

In addition to the creation of this manual, Strike Debt has organized a number of initiatives and actions, such as the Rolling Jubilee. The Rolling Jubilee purchases debt on the secondary market for approximately 1–5% of the original principal and subsequently abolishes it. Other Strike Debt projects involve debt education, hosting debtors’ assemblies, offering free health care, and protesting hospital closings.

About this manual

The Debt Resisters’ Operations Manual (DROM) seeks to provide widely applicable yet detailed information about debt as well as strategies for resistance. It highlights our commonalities—namely, that people are not alone in their struggles against debt—as well as our different relationships to debt. We strive to analyze debt from many different angles, always maintaining a nuanced, critical analysis that is conscious of race, gender, class, sexuality, age, ability, and their intersections. We strive to write in simple language and will work to translate the manual into languages other than English. A 120-page pamphlet version of the manual was collectively researched and written in August 2012 as a contribution to strengthening and expanding the debt resistance movement. Following its release in September 2012, over twelve thousand copies were printed and distributed for free within two months, from New York to Portland to Chicago to New Orleans. Digital versions were read by tens of thousands more people. In order to reach out to a wider audience and encourage more acts of debt resistance (and to avoid accruing more debt ourselves through printing and distribution costs!), we decided to expand the breadth of issues we covered in the pamphlet and publish this book with Common Notions and PM Press.

Although this edition is sold online and in bookstores, we are committed to making the contents of the DROM available for free to anyone who might need them. In both the earlier pamphlet and this book, a decision was made to not attach any individual names to this manual. This decision is rooted in our principle of collectivity. A large collective of people from all over the country were directly involved in the researching, writing and editing of this book, but moreover, this manual is an attempt to reflect, and explore further, the endless conversations that have happened within Strike Debt over the past year. Whether it’s collectively developing an analysis of debt as a form of social control or contemplating particular strategies to resisting various forms of debt at meetings, countless people have made essential contributions to the content of this manual in both direct and indirect ways. People in and out of Strike Debt were invited to participate in creating this book as much as they desired in various capacities—as a researcher, writer, editor, coordinator, or various other roles. We also relied on input from the larger Strike Debt group in determining what concepts and tactics should be included in this manual. To ensure the group remained democratic, contributors of the manual reached consensus on decisions that affected the overall tone or structure of the book, such as the table of contents, the book description, and a style guide to inform each chapter. Meanwhile, researchers and writers of a particular chapter coordinated amongst themselves, while taking into consideration concerns raised by other members. As stated in the original preface, the DROM is a collective, living document; it remains open to revision and we invite constructive, critical dialogue. From the original preface:

We don’t claim to have all or even most of the answers regarding debt. To produce this manual, we have reached out to our networks to the best of our ability. Some sections barely scratch the surface and in fact deserve their own book-length treatment. Researching debt has uncovered many connections we didn’t expect, and we know there are types of debt we haven’t addressed. It is our hope that readers will have their own strategies to contribute to future versions of this manual. . . . Any ideas, plans, tips, corrections, resources, schemes—legal or otherwise—should be sent to DROM@riseup.net.

Since September 2012, we have received a tremendous amount of feedback from fellow debt resisters as well as lawyers, accountants, and other experts, and we have done our best to incorporate those suggestions into this edition. We have expanded upon each of the original chapters and have written four new ones (Chapters Six, Eleven, Thirteen, and Fourteen). We have endeavored to place greater emphasis on strategies for collective action and alternatives to relying on the debt system for meeting basic needs.

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