Tag Archives: debt

Welcome to the Land of Inequality

Teaching American Studies in Torino, as I am for the next two weeks, is an eye-opening experience.  I feel a bit as if I am a native informant, who has to try to undermine the inaccurate views of my students about the United States. One of the foremost of these is the myth that the U.S. is the land of opportunity.

My first class this week will focus on The Monster, Michael W. Hudson’s encyclopedic account of the depredations of the subprime mortgage industry in the U.S. over the last two decades. The industry that, in cahoots with Wall Street banks like Lehman Brothers and using arcane financial instruments like Collateralized Debt Obligations (CDOs) invented in order to profit from the subprime mortgage market, wrecked the global economy.

The sordidness of the subprime mortgage industry is impossible to overestimate. It was run by completely unscrupulous capitalist bosses who purposely targeted working class people of color, people who had finally managed to build up a bit of equity through government-backed mortgage schemes in the decades after the New Deal and the Second World War. Equity, mind you, that was radically less than what the average white suburban family was able to build up in the same period. Here’s an excellent video that gives a sense of the unequal (racialized) landscape of housing in the U.S.:

The subprime mortgage industry targeted working class people of color, siphoning their hard-earned housing equity into an insane Ponzi scheme built on virtually impossible to penetrate financial instruments like CDOs and Credit Default Swaps. The result was a complete crash of the global economy. Here’s a video that very nicely explains how all of these arcane financial instruments worked?

Underlying this crisis of credit reminds us that, of course, the assault on working- and middle-class wages begun by global financial elites in the mid- to late-1970s, led, particularly, by Ronald Reagan in the U.S. and Margaret Thatcher in the U.K. As elites clawed back more and more of the wage gains and other social benefits win during the period since the Great Depression and the Second World War, life for the average person became more and more difficult.

What this led to was the financialization of everyday life. The 99%, in the Occupy parlance, were forced to live more and more off credit (and women had to enter the workforce in order to maintain middle class standards of living). Slowly, people came to think of life itself in financial terms, as a kind of risky investment.

One area in which this shift is particularly apparent is higher education, which went from being seen as a right that was provided to the people free of charge through public higher education systems like the City University of New York and the University of California systems, to being seen as an investment that people had to pay for through tuition charges. This was a Faustian deal, though, since it only made sense – if it ever made sense – when the economy was doing well and this “investment” could be payed down quickly after snagging a well-paying job. Now that unemployment is high for young people, high tuition rates in universities (including public ones) seems more like a scam than a just exchange.

There was a good article in the New York Times today about a couple of French economists who have shown that inequality in the US is nearly as bad as it was during the Great Depression. This is no news break to Occupy activists, but one suspects that the American Dream myth is keeping most people in the U.S. in the dark about this fact, not to mention many people around the world, who continue to think of the U.S. as the land of milk and honey. Here are some amazing charts from the article that demonstrate spiraling income inequality:

It will take tremendous push-back in order to turn this horrible situation around. We’re just at the beginning of such efforts, but the Occupy movement has already initiated some very creative and brave responses to the economic crash. Here is a video of folks from Occupy Foreclosures who block house auction proceedings with choral singing:

The pranksters at Occupy also recently produced a beautiful video that, in Situationalist terminology, “detourn”s West Side Story to cover many of the issues I’ve touched on in this post:

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Student Debt Campaign

The last month or so has been incredibly heady and hectic.  I’ve been working with a sub-committee of the Occupy Wall Street movement; this group has been focusing on student debt, which is set to top off this year at around $1 trillion, more than cumulative credit card debt.  It’s been exhilarating working with the Occupy Student Debt Campaign.  In literally a matter of weeks, our small group of students, ex-students, and faculty members drafted a series of pledges of debt refusal using the incredibly creative techniques of horizontal organizing pioneered by the Occupy movement.

These pledges focus on four related demands: forgiveness for current student debtors; free federally funded public higher education; fiscal transparency for private universities; and interest-free student loans.

Taken together, these demands amount to a structural transformation of American higher education, a change that would no doubt also have a strong impact globally given the prominence of the U.S. model of higher education today. 

In addition to the debtors’ pledge, there is also a faculty pledge of support for debtors, and a pledge of ex-debtors to support current debtors.  The former is particularly important, in my opinion, since the spiraling cost of the institutions at which faculty members like myself teach is linked to the student debt racket (although I should add that faculty members see little of this increasing tuition in their paychecks since most of this money has gone to adding administrators).

Last Monday, we launched the Occupy Student Debt Campaign at Zuccotti Park. Although the park is a depressing place in comparison to the vibrant spot it was before city authorities cracked down on OWS, our launch nonetheless brought a large group of protesters to the site and suggested that the Occupy movement is capable of transforming itself in vibrant ways despite the clamp-down on specific sites.

Andrew Ross, who has been a key figure in the group, explained the rationale behind the campaign, talking about how banks, backstopped by the U.S. government, make exorbitant profits from student debt, and how students and ex-students get caught in a trap from which there literally is no exit – since student debtors cannot escape their debt by declaring bankruptcy, since their debt follows them for life, and since their extended families can often inherit their debt if they die before paying it off. Then a student debtor named Pam Brown read the debtors’ pledge of refusal.  I then read the faculty pledge of support.  This was followed by some wonderful guerrilla theater, with a group of graduates being given huge debt burdens at graduation, followed by the arrival of a large check from the federal government offering free public higher education, after which the graduates throw off the chains of debt that were weighing them down.

Our campaign has now topped 1,000 signatures, a nice milestone but only .5% of the audience we hope to reach.  I hope you’ll go to the Occupy Student Debt Campaign and sign one of the pledges, and that you’ll also help spread news of the campaign through your various social networks.

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Smackdown on Wall Street

Today I attended a march on Wall Street organized by National People’s Action to protest the stranglehold big banks have over the U.S. economy.  Lots of really terrible stories about people turfed out of their houses and apartments by banks after years of having lived there.  Lots of anger about the massive bonuses being awarded to bankers who just recently had to come hat in hand to the U.S. public after they screwed up their own businesses and took the world economy down in flames.

The Showdown in America website contains a really impressive series of drop down discussions of problems created by corporate and banking power as well as solutions for those problems.  Most specifically, the organizations that are part of the campaign that organized today’s march are calling for big banks to stop targeting l0w-income and ethnic-minority communities, and to donate their obscenely large bonuses to fix state budget crises, create jobs, and keep thousand of people in their homes.

The groups also call for modernized financial regulation, including breaking up “too big to fail banks” by instituting asset caps and firewalls between banking and investment services.

Perhaps most importantly for the hardest hit by the current crisis, the organizing groups call for a moratorium on foreclosures.  No one should be thrown out of their homes by banks that themselves had to be bailed out by the public.

It was really inspiring to be part of this protest on a beautiful clear spring day.  I wish though that the protest had been more large and more militant.  I’ve been on countless demos since 2001 in NYC and the drill is now almost always exactly the same.  The cops set up steel barricades that pen crowds in to small cellular groups.  Movement from one cell to the next is tightly controlled by the police.  The streets are kept completely open for the free flow of traffic – nothing can impinge on the sacred space of the automobile!  When marches eventually start, they are completely contained in exactly the same way as the pre-march demo.  Unfortunately I’m very skeptical about how much this approach can accomplish.

During the demo I had an interesting conversation with Jonathan Tasini, a candidate for NY State Senate with whom I was imprisoned a couple of years back when we both did civil disobedience on Fifth Avenue in support of the grad employees unionization efforts at NYU.  Tasini suggested that what we really need to do to get Wall Street’s attention is to break down those damn steel barricades and sit down en masse in the middle of Broadway.  If several thousand people did this, they’d gum up the police works for days.  He pointed out that we were only about 30 people getting arrested at the NYU demo and it took them hours to process us.  He’s got a good point.  Why are there no mass non-violent direct action campaigns going on at the moment given all the calamitous events taking place?  Why are there no leaders willing to advocate tactics such as those pioneered by Gandhi and Martin Luther King, Jr.?  Surely the times call for such courageous leadership and behavior.

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