American household debt is at its highest point since 2008 and people are starting to miss auto loan payments. Can the ancient tradition of the debt jubilee help us mitigate some of the worst effects of modern capitalism?
The President seems to think “The Country is doing well,” but he also thinks you need photo ID to buy groceries (unless you were a furloughed government worker, supposedly able to get free groceries for the asking). Here in the Real World, though, things are different. Very different. As the shutdown showed us, workers across the country are living paycheck to paycheck. The image of prosperity is maintained by taking on increasing amounts of consumer debt. However, families who are barely scraping by (or sinking into debt) are inherently less resilient, less able to pull themselves up in the Republican ideal. Ancient societies understood this all too well, which is why some of them declared the occasional debt jubilee. Is it time for us to learn from them and do the same?
Americans are taking on more debt, and having trouble paying it back down. According to the Federal Reserve Bank of New York, the end of 2018 saw U.S. household debt rise to $13.54 trillion. This means American households are collectively $869 billion deeper in the hole than they were in 2008, the last debt peak. It’s not mortgages this time, though, it’s credit cards, student debt, and auto loans. Meanwhile, those auto loans aren’t getting paid. A record number of Americans – 7 million! – are at least 90 days behind on their car payments. That’s worse than the end of 2010, when unemployment was at 10% and only 5.3% of Americans were delinquent. Non-payment of auto loans is like the canary in the coal mine, since they’re one of the first bills people pay. Losing the car often means being unable to get to work or find a job.
The GOP has a plan, though. While Millennials are putting life on hold, delaying home purchases or avoiding starting families in order to put a 10-30% chunk of every paycheck into servicing their student loans, it’s not enough for Senator Lamar Alexander (R-TN). Earlier this month, he announced his proposed overhaul of the way student loans are repaid. He’d like to see employers take loan payments right out of workers’ paychecks, prioritizing paydays for lenders over other needs like housing, groceries, day care or transportation for the 44 million Americans currently holding $1.5 trillion in outstanding student loans. Half of that debt, mind you, is held by people under age 35. Can’t afford it? Don’t ask Betsy DeVos for any help either: she wants to make student loan forgiveness nearly impossible. She’s not here to help you, peasant.
When you’re mired in debt, living week to week on an at-will paycheck, you are not free. You’re unable to save money for hard times or build the capital you need to start a business and bootstrap out of poverty, two things that Conservatives love to blame poor people for not doing. Debt causes major systemic problems, too. According to economist Michael Hudson, indebted societies are inherently unstable. Add compound interest, and debts can grow faster than the ability to pay. (People in ancient cultures ended up selling themselves or their children into slavery under these circumstances, but nowadays we just become wage slaves.) If you want a productive country, you need productive citizens, smallholders and businesses. That’s why usury was forbidden in many ancient religions, and the necessity of a periodic debt jubilee was addressed in Leviticus and Luke, as well as in Babylonian law.
The debt jubilee cleared the slate and allowed society to thrive again. Personal debts were cleared (but not contractual business debts). Forfeited lands (think foreclosed homes and farms) and usufruct rights were restored. Indentured servants were allowed to return home.
The Hebrew debt jubilee was to be held every 49 years. In ancient Near Eastern history, Hammurabi proclaimed a debt jubilee four or five times. They were a regular feature in Sumer and Babylon. If a ruler didn’t declare a debt jubilee, a rival could gain power by promising one himself. There’s even a compelling claim that Jesus was killed for agitating in favor of a debt jubilee in Judea. If the “what the heck, let’s try something new” 2016 candidacies of Donald Trump and Bernie Sanders, and the blue wave wins of challengers like Alexandria Ocasio-Cortez are any indication, today’s beleaguered middle and working classes want some version of a debt jubilee now, too. Societies tend to collapse if they don’t hit the “reset” button every once in a while. We’re collapsing now and have been for a while. Is it time?
…Forgive us our debts, as we forgive our debtors… (Matthew 6:12)