Be Careful What You Wish For Dept.: “Occupy” May Finally Have a Plan, and Sure Enough, It’s Ethically Bats

Oh, yes,THIS is bound to work out well…

The core of my objection to Occupy Wall Street and its progeny was and is that it never had the discipline, cohesion or communications skills to make it clear what the “movement” really wanted to accomplish, other than generally blaming all the world’s ills on the wealthy and successful. This was the reason for its failure, though Occupy fans like to say that it “succeeded” by starting a national dialogue about corporate executive salaries and the growing disparity in income levels between the richest and the poorest Americans—as if that dialogue hadn’t been ongoing long  before the first sign went up in Zuccotti Park.

Now there are signs that the Occupy bitter-enders are hard at work launching a real, substantive effort with a specific goal, albeit and insane one: to bring down the financial system with a “debt strike.” ( In These Times headlined its story about this “You Are Not A Loan.” Pretty clever!) The idea is to refuse to pay back the interest or principal on outstanding debt, and to insist that all loans and interest  be forgiven, since the debt system is inherently corrupt and rigged to transfer wealth from the poor to the rich.

We shouldn’t have to expend a lot of argument on why this is unethical. People, companies and nations in serious debt reach that point because they spend more money than they have. They borrow money promising to repay, agreeing to pay an additional fee, interest, for the privilege of using money that doesn’t belong to them. The vast majority of debt is not amassed by desperate debtors who have to deal with the equivalent of Loan Shark Larry and risk broken legs or death unless they pay unconscionable fees. Most debt comes from wanting something before you can pay for it. While laws are in place to minimize predatory lending and to provide a safety net (in the form of bankruptcy) so people and companies don’t end up destitute and in debtor’s prison, essentially the system, like society itself, exists on trust, the cornerstone of all ethics.  Lenders give their money to trustworthy loan-seekers, and charge higher interest rates to those who they deem less trustworthy. That is fair.

Occupy’s “debt strike” makes sense only in a backward-ethics parallel universe where irresponsible choices have no consequences, it is ethical to break promises and agreements, and those who make money are deemed greedy if they don’t just give it away. Reading the Debt Resistor’s Operations Manual, apparently the beginnings of a blueprint for a world-wide debt strike, is like being led on a tour of Bizarro World by a double-talk expert. Same examples:

  • “We are told all [our debt] is our own fault, that we got ourselves into this and that we should feel guilty or ashamed. But think about the numbers: 76% of Americans are debtors. How is it possible that three-quarters of us could all have just somehow failed to figure out how to properly manage our money, all at the same time?”  Now that’s a head-scratcher, isn’t it? In a virulent consumer society, with celebrity, wealth, material possessions and designer labels being extolled in the media and pop culture, three quarters of the nation decides that it just has to have stuff it can’t afford. Savings rates have been declining for a half-century, the idea of building an estate so one’s children can be secure is not merely unfashionable but discouraged by tax policy, and yet mirabile dictu! A majority of the public gets the idea that it makes sense to borrow rather than save!  Occupy, typically, builds its version of logic on a mutation of the “everybody does it” fallacy. Not only can conduct not be unethical if everybody does it, it can’t be stupid either. Of course it can…in fact, when everyone you know is being irresponsible, taking vacations they can’t afford, wearing expensive clothes they don’t need and driving cars that cost too much, it is much easier to go with the crowd. It’s called the influence of peer groups and culture.
  • “Instead of taxing the rich to generate money to build and maintain things like schools and roads, our government actually borrows money from the banks and the public pays the interest on these loans.”  This is classic obfuscation. 1) Taxing the rich wouldn’t pay for all those “things”, even if the government just confiscated all of their money. That would, of course, also require the government to run all the businesses, an eventuality that Occupy somehow thinks would suspend human nature and the laws of finance. If government runs the economy, all the corrupt people who would have been in private business will end up in the government (The Willie Sutton Rule: “That’s where the money is.”) And the government still will have  to borrow money. 2) The public isn’t “paying the interest on these loans,” just like it isn’t paying for the other expenses of running a government. Is the government supposed to go on a debt strike too? Why not?
  • “To the financial establishment of the world, we have only one thing to say: We owe you nothing.” And to the debt strikers, should there actually be any, I say: You are liars and thieves. You took money under false pretenses and signed a legally valid and enforceable contract promising to pay back what you borrowed. Now you are saying you don’t owe anything. But you do.

The real purpose of the debt strike, other than to give dead-beat borrowers a rationalization for stiffing the people and institutions that were foolish enough to trust them, is to crash the financial system. To be even arguably responsible, this would require Occupy to have a thorough, proven, practical alternative system in mind that could take its place, and, true to its tradition, it doesn’t. Money should be free, corporations shouldn’t have rights, nobody should suffer the consequences of bad choices, and candy ought to grow on trees. You can’t build a society, which must be based on trust above all else, with broken promises, lies and theft. Nobody is going to agree to a cooperative effort with a partner whose philosophy is that whenever an obligation becomes too burdensome, the default response is “We owe you nothing.” Ironically, this is the perceived conduct by Wall Street firms that Occupy complains bitterly about. “If you can’t beat ‘em, join ‘em” is not an ethical precept.

The In These Times article interviewed several enthusiastic advocates for a debt strike. Their names are Pam Brown, Prof. Jodi Dean,  Mike Konczal and Peter Rugh. It would be both ethical and prudent for every credit card company, bank, mortgage loan company and credit company to take note of their names and tell them “Not in your life!” should they seek to borrow funds long or short-term, for a castle, a car, or groceries. They have announced that they don’t believe they are obligated to keep their promises or to pay their debts, and nobody should be obligated to loan any of them a cent.

__________________________________

Pointer: Windypundit

Facts: In These Times

Graphic: Occupy Houston

13 Comments

Filed under Business & Commercial, Character, Finance, Government & Politics

13 responses to “Be Careful What You Wish For Dept.: “Occupy” May Finally Have a Plan, and Sure Enough, It’s Ethically Bats

  1. Michael R.

    Well, we keep pandering to people like this. Every time something happens because of people’s poor choices, the government comes in to tell them it isn’t their fault. When people bought houses beyond their means and couldn’t pay for them…a government program was created to bail them out with my tax money. When people have more children than they can support…a bunch of government programs to help them. When people build a lot of large structures too close to the water and they flood…a government program to help them rebuild everything so they can flood again.
    We have raised a generation of people who think that the solutions to any problems they might have is for the government to start a program that will fix it. Of course they want to stop paying their debts. They can’t believe the government won’t just make it official that they can do it. I guess I should write it as “that THEY can stop paying on their debts”. I’m sure those same people think ‘I’ should pay those debts for them through taxes.

    Now, to apply the principles of the preceeding paragraphs. I need to write my congressmen and tell them to avoid any deal on the fiscal cliff at all costs. Yes, I know it is going to cost me money. Yes, I know it is going to slow down the economy. I also know that when debt > 400% income, you have to stop borrowing, stop spending, and need to start repaying. At $50,000/person, that works out to $200,000 for my family, which is about 400% of my income (I guess I am average). That will mean $6000/year for the rest of my working life just to pay back the principal. We can’t start any pie-in-the sky expensive programs (and I don’t care how worthwhile it is). We can’t put the problem off any longer. We are BROKE. Time to tighten the belt, suck it up, and deal with it. The alternatives seem to be to dilute the currency so we can pay the debt back with devalued dollars or default on our debts (like the Occupy movement seems to prefer).

  2. Alan Rage

    Debt resolution is not about giving license to people to shirk their duty to pay back money they borrowed, quite the contrary. What it really boils down to is the fact that money is no longer backed by anything. If the government needs to spend $20 billion on a project, they just call up the private print company “Federal Reserve”, and have more money printed. This is devastating on the economy to print more and more and more money, and in essence, hurts everyone by deflating the buying power of each dollar. So the “rich” get more money from the print to balance out their devaluation, while everyone else works just as hard, for less buying power — the numbers look the same in dollars, but what you can actually do with that money decreases. This forces a lot of people into a borrow or die scenario, where all loans essentially begin at the bank, who then charge interest on this newly printed money — interest that simply does not exist.

    What is ethically wrong, is that the entire monetary system of America is in the hands of a few non-elected private individual corporations, and further that any distribution into the economy of printed money from this manufacture is via loans — all of which ask for interest to be paid. So not only are they making money out of thin air, they are asking for money to be paid back above and beyond the money they have put into circulation. It is one thing that money be lent privately, and to ask for a bonus from what they have earned by borrowing the money from you, and a totally different beast altogether for the government to ask for more money back than what they put into circulation — not only that, but it is impossible. How can one pay back more money than is issued, foreign exchange notwithstanding, however perhaps you can slate the skewed currency swap imbalance for another debate ?

    I may not agree with some of the specifics of what is happening with Occupy, however I do agree and support that people en-mass are standing up for a belief. The foundation of this movement is solid, and having the ability to think critically (a rare commodity), I humbly request that you glean into the specifics of the background of the state of USA currency system as it stands. It was abolished previously, and Americans did begin to thrive again on a system of the people for the people, however, control was then relegated by the corrupt to private corporation for print, all of which, interest must be paid back upon. When you dig deep, it is quite absurd that such a system was ever allowed, however given this day, where people can communicate and be informed more than ever, the details of the travesty have become clear who the real threat is.

    Keeping the current system in place only ensures a downward spiral of buying power per dollar, and this is by design as it was engineered by very intelligent, and deceitful people. Some very prominent US presidents saw this, and they tried to change it — suspiciously, and potentially related, they were assassinated with the assailant allegedly never being found.

    • All well and good. But this smacks of rationalization. How convenient to say one is addressing incompetent monetary policy while simultaneously erasing one’s own debts. Sorry—that’s too much conflict of interest for me. And if monetary policy is the target, then the manual should make that clear up front. “We owe you nothing!” is inconsistent with your justification.

      Occupy should hire you as a consultant.

      • Alan Rage

        I can see where rationalization comes to play in the “We owe you nothing” statement, as this is most likely due to the idea of “we have paid more than we could ever owe” theory. I disagree with not paying loans back, as that is clearly unethical. To borrow is to conceive intent of giving back, and to not give back having established intent, is unethical. So the approach they are using, in my opinion is misguided and only offers a glancing blow at the real target. What it does seem to establish is followers who empathize with being in debt, and wish for an easy escape from their ethical duty of repayment. I feel in order for something like this to succeed, the target needs to be more precise, and clear, and followers motivation needs to be ethical. Misdirected protesting, or garnering followers on misguided or unethical principal is a tactic that even though commonly used, is, in my opinion, the incorrect mechanism to achieve the alleged root goal which is ethical: To re-establish permanently a currency that is both manufactured by the government and distributed by the government, of which every dollar is backed by something tangible on an equal level — such as gold, while dismantling the private corporation that currently does the print and therefore, theoretically eliminating “national debt” (not personal debt).

        I believe that is where the confusion has occurred, and thus, an unethical battle ensues from what originated on ethical ground. To be clear, I do not find this current protest of ethical nature, nor do I grant them justification based on a history where more good has been done as it does not matter how much good one does as it can not ever justify doing something unethical.

    • Andrew V

      Your description of inflation is way off. You are right that inflation due to the Federal Reserve’s printing of money reduces purchasing power, but I don’t know where you get the idea that the rich are somehow getting a payout because of this. Inflation actually decreases the burden of your current debts. Occupy should welcome intense inflation (disastrous as that would be) if they really want to get rid of debt.
      And also, why do I keep hearing Kennedy conspiracy theories? I was just told yesterday by some Lyndon LaRouche idiots that Kennedy was killed for resisting Gen. MacArthur’s advice to attack Vietnam.

      • Alan Rage

        Not sure where you get “Kennedy conspiracy theories”. I was speaking more indirect about Abraham Lincoln’s success in establishing a currency that is not privately run, and his assassination in that era.

        Inflation is injection of more money causing the dollars buying power to go down, and thus essentially, you have to work twice as hard to earn the same amount of buying power. For example, if money were printed causing the buying power of one dollar to divide by two, then a bag of milk, would cost $10 instead of $5, while still earning the same amount as wages do not generally change to compensate for the difference.

        This happens all the time, and if you wonder, why $1 could buy so much 60 years ago, it’s not that the product has really changed, or costs more (buying power), it is the dollar’s buying power is less, so you need more of it. And how do you get more when you are already working 80 hour weeks just to pay rent ? … loans. As for the rich getting richer off this scheme, where do you think the bank payouts went ? What about GM ? Any business that produces a shoddy product should go under, however, they get a bailout, then run with it. These are just recent examples that were made public, and I am sure if you look into the issue further, you will see more. Additionally, being that the money is printed from a private manufacture and “loaned” to US government, which interest is promised, the manufacture “Federal Reserve” and associates profit tremendously off this scheme.

        The amount of money that was printed to bail out these companies is over the top, there was more than enough printed for every single employee to have plenty to build new businesses, but instead, this was just handed over to big corporation which has been producing a less than quality product for quite some time now. I do not see how this is ethical, however back to the main point. Money is printed without anything backing it, and it is put into the economy in quite large sums either directly to large corporations or to banks who decide terms for loan and repayment, and stack on top of that an interest that simply does not exist, therefore perpetuating a downward spiral of the economy as a whole.

        This type of monetary system is a cancer on society and guarantees that the financial system will fail. What happens then, when “Federal Reserve” no longer wishes to “loan” money to the US because the debt ratio is too high. This is what this was originally about — not about not paying back debt. I am not sure where the Occupy movement took that left turn to state “We owe you nothing!”, however in light, it would be impossible for the US Government to pay back “Federal Reserve” all the money printed + interest, as that would require that the value of interest would be in print as well, which it is not.

    • Michael Ejercito

      I like Occupy Wall Street’s idea of buying distressed debt and cancelling it.

      Indeed, it is consistent with ethics, unlike a debt strike.

    • Alan Rage

      This is an interesting idea. How far up is the debt erased. Does it affect current loan rates due to inflation of money — is that money that is “cancelled” recalled, or is that just some of the “interest” which can never be repaid anyway ?

      A good start, but consumer debt, is only a symptom of the root problem in how money is put into distribution in the first place — not saying that people are not and should not be responsible for money borrowed.

      If this works, this is much better concept than simply printing 20 billion and offering a promise to repay + interest which further kills the economy.

      Although, cancelling debt in general, is unethical as it means that someone defaulted and has no intention of ever repaying — at the very least, interest on debt should be cancelled, but the principle should remain in collection status.

      • Michael Ejercito

        Although, cancelling debt in general, is unethical as it means that someone defaulted and has no intention of ever repaying

        If you read Ampersand’s link, the idea was to buy debt, thus becoming the creditor, and then canceling it.

        There is nothing unethical about it. The debtors do not have to pay, and the original creditors get their money.

        • Alan Rage

          What is unethical, is the debtor did not pay back what they promised to pay.

          • Michael Ejercito

            What is unethical, is the debtor did not pay back what they promised to pay.

            And if the creditor relinquishes the obligation, the debtor no longer has to pay.

            • Alan Rage

              That is rationalizing. The creditor would not relinquish funds on a debt they feel is noncollectable, in which case, the debtor had no real intent to pay, thus the debtor is lacking ethic as they originally made a promise to pay and broke that promise.

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