23. The Ethical Deadbeat (Continued): The Material Argument for Debt Refusal

A few weeks ago I published a piece which dealt with the common arguments against a debt strike.

My arguments were primarily focused on who held the moral legitimacy, those who were refusing their debts, or those who were demanding that justice was served through debt repayment. The case for debt refusal is strong, and as I demonstrated, the dogmatic opposing argument that students should simply “keep their word” and service their onerous debts simply doesn’t hold up to scrutiny.

But what about the material arguments? What about the practical side of debt refusal? Do student debtors have anything to gain by defaulting, a potentially suicidal act (at least from a financial standpoint)?

Before I go into the material arguments, let me first say that its no small feat to have a claim on moral legitimacy. Being right isn’t everything, but it sure is something. The fact is, systems of oppression cannot last for long without some claim to moral, or at least practical, legitimacy. As I’ll demonstrate below, the ongoing system of student debt has neither.

Let me first point out that from a strictly individual, personal finance point-of-view, there is not a strong “material” argument for refusing repayment of student debt. I won’t argue that doing so will somehow increase your bank account or help your 401k or anything like that. But just because deliberately defaulting on your loans might ruffle the feathers of your financial planner down at Edward Jones, there’s no cause for alarm. Before I explain exactly how student debt default can bring material benefits, let me first explain why a lack of financial benefits from a “personal finance” point of view is no reason to panic. In truth, the “prudential” advice from the put-together types over at Reddit’s r/personalfinance or Edward Jones is far from prudential, despite how responsible and respectable it may seem. This is because this advice relies on two crucial, and faulty assumptions:

The first is the unquestioned assumption that capitalism is a just, sustainable system. For example, the advice to buy a house primarily as an investment (because the price of the house will invariably go up) seems sound, especially from a financial planning/personal point of view. The problem is that nobody who thinks along these lines is considering the social (collective) consequences of this line of action. The problem with “earning” money through “investment” in housing, land, etc. is that the overall action here is to drive the overall cost of housing up, ultimately putting home ownership out of reach for many. Affordable home ownership, which is another way of saying “the right to secure, stable, decent housing without having to pay an arbitrary monthly usage fee” should be viewed as a basic human right (at least in any decent, civilized society). Capitalists don’t see it that way, however, and no amount of prudential ornamentation can cover up the inherent barbarism of such a belief system. One of the primary reasons that the Baby Boomers were all able to afford houses, and that Millenials aren’t, is that the baby-boomers bought into the myth that real-estate speculation is a viable means of earning money. And for them, it was. However, the social cost is that now the cost of housing is out of reach for most in our generation. I put the terms “make money” and “earn” in quotation marks, because my essential argument is that speculation is an inherently dishonest way to make money because it doesn’t really add anything to the economy. Buying a house and waiting until the price goes up to sell it, from a collective point of view, is essentially parasitic. Where does that extra money come from? The answer is it comes either through inflation (which impoverishes everyone) or through taking money out of some other part of the economy. Morever, earning money by threatening the right of another human being’s access to housing (which is what you do directly when you charge rent as a landlord, or indirectly through real-estate speculation) is fundamentally immoral and abhorrent. And yet, you can head down to Edward Jones (or whatever other cookie-cutter financial planning service is available in your area) and hear this kind of barbaric advice dispensed by a nice, smiling Mormon white man with a respectable haircut and a tie (pardon me if that’s stereotypical, it’s just the image that comes to my mind when I think of “financial planner”).

Aside from unquestioningly positing capitalist finance as prudential from a moral standpoint, the personal finance industry is hugely mistaken to assume that such advice is prudential from an ecological or social point of view. In other words, not only is mainstream “financial advice” immoral, it’s also impractical. This is because (to put it succinctly) we are facing a major ecological and social crisis, the scale of which is hard to appreciate (and hard to express with mere words). We are at a time of tremendous upheaval, where our survival as a species will depend on radically changing the way that we interact with each other (particularly in terms of “the economy,” which is simply the material aspect of our relationships with each other) and with how we interact with our environment (ecology). I won’t go into detail here about exactly how and why this is happening (though for those who don’t already know, I’ve added an appendix at the bottom to further explain), but suffice it to say that it is foolish to assume that we can keep living the way that we are, and therefore to assume that saving for retirement, building up a 401k, or otherwise continuing to invest in capitalist financial infrastructure is somehow “wise” or “prudent”. If our economy continues the way it does, it won’t matter how much savings we have, or how well we’ve invested our finances, none of us will be able to look forward to a “comfortable” or “easy” retirement. Instead, we can look forward to spending our “Golden Years” facing an increasing onslaught of ecological and social crises and quite possibly witnessing the extinction of our species on this planet.

It’s no coincidence that the most ardent, vocal supporters of our defunct economic system are also those who believe that the Earth is 6,000 years old, there’s no such thing as global warming, and that our salvation will come when Warrior-Sky-Jesus descends from outer-space with his flaming sword of righteousness. (This is no exaggeration, I grew up in an Evangelical family, and I can guarantee that if you were to press any true-believing-Christian on the issues of social and ecological crises they would invariably present Magic-Sky-Jesus as the solution).

The point is, ignoring standard personal finance advice and deliberately defaulting on loans might seem foolish, but it’s important to remember that such advice comes from a narrow framework of “acceptable” thinking about money, finance, and the purpose and value of our lives. Failure to think outside of this box is the reason that we are facing crises that make “ruined credit” pale in comparison.

Ultimately, when it comes to the material considerations of whether or not we should pay our student loans, perhaps we should think in terms of investment. If we continue to pay our loans (and therefore seek jobs and lifestyles that afford doing so), we are investing in a system that is demonstrably defunct and existentially threatening (in every sense of the word). By paying back our loans we are effectively investing in the system of our own oppression and ultimate destruction, which makes capitulating to student loans a very bad investment, indeed.

However, if we choose to resist by refusing to repay, we are not only symbolically resisting the influence of capitalism on our lives, we also open up the possibility of directly freeing ourselves, and providing space and opportunity to start building and existing in a different world, a better world. So when I argue that deliberate default will better our material circumstances, I don’t mean individually and I don’t mean right-away. Indeed, those of us who choose to resist will be making our lives more difficult in the short term by facing wage garnishment, harassment from debt collectors, not to mention scorn from the hangers-on of the capitalist system. I also don’t think that student debt should be resisted (and ultimately “forgiven” by those in power) so that we can free up financial resources to increase consumption and “jump-start” the consumer economy (and further exacerbate the ecological crisis). Rather, the real reason to quit paying is to free up our time, to free up our lives, so that we can start the real work of saving the world. For me, I realized that paying back my student debt was keeping me in a job that I hated and that was directly destructive to society. Debt repayment was constructing and dictating my lifestyle and my life itself. When I chose to refuse, I began the process of freeing myself physically and psychologically. I began to cultivate a lifestyle of participating in the construction of the New World, here within the crumbling shell of the Old. Debt refusal, if it is to benefit us materially, should be about nothing less.

For those of us who choose to refuse right now, life will be very hard. For me, it means living in a foreign land in a foreign culture, and knowing that I will never be able to return home to the lifestyle that was promised to me as a “good student” in white, middle-class, Christian America. Even though I never really wanted that lifestyle, and it always terrified me, it’s still hard to know that in some ways, it’s gone forever. Indeed, choosing to default is, for us, a “crossing the Rubicon” moment. Once you refuse, you can never go back.

As the student debt crisis grows and increasingly becomes a topic of conversation amongst the general public, it’s likely that the tide of popular opinion will turn in our favor. It’s naive to think that this change in opinion will be reflected in the corporate news media, who will likely ignore the topic altogether, or turn up the volume on their asinine, reactionary arguments in attempt to hide their fundamental weaknesses. Not only this, but as more and more people awaken to the reality of capitalism’s (non) plan for our future, they too will jump ship and refuse their debt. I am certain that we are on the right side of history.

Ultimately, we have two choices: the uncertain and unsafe adventure of building a New World, or the certain destruction to come from remaining here in the Old. In truth, if we are to survive, we have no choice to start changing our lives, individually and collectively, and to start changing our world. For many of us, Student Debt is the primary barrier that prevents us from living meaningful lives of purposeful, and vitally necessary, social change. Debt refusal is a way to tear down that barrier so that we can start doing the real work of saving our own lives.

When it comes to refusing student loans, and therefore making an investment in a better world, it gives me great pleasure to quote Margaret Thatcher:

“There is no alternative.”

Where will you invest your life?

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Appendix: (Why and How Capitalism Threatens us Socially and Ecologically)

As I argued above, maintaining the status quo of student debt has neither moral, nor practical legitimacy. The material argument is derived from the fact that this system (and the overlying Capitalist economic system of which it is part and parcel) is illegitimate in every possible way (ethically and practically).

We’ll start with the damning ecological evidence. The fact is, Earth, as an integrated organism is in a state of severe crisis. It is seriously, seriously ill. Since the rise of industrial capitalism we have destroyed biodiversity, and decimated the planet. The economic explanation for this is that we operate under a debt-based monetary system. This is explained in-depth in the Zeitgeist films, and also more briefly in this inspiring film by Charles Eisenstein. I’ll briefly summarize here. Because money is created as a loan (an interest bearing debt) by private institutions, the total amount of money in the money supply is always outweighed by the amount of debt. So in order to repay this debt, the economy must constantly expand. Again, it doesn’t take a rocket scientist to understand that limitless expansion in a limited arena is impossible.

As a result of the way money is created, the capitalist economic system is also untenable from a scientific standpoint. Fundamentally, capitalism stands opposed to our scientific, ecological understanding of the world. Capitalism views the world as atomized and disconnected. It considers the environmental systems that it operates within as mere “externalities” to be ignored or passed on, rather than our fundamental life-support systems. The more we understand about the world, the more we see that everything is interconnected and interdependent. We cannot act in a destructive manner towards our environment without bringing destruction upon ourselves. Again, a system that is fundamentally at odds with the underlying nature of reality cannot last for long.

Capitalism is also intellectually untentable. The primary drive of capitalism is increased profit. It’s assumed, a priori, that increased profit should mean an increased overall welfare in the human society. Again, this is the argument used to sustain capitalism (particularly with the “trickle down” theory that was sold to the working class at the advent of neoliberalism….the argument being that increased profits for the rich would ultimately benefit the working class). From a strictly intellectual point of view, if increased profit and wealth doesn’t add to the value and enjoyment of life (which it doesn’t , neither from an individual standpoint and certainly not from a social standpoint), then what’s the point? If it doesn’t do anything to add value to anybody’s existence, the chase for profit simply becomes an arbitrary game of adding numbers to a score board. Meanwhile, the “game” impoverishes and immiserates the working class. It’s clear now that “trickle down” economics doesn’t work (even the IMF says so). Without any means to justify the existence of an economic system that provides opulent wealth for a few at the expense of most of humanity, how long can we expect such a system to last?

Finally, capitalism is unsustainable from a social point of view. Karl Marx predicted this over 150 years ago in his treatise on capitalism. As I’ve said before, I don’t necessarily agree with Marx about a lot of things (particularly the need for a “dictatorship” of the proletariat), but his views on the overall trends of capitalism are startlingly prescient. Marx predicted that a capitalist society would divide itself between the few owners (the bourgeiosie) and those who were forced to sell their labor power by virtue of being born property-less (the proletariat). The rise of the “middle class” in post-war America was an anomaly that served to temporarily muddle and confuse these distinctions. The idea that the “middle class” was somehow outside of the ranks of the proletariat is patently false, and this falsehood is being further exposed along with the rapid disappearance of the “middle class.”

Another important idea from Marx is the idea that class struggle would be the defining feature of the relationship between the working class and those who profited from its exploitation. In other words, these classes are fundamentally adversarial, with the ruling class invariably seeking to further its own interests at the expense of the working class. Again, in the United States a mix of cold-war patriotism and the temporary capitulation of the owning class (which allowed for labor unions and the necessary wage increases needed to stave- off the real threat of revolution) served to mask this adversarial relationship (which was, again, epitomized by the acceptance of “trickle down” economics by the increasingly right-wing working class). It’s clear now that while the working class may have naively bought into the notion that increasing the power and wealth of their oppressors would somehow benefit them, for the ruling classes, the class struggle has been ongoing (and they have been winning).

This is obvious in the rapidly growing rates of income inequality and the fact that the so-called “recovery” has primarily benefit the ruling classes and left the rest of us impoverished.

But perhaps most prescient of all is Marx’s analysis of what he called “the inherent contradictions of capitalism.” Marx argued that implanted within capitalism were the “seeds of its own destruction.” In order for the ruling class to continue ruling, it must increase profits. In order to do so, it must continuously cut labor costs either through lay-offs, wage cuts, or automation. So in order for the ruling class to maintain its ever-increasing profits, it must impoverish the proletariat base on which it relies for its profits.

The student loan crisis is part and parcel of this crisis. First of all, the overall rise in the availability of credit (which is simply the ability to go into debt) served to mask the stagnant wages of the last 30 years. The debtors plight which most of our generation finds itself in is simply the above situation in convoluted, barely masked terms. Because we are unable to service this debt, we are unable to participate in the economy, which ultimately makes the economy unprofitable for the ruling class, and therefore non-functioning.

Simply put, capitalism is unsustainable. Given the rapid changes in human society over the last 400 years, which have only intensified more recently (consider even the astounding technological advances in the last 20 years), there’s no reason to believe that the future will be the same as the present. We are at a time of upheaval. Whether or not these changes will be beneficial or destructive to humanity as a whole is based on how and whether we choose to react to these crises. Will we ignore them? Or will we choose to meet them head on?