Brian Davey of FEASTA argues that we could do debt cancellation ethically, while leaving the larger financial system intact, and that OccupyEverything should focus its message on the idea of Jubilee.
Instead we need a scheme with a pattern of rewards and incentives that is more appropriate to the times that we live in. This could be achieved by giving people the wherewithall to reduce their debts if they have debts, but also giving the same amount to people who have no debts, or have low debts, which they could use too - not on a consumption binge, but on green investment to bring down our ecological debts (the carbon intensity of our lifestyles).
So how would this be organised?
Here's how it might work (in the UK - you could adapt it to your country if you don't live in the UK).
Every adult individual gets a voucher for, say, £25,000 (in the UK) - or some other sum......
On the voucher it explains that the voucher can be used by the person to whom it is addressed in one, or both, of two ways:
to repay debts or money owed to any lender organisation or company in the UK registered with the Financial Services Authority - all such lenders will be obliged to take early re-payment on receipt of a voucher up to the whole value of the voucher, or whatever percentage of it that the voucher holder wishes to use for debt repayment purposes. FSA registered lenders receiving re-payments with the vouchers can then claim cash from the central bank which will be paid into accounts set up for them at the Bank of England.
the vouchers could be used to make payments for invoiced services or products for energy efficiency or renewable energy work from companies or organisations already existing as at October 2011 which are also part of recognised industry trade associations like the Energy Systems Trade Association, the Federation of Environmental Trade Associations, the Energy Institute, the Renewable Energy Association etc. Some people do not own their homes so alternatives would be needed too - for example allowing people to invest in bonds that support renewable energy development. The green economy sector could be invited to submit proposals for what would qualify.
The requirement for these to be pre-existing organisations registered with trade associations is to prevent cowboys getting in on a bonanza. Over time proposals might be worked out for accreditation to allow new firms to set up with suitable skills. Companies wishing to apply for this work, or source of capital, will be obliged to register their interest with their trade association and will submit proof of payment of a voucher or part of a voucher to their trade association which will maintain an account with the Bank of England.
Vouchers must be presented for repayment of debts within so many months of receipt of the voucher.
Vouchers (or parts of vouchers) used for energy efficiency, renewable energy work or investment in clean energy can be redeemed over a longer time period - as it would take time for suppliers to gear up and increase their capacity to deliver.
Read the whole thing. One of the things I like about this plan is that it obviates the traditional objection to redistributing any of unfairly claimed wealth, because everyone gets the same distribution. In the US, pitting struggling people against each other is a traditional method of ensuring that wealth continues to get concentrated - pit, for example, the poor person who can't get health insurance against the one who has inadequate health insurance through the state, and you can be certain person A will vote against person B continuing to have even that small amount of security. Set struggling and exhausted working parents against desperately poor women receiving welfare, and you can be sure there will be no chance that any low income woman will get to stay home with young children.
At the same time, I think there are two objections to be made here - how do you ensure that the money goes to pay off debt, first? Consider person A, who has 25K (or whatever) worth of credit card and automotive debt and person B who doesn't. Person A gets money to pay off her debt. Person B gets to redo his house, and cut his energy bills, and maybe get some cool solar panels. Person A, however, is paying for things she already has purchased, without any of that cachet. I'd like to see that Person A would see the virtue of this, but I'm not at all convinced that she would - or that she would see it is fundamentally equitable.
Without a method of enforcement, my guess is that many people would prefer to purchase something new with their subsidy, and continue to either pay or default on their debt. The methods of enforcement seem potentially troubling, and if sufficient people don't pay off of bank debt, the "leaving the financial system intact" part of this doesn't work. That isn't to say I couldn't be wrong, or that it might not work better than anticipated, but to me, that seems the main difficulty. 50+ years of encouraging people to buy new things rather than pay off debt seems fundamentally difficult to overcome. Still, it is one of the better plans I've seen.
As Davey points out, we're all kind of stuck on our dependence on the banks that have manipulated the economy. While I like Davey's solution in some measure, I think leaving the current financial institutions intact is probably doomed to failure, and I'm not at all clear that Davey's plan actually does.
My own suggestion is somewhat different. The US manifestly needs a new financial system, and one that as Richard Douthwaite has pointed out, is not debt-dependent. None of us want to see a purely centralized economy, of course, but neither do we want to maintain the status quo. My suggestion is that we put American ingenuity to work to create an American-Idol like show that creates new financial institutions for the US. A set of judges could cover the range of commentary and reveal subtleties an audience might not initially grasp. I propose a panel made up of Elizabeth Warren as the basically appealing but still critical judge (think Paula Abdul) "I want to like your suggested scrip, I really do, and you clearly have a lot of heart, but I just don't see an economy modelled on the exchange of cattle as working in Cleveland," Ralph Nader as the odd, idiosyncratic minor player who calls everything "pitchy" and Ilargi of The Automatic Earth as Simon Cowl "That is without a doubt the most idiotic suggestion I've heard outside of a Fed meeting." (Watching CEOs cry when Ilargi criticized them would, of course, be a huge ratings hit). I think continuing in the American Idol vein, we should definitely have a musician appear as a guest judge, because having a portion of our economic future determined by Iggy Pop. Lady Gaga and Tom Waits just seems like a great idea and wholly in keeping with our culture.
This would allow any reasonably creative group of people to propose fiscal models and offer them up to the general public for consideration. Current financial institutions could also participate, of course, although their prior records would be part of their larger performance. (Actually, for extant large financial institutions, a survivor-style pre-game strikes me as ideal, as the obese institutions are whittled down to show size by a series of arbitrarily cruel and humiliating exercises). Those voted off would have their assets redistributed to the winners, which would restart from the beginning. Legal cases against losers could take over the time slot during the summer hiatus.
All debts are cancelled, the new regime (which can't possibly be any stupider and more evil than anything else) takes over, and a good time is had by all...almost all. Hey, it is the Jubilee!