Iceland Forgives Mortgage Debts in a Year of Jubilee
One of the more interesting parts of the Bible deals with the idea of “the Year of Jubilee,” in which all debts are forgiven.
The common interpretation combines a bit of Leviticus, which actually includes the concept of the Year of Jubilee, with a bit of Deuteronomy that reads “At the end of every seventh year you must cancel the debts of everyone who owes you money.” Leviticus says Jubilee happens every 50 years, not every 7, and it’s a little more about letting the land rest for a year and reclaiming property (which seems like the opposite of forgiving debts), but I’m not a theologian, so you can explain the finer nuances to me in the comments.
Anyway, every once in a while we decide to test the idea of the Jubilee, to see if we can get it to work. You might remember Strike Debt’s Rolling Jubilee, which worked to buy debt “for pennies on the dollar” and then pay it off. It wasn’t unsuccessful, in that it did pay off some debt, but it wasn’t a game-changer.
The latest group to test-run the Year of Jubilee? The government of Iceland.
NPR’s Planet Money recently ran an episode on Iceland’s “correctment,” in which the government agreed to cancel mortgage debt that its citizens accrued during its recent financial crisis. Basically, during the crisis, the amount of money that people owed on their adjustable mortgages jumped up significantly during a period of rapid inflation. So now the government is forgiving the debt—or at least the percentage of the debt that was incurred as a result of the inflation.
The interesting part is that they’re not just making the money disappear (which, you know, we could do, it’s just numbers after all). The government is paying off the debt in an deliciously ingenious way, as Planet Money explains:
The money to pay for the Jubilee would come from a tax on those three dead Icelandic banks, banks that many people in Iceland blame for their financial crisis.
Now, if you were a Sunday School student like me, and you learned about the Year of Jubilee in Sunday School like me, you might have been the obnoxious kid who piped up “But what about the people who didn’t have any debt? What do they get?” Well, they don’t get anything. No surprises there.
But there’s a bit of an unexpected Matthew Effect going on—look at me proving I know other parts of the Bible too—in that those who hath debt shall be given, but those who hath not even the money to incur debt in the first place, they are still just as badly off:
The Jubilee leaves out people like Baldur and people who arguably need help the most – people who didn’t have enough money to buy a house. They were hurt by the financial crisis but they’re not getting anything here.
Baldur, in this case, is a person who bought his mortgage after the cutoff for the Jubilee. He’s still stuck with his debt. As Planet Money notes, people with student loans are also still stuck with their debt, even though their student loans also increased during the period of inflation.
So the Jubilee is imperfect, as Jubilees will always be.