The scandal of the Alabama poor cut off from water
bbc.co.uk
bbc.co.uk
Birmingham was once an industrial capital, and in the middle of the last century was bigger than Atlanta, and in many ways better positioned economically to lead the south east. High taxes and a corrupt political culture drove Birmingham into the dirt. A couple generations later, Atlanta has one of the busiest airports in America, world-class universities, and hosted the Olympics, while Birmingham can't provide running water.
Elections matter.
What really happens at the very end after all of the brouhaha about derivatives, crooked politics, and mortgage disasters? The people go back to using outhouses. Pardon the pun: Shit just got real.
Once people see their neighbour doing it, they'll do it. Especially when it's potentially saving them hundreds of dollars. So then the creditors will want hikes of 50-100% annually.
It's an awful mess of crooks and greed. I don't get why the creditors decided to fight these people in court and add in legal expenses when they could have just said "we'll cut the interest rate if you pay over a longer term".
I'm sorry but my business mind tells me that some money is better than no money.
http://www.msnbc.msn.com/id/44552659/ns/us_news-life/#.TulFl...
A 1000% markup on a project should be illegal however it happens. Sorry, if a company wants to overrun the same should apply as to my mechanic 30% above estimate and you pay the rest. Government would have paid $400 million, sounds about right for a cost overrun to me, not $3 billion.
http://www.bloomberg.com/news/2011-11-09/alabama-s-jefferson...
And, now I read that Goldman Sachs is literally hoarding aluminum in gigantic warehouses to manipulate the market.
I wonder when people start to realize that concentrating money like this is not a good idea.
http://www.businessweek.com/news/2011-12-14/aluminum-glut-at...
"Dec. 13 (Bloomberg) -- Aluminum stockpiles rose to a record and orders to withdraw metal from warehouses fell to a 15-month low amid speculation traders are adding to bets the commodity will extend its biggest slump since the global recession."
Not sayin this is fact, or a deeply thought out theory, or that I know too too much about the subject, but I wouldn't say that current price of AL gives me much solace just yet....
If Goldman looks like they lost in the short run, they probably did. They'll take the losses, learn from their mistakes, and try to make it up next time.
Investment bank JP Morgan Securities and two of its former directors have been fined for offering bribes to Jefferson County workers and politicians to win business financing the sewer upgrade.
Fined? That level of punishment seems insufficient.
http://blog.al.com/spotnews/2010/09/five_men_convicted_in_je...
(Assuming they weren't well-connected to the upper ranks of the Party elite...)
The current consequence of 'pay some fines' doesn't serve the public, nor does it discourage the abuse. Restitution here is that the city doesn't have a sewer and water system. By having JP Morgan fund the building and provisioning of such a system and then handing it over debt/bond free to the city, the city is made whole (they have their sewer system), JP Morgan is punished (they paid for it), and hopefully they are discouraged from future attempts at bribing folks.
"But the bill soared to $3.1bn after construction problems and a series of bond and derivatives deals that went sour in the financial meltdown of 2008...[the county] faces a budget shortfall next year of $40m after a local tax was declared illegal."
Clearly, someone involved with the construction is partially at fault, as are politicians for basing their budget on an illegal tax.
So it would certainly be excessive and unfair for JP Morgan to foot the bill for the entire sewer and water system.
Secondly, the construction problems, common among massive public projects, really weren't the problem. The problem is that County Commissioners were BRIBED by bankers into taking out unwise interest rate swaps in 2003. I believe all five commissioners from that period have been convicted of corruption, particularly Larry Langford, commission president. [2]
The reason for the bankruptcy is less that interest rates rose, but primarily the freezing of the market for municipal bonds during the 2008-2009 recession. Bloomberg explains, "After some bond insurers incurred losses on subprime- related securities, threatening the credit ratings they used to guarantee other Jefferson debts, investors in 2008 dumped the sewer securities on banks that had agreed to act as buyers of last resort. That triggered contractual requirements for the county to pay off $850 million of the debt in four years instead of the 30 or 40 under the original agreements, according to government records." [3]
So it is clear that BOTH bankers and our local politicians are at fault for this problem. Both acted illegally. Our politicians are in jail, but the guilty bankers are not. So, yes, I think JP Morgan should pay a substantial penalty for this.
1: http://blog.al.com/spotnews/2011/03/alabama_supreme_court_ru... 2: http://www.inthepublicinterest.org/case/jp-morgan-investment... 3: http://www.bloomberg.com/news/2011-11-09/alabama-s-jefferson...
"The county paid $120 million in fees -- six times the prevailing rate - to buy interest-rate swaps from J.P. Morgan, Bank of America, Lehman Brothers and Bear Stearns.
Within five years, the bad advice had increased the county's debt by $277 million."
Hmm, let me do some quick arithmetic - is $277M < $3.1B? I believe it is, and I therefore stand by my claim that JP Morgan is not solely responsible for this problem. However, I'm all in favor of sending anyone involved in bribery to jail.
It looks like the real problem is that the county decided to make long bets on housing and lost.
But if you'll read [3] (far more explanatory than [2] about the details), you'll see that the problem isn't the size of the debt that brought the county down -- it's the contractual obligation to pay it off early.
You're right - the county did make long bets on housing. They attempted to expand the sewer system to growing areas to boost revenue. But the bankruptcy was primarily a result of the interest rate swaps.
EDIT: The original reason for the debt was a court order to reduce the pollution from the sewer system. The county also tried to expand the sewer system at the same time to increase the revenue base. The debt was unavoidable (though larger than it could have been without the additional expansion). The interest rate swaps were applied to the debt later. These are what JP Morgan sold, and what caused the bankruptcy.
Yes, but that doesn't mean JP Morgan is responsible for the bad decisions of the county. Similarly, if the county bet $3.1B at the horse races, they'd have no right to go complain to the racetrack when their horse lost.
That would be true even if the racetrack let some county employees sit in the VIP box.
And this bribery wasn't some minor ethics violation. They didn't give away free meals. The president of the county commission received $236,000 in gifts from an investment banker.
And in general, giving advice does not make you culpable for movements of the market. A car can be expected to drive reliably within certain parameters, but investment vehicles are not cars. TD Ameritrade gives me investment ideas all the time, but I don't get to demand they pay me if I buy AAPL and it goes down.
There are exceptions for negligence - e.g., if I say "I want a long position", and they advised me to buy a put.
It appears that the city pissed this money away. Why aren't they responsible for that?
What the bankers did was bribing officals into taking bad advice at hiked rates leading to a 30-40 year loan having to be paid off in a tenth of that time. THIS is what's leading to the impending bankrupcy.
I cannot fathom why the investment bankers involved haven't been sent to prison for a very long time. They were the ones who started this whole ordeal. No bribes = no horrible decisions = no bankrupcy = no porta pottys. While I agree that bankers in general are being blamed for most everything that's been going wrong in the world in the last few years this time it really was their fault. Not only theirs but they should be more than fined.
"...[paying] $120 million in fees -- six times the prevailing rate...increas[ing] the county's debt by $277 million."
Fixed that for you.
http://www.inthepublicinterest.org/case/jp-morgan-investment...
The fact that the county also took on contracts with contingent balloon payments is not caused by bribery. It's caused by the county officials either not reading or not caring what was in the contracts they signed.
This time, about $277 million of the $3.1 billion problem is indeed the fault of the bankers. The only thing being debated here is the other $2.8 billion.
I cannot fathom why the investment bankers involved haven't been sent to prison for a very long time.
The contractors they hired (who were actually the ones that committed bribery) are in jail.
http://blog.al.com/spotnews/2010/09/five_men_convicted_in_je...
So the bankers ARE partially responsible. They were paid for advice, and their advice was terrible. Now we're bankrupt, and they deserve to take a big loss.
Am I the only one here that believes that running water is a luxury, not a right?
I've been in some pretty shitty situations myself, though none as tough as this. That much I freely admit. But the overall tone of the article seems to be one of horror that people might not have a ceramic toilet which flushes the waste away to a sewage treatment plant. Also, an attitude of "This is a first world country; this shouldn't be happening to anyone". (Yes, I noticed the sidebar on "corruption")
Does everybody else think that running water/sewage is a right?
Clean water and sanitation are pretty much the two things which most enable us to maintain population-dense cities. Lack of modern sanitation repeatedly led to horrific pandemics in the Middle Ages in Europe, culminating in the Black Death. I don't have any statistics handy, but one would expect the presence of sanitation to be as big a contribution to personal health as diet, and what's more, poor sanitation is sure to harm other people through disease transmission.
So yes, I believe that clean water and sanitation are very important to human life at scale; important enough that we should pay a sufficient tax, so that we can give them to people who can't afford to pay.
The solution, then, is to bail out the corrupt and wasteful government?
I'm not seeing any meaningful way in which this differs from bailing out banks or auto manufacturers. I'm assuming that you agree that those gifts to corporate America were immoral. If you agree about the corporate bailouts, how would this governmental bailout differ?
The difference that immediately springs to mind is that the corruption was in some ways the responsibility of higher levels of government to prevent. The justice system was failing these residents when people engaged in corrupt practices were not caught soon enough to prevent this situation arising. It is difficult to hold the residents who voted fully accountable - they can not be clairvoyant and predict who is or is not corrupt.
Another difference is that governments exist to serve the peoples' interest at all levels, if one level is dysfunctional it does not seem to give all other levels the freedom to ignore it. Giving the reality on the ground right now it is the governments duty to do some kind of cost-benefit analysis to determine what can be done to help these people a great deal while only harming (or perhaps helping) others in other jurisdictions a small amount. (For example based on the information in the article it would seem obvious that sanitation problems among the poor are going to end up being bigger medicare bills for the government to handle at some point given the economic circumstances.)
Even disregarding the sanitation, hygiene, and emotional impact of cutting people off from modern sewage, there are efficiency issues. The more time people spend digging latrines and putting up outhouses the less time they have to improve their own lot.
Imagine if we took away roads, and it took you two hours each way to get to the general store!
Infrastructure, luxury or not, are key to pulling this country out of the shit-pit (no pun intended) it's found itself in. Cutting people off from these essential services certainly won't help matters.
Sitting around debating whether or not people are crybabies for demanding modern sewage services, also doesn't help.
But what do "rights" have to do with this discussion? Running water may or may not be a right, but it's a basic feature of first world civilization. It is an embarrassment to the nation when a major county in the U.S. can't provide its citizens with running water, because of the greed and corruption of some politicians and some banks.
I was born in Bangladesh (where running water is indeed a luxury for most people), and my dad has spent his life working in public health (not running water, but vaccine programs and the like). These are problems to be dealt with in places like Uganda, not in the United States.
When we have no problem spending billions on foreign wars with dubious moral justifications but can't provide clean water to citizens we have serious priority issues. Its the first really dangerous symptom of what might be a truly horrifying underlying disease.
It's not like we are talking about a small, rural town in middle-of-nowhere Alabama being cut off from cheap sewer access (we might expect this considering infrastructure costs of getting it all set up out that far away from cities). This is Jefferson County, which is the most populated county in Alabama. We've moved past expecting the bare minimum once we get into cities, and we expect a bit more competence from our local governments when it comes to dealing with these pretty basic issues. Without basic sanitation, we don't get large cities.
I've been to a lot of hole-in-the-wall towns with populations of less than 1,000 in rural California, Ontario and B.C. and I've never once seen a latrine.
Now fly-in Native reserves in northern Canada - that's another story.
All of them believing in libertarianism for consequentialist reasons as well, they would probably view this story as testament to the failures of government, and what happens when it is coopted by businesses.
Edit: I also want to disagree with the other commenters that issues of 'rights' don't matter. Sure, if you're only judging things by their consequences, then that discussion is moot. But having a moral position against the coercion of government (I'm going to take your money to build sewers, roads, engage in multiple wars, etc) is a legitimate stance--even if you disagree with it.
Rothbard would go further, though, and say even that minimal state is too much, as it is still coercing people to fund government activity (police protection of property). Even as that end of property enforcement is just, it's still using an immoral means to achieve it.
Which just goes to show that one man's right that deserves government protection is another's coercion. I respect Rothbard's consistency, because it's quite problematic for the run-of-the-mill libertarian to argue for some forms of positive liberty (the right to government provision of property enforcement) while saying that other forms of positive liberty are categorically unjust (such as, say, the right to government provision of running water).
That particular strain of libertarianism is indefensible on anything other than religious grounds ("Property is a god-given right while water isn't") or something equally metaphysical.
I doubt Rothboard would describe his viewpoint as being simply that "property is a god-given right while water isn't," even if you exclude the god-given part. It's more that property is an institution that develops from organic human action and self-organization. And in his vision people end up self-organizing into groups that will defend some version of property rights using threat of violence if necessary, and he goes further and thinks that, due to the nature of the market of violence, most will converge onto roughly similar versions of property that are best suited for human living.
My take on that is that this has already happened, but as it turns out the market of violence lends itself to aggregation and monopoly. We call this monopoly supplier of violence the State, which has found it utility maximizing to form a set of contracts, implicit and explicit, with most of the different parts of society, including price discrimination, loss leaders, etc.
In other words, Rothbard left out public choice and the economics of the firm, and when you add those into anarcho-capitalism you get... social democracy.
I deeply admire, though, his capability to imagine a different, more decentralized, and free-er world. Like most visionaries, his greatest flaw and strength is his utopianism.
In pastafarianism, humans have a natural right to linguine on Tuesdays. So what?
My point is: I have been there and at the time didn't think much of it. But after living in the USA for 16+ years now, I can't even imagine being without running water.
So, is it a right or a luxury? I don't know... 17 years ago, I would have said luxury but now, my answer would be it's a right...
This only goes for places where it is illegal to drill a well.
Would you not consider this a luxury? I expect your gardner did not have someone filling up his drums waiting at home for him. I've been in natural disaster areas where water and power weren't available, we made do but it also became what we spent 1/3 of the day managing around (hauling water, getting things done before nightfall etc).
I grew up in the middle of nowhere, Arkansas. We had a well, no central heat-and-air, and a septic system in our back yard. This worked just fine. We had the same quality of life (aside from freezing in the cold winters) that everyone in large cities had.
The difference is that we owned the equipment to take care of ourselves, instead of the local government.
I'm kind of new-ish to HN, so I was wondering how you guys lean (if at all).
Also, it bothers me that there is usually no competition amongst utility providers. Where I live, we have one choice for electricity (short of generating your own), one choice for sewage (there _are_ other options, such as personal sewage systems), and one choice for garbage removal.
I think that if we could find ways to create more options, we could create a better situation for the folks in referenced in the article (and elsewhere).
Also, how do you guys define troll?
In the context of a country where running water is ubiquitous, it is a horror that people have no infrastructure providing running water. It's not a "right" in the platonic sense, but I think I can say fairly objectively that it comes close to that status. That's really all that matters.
What can you really do with the information that water should be a "luxury" in the technical sense? Leave everyone t their own devices?
So yes, you are trolling.
I don't believe that the parent was even accusing the original poster of anything particularly dark on the racial front, just providing some context.
But there's a long history of racial tensions in Alabama, and nowadays one of the main ways it's expressed is through the white-dominated state government absolutely hating the city of Birmingham.* A combination of under funding and interference in local matters makes it very hard for an already poor city to prosper and, some would say, fosters a corruption-inducing urban insularity.
And now the families who lack indoor plumbing and running water? Suffice it to say that if they were mostly white, state politicians would be much more interested in remedying their situation.
Take this with a grain of salt, as I'm projecting my Georgia experiences. (I will note that Alabama is, if anything, less cosmopolitan than Georgia, so I doubt I'm being too harsh on them.)
*This is a repeated pattern through the South: compare, for instance, the Atlanta/Georgia divide. It goes beyond the typical urban/rural divide.
I can understand why you think I was insinuating that the OP was racist, but that was not my intention. My intention was to point out that his 'academic' question was incredibly callus toward a population that is regularly and systematically disadvantaged on multiple fronts. .
Additionally, based on the initial line ("At the risk of being accused of trolling"), it seemed obvious that the OP KNEW that what they were about to say was terrible and/or offensive. That comment was an attempt to confirm that yes, what they said was bad and they should feel bad.
I see what you did there.
I mean, what rights aren't luxuries in some form or another? Voting? Luxury. Not being a slave? Luxury. You can still live, breathe, and procreate without access to either of those things.
I don't think lowering the standard of living is going to get us very far in this world. What we desperately need is for everyone to contribute to society. This is usually done by having healthy citizens with a high level of education so we can find better ways of solving today's problems.
But sure...two steps back, one step forward.
Unfortunately services provided by private companies are not a right. You can call access to water a "right" and that's a reasonable claim. Now what does that actually mean. Do I have the right to demand free water from a private company riddled with debt? Do I have the right to demand free water from you personally? Or for you to pay my bill? Or for my bill to be reduced to zero? Or for someone to work at a utility company for free so that the utility company can provide a free service? Does that then mean that the utility company has a right to demand free parts from local supplies companies so that the can provide a free service?
Maybe the utility companies should be nationalized and all citizens can contribute tax dollars to the service. It wouldn't surprise me if that's how it's done in a lot of Eurozone countries? I'm not sure. I don't even really understand how the fraud occured and who is on the hook for the bill. It is however fair to say that it's way more complicated than "how a country treat's it's least fortunate".
And maybe that's part of the problem. Presumably a private sewer company could declare bankruptcy, sell its infrastructure, and let someone else provide the service. But with a public utility, we're stuck.
You did notice that this was bout 'a' county, in 'a' state. And that there was no data in the article about how many people this problem affects.
Thinking this is representative of the country as a whole would be a big mistake.
The article was long on emotion, short on facts.
Two steps back (lack of affordable clean water and lack of affordable sewage), hopefully the one step forward is going to be lack of government.
The leading problem in the western world is that the free market doesn't extend to government. I want to choose my politicians based on lowest expense and highest reward, because the electoral system seems to keep giving me the highest expense and the lowest rewards.
I get the politicians I am willing to pay for.
Unfortunately corporations have more money, and can afford to pay more than I can.
That is the free market at work.
But why is this true? Why does the politician with the most money almost always win?
Personally I find this a failing in the electorate, not the system. The fact that more votes are almost a guarantee with more advertising dollars spent tells me that the electorate isn't doing their job, they are just voting for whomever they see more.
From the article:
"Six of Jefferson County's former commissioners have been found guilty of corruption for accepting the bribes, along with 15 other officials."
This shows an obvious pattern, but to me that doesn't mean "the government is broken" it means "the electorate is either not paying attention or gullible".
The electoral system is something with rules and processes that can be changed to try to reach an outcome that produces less corruption.
Trying to coheres the electorate into making the 'correct' choice is to say that Democracy has failed, your population is 'dumb' and now a minority has to manipulate the system to get a reasonable result. This all assumes that such manipulation is in good faith, poor assumption.
I believe that any political (and judicial) system that delegates authority ultimately has to have an element of good faith from the people that receive that authority. It is unfortunate that it has to be that way, but I don't know what alternative is available.
In light of that I think that saying that the need to trust someone else is a "poor assumption" and thus negates any options for change may work as a rhetorical device to win an argument but it does not offer any way to make any progress. That makes such a position not very useful.
It seems to me that if most of these people are on welfare in an area with a pretty good climate and what appears to be (from the photos) low population density, this would lend itself very nicely to getting off of the grid.
Instead of relying on the government to support them, they could farm. Instead of worrying about running water and sewage, they could irrigate and fertilize. Instead of worrying about hydro bills for lighting they could use small scale solar.
what a disgrace!!! the richest country in the world can't provide running water to its citizens... what a shame!!!
Did anyone else notice that the linked article doesn't come right out and tell us how many people are using outhouses instead of the city sewer? One lady who may cut off service, one guy who has. The number of guys like this is said to be growing.
Outrage is fine and dandy.
But shouldn't you find dig around so you know what you're outraged about?
If you have a $300 water/sewer bill you're doing something absurd. We're a family of 6, and I am by no means conservative with my showers, wife takes a bath every night, 4 kids bathing regularly, and our bill has never been more than $100 for a month.
Having the sewer portion of the bill be the same as the water portion is bad, and there's no doubt it's a screwed up situation, but this is a typical case of a reporter seeking out outliers and presenting them as commonplace.
Some crazy decisions going on there.
Let's see if people keep voting against themselves.
But 'poor' people have cars in America(From the photos)? You guys get $600 per month for doing nothing(Social security)? Don't pay taxes and yet infrastructure benefits must reach you?
I don't really know what more the country can do for you guys. I mean paying individuals $600 per month for doing nothing, with which they can afford home, cars, food and clothing all this when the individual isn't even working.
I mean if this isn't sufficient, what is?
You really must come out of US and check the definition of 'poor' in other countries.
Here is a reason why you guys can never beat China. Because there people tend to be happy with ever little they get. But here in this case you have people complaining for stuff which is offered to them free at the first place.
P.S : I am software engineer here, who can barely afford a motorcycle and fuel. Let alone a car.
I could go and dispel more misconceptions for you, but I think you've read enough to know that you have a few things wrong and will wisely avoid judging the entirety of a nation's poor based on a single photograph.
ETA: Most poor people have cars because most poor neighborhoods don't have any reasonably priced grocery store. It's cheaper to own a car (with all the potential it brings) than to shop locally.
Just come to Mumbai or any urban metro in India and see for yourself how people travel. Majority of them are herded like sheep in busy trains and buses.
That is why I said, it might be just a cultural thing. Here too, we need to pay for water and sewers.
But I understand that your barrier for entry when it comes to measuring poverty is very different than ours. By your definition 95% of whole India may fall into poverty.
That doesn't even begin to describe poor according to my definitions of poor.
But I agree, we have different yard sticks to measuring what exactly poor is.
About 70% of them. 25% actually have two or more cars.
http://www.census.gov/prod/2008pubs/h150-07.pdf
Forget learning what poor is in India, most Americans should come to India and see how the top 5-10% lives. Someone on welfare in the US probably has a nicer house than most people in Bandra or Koregoan Park. Sad but true.
I always think about this. That life in India and countries alike is so difficult, merely meeting the ends meet and getting yourself food, clothing and shelter requires you fight daily battles.
I mean with farmers committing suicide, crores of people below poverty line. Hunger and Malnutrition in one part of country. Children starving to death. And middle class earning barely enough to survive. We still consider ourselves fortunate if we can get the basic stuff right.
Now here some one is giving you $600 for doing nothing in a wonderful residence, food, clothing and shelter with a car to drive. And all the time in the world to spare.
And people are complaining?
I agree there is some corruption and scam going on in here, but really if you can buy a car you are anything but poor.
In the hypothetical nation of Robotopia, most people live in mansions, have flying cars, all the education and health care they want, and robots handle most menial labor. This is true even for the "poor", who have their robots (5 year old models, occasionally a little scratched), mansions (only 10,000 sq ft instead of the normal 20,000 sq ft) and flying cars provided by the state.
However, due to a massive corruption scandal, one of the poorest parts of Robotopia now can't afford to provide robot house cleaners. The "poor" (who mostly don't have or want jobs) are now forced to clean their own houses.
As a result, those poor people are complaining, threatening to riot, etc.
Whatever your feeling are about the poor complaining Robotopians, that's probably how someone from India feels about the American poor.
I would hope some day my country has such a thing too!
But I talking on the lines of gratitude. Gratitude is important. You can't really complain about stuff you got for free.
As an aside, when I was in grad school in the US, my lab mate and I (both of us of indian descent, although born in the US) used to joke that for half our yearly stipend (about 25K) we could afford to hire a full time Ph.D. chemist in India to do our experiments while we slept. 10K USD in the India is considered middle/upper middle class.
Do you see Americans dropping in to talk about how out of touch people in better educated European countries are when they talk about problems in their schools? It wouldn't make sense. People get to aspire to better things for their country, even if other countries aren't quite there yet.
They have stolen your jobs because of my aforementioned arguments.
In other words you are in this 'poor' state because of your very high standards of living.
You know what is good for you. Act accordingly.
And just for the record, I really like Birmingham. It's a good city. It has had some really terrible politicians, but despite that, it's a really nice place to live. (Though, I must confess, I don't have to pay a water bill).
The problem is that not all elections are equally important, and it is easy for the voters to either (a) go to sleep at the wheel or (b) vote themselves more pork.
- There was 'a' person who self-reported he could not afford the water bill?
- That there were no data at all about who could or could not afford the bill?
- That the number of people now using outhouses in that county was said to be rising but no numbers were given?
It's called propaganda. You fell for it, hook, line, sinker, and part of the dock.