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Some notes on slums and free markets
Recently I’ve been seeing a lot of articles about slums (the NYT on Gurgaon, India, and the Guardian on Cairo), and inevitably the phrase “free market” gets thrown around. And as it should – so-called “slums” often have very minimal active governance, and as a result they often have very dynamic economies and upwardly mobile citizens (something even the New York Times and Guardian, two very liberal papers, recognize). But it’s lazy to equate them with the free market, and unfortunately I see a lot of people doing that. One problem with slums, from a free market point of view, is that only certain investments are secure. People and their houses (well, at least the owner-occupied ones) are the safest, especially in democracies like Brazil and India. Though of course there are stories of people’s homes in slums being demolished or taken by the government without compensation, it’s my understanding that this is becoming rarer as slum dwellers grow in number and political power. Residents are likely to get titles in some Hernando de Soto-inspired regularization scheme, so people invest in their homes. Residential areas harden as sheet metal turns into bricks, houses get proper roofs, and we start to see two- and three-story structures. Infrastructure, however, is another story. While many newspapers I think generally exaggerate the lack of services (I refuse to believe the Times’ assertion, for example, that Gurgaon only has employer-funded mass transit – there must certainly be share taxi/small bus services, or at least motortaxis), there does appear to be a real lack. The poorer areas often have open sewers, and running water in homes is rare. Many critics take this as evidence that infrastructure – paved roads, mass transit, electricity, waste collection, water – will not be adequately provided for in a free market, which […]
