June 20, 2006

Slum-dwellers and the UN

From the BBC (found via Resilience Science):
Slum-dwellers who make up a third of the world's urban population often live no better - if not worse - than rural people, a United Nations report says.
Anna Kajumulo Tibaijuka, Executive Director of the United Nations Human Settlements Programme (which released the report), says that "people move to the cities not because they will be better off but because they expect to be better off." There are at least two ways to explain this:

1. People are idiots - they move in huge numbers from villages to cities, and not the reverse, just to live worse.

2. People who move to the cities are not idiots - they are better off there. Maybe the preferences of the authors of the report differ systematically from those of rural migrants. If so the message of the report should have been:
Under the current conditions we the authors of this report - unlike rural-urban migrants - would rather stay in third-world villages than move to city slums.
Tibaijuka also said that "the only effective way to upgrade slums and prevent new ones emerging is to persuade governments to improve infrastructure." But then to improve infrastructure governments need to make people poorer by taxing them. Or maybe the UN will persuade governments to be less corrupt, using money to improve infrastructure instead of improving their bank accounts. But who? The UN?

Finally, Tibaijuka "also argued that governments could take relatively cost-free action such as reforming property laws." That looks more promising.

3 comments:

  1. But then to improve infrastructure governments need to make people poorer by taxing them.

    If the tax increase is at all reasonable it would make the *rich and middle classes* a bit poorer. Which would be an acceptable tradeoff if it made the very poor slum dwellers better off.

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  2. Thanks Stentor. You have written two "ifs." In the second of them I would add the word "sufficiently." I.e. "would be an acceptable tradeoff if it made the very poor slum dwellers sufficiently better off." You don't want a large tax increase for the rich to get a tiny improvement for the poor. And this is not a trivial matter - governments need more money than private agents to build a given infrastructure because bureaucrats have little incentive to cut on costs (including the cost of guessing what infrastructures best serve the interests of the poor or, worse, the interests of the political class) and because some money is usually lost in corruption. So governments usually spend a lot of tax money to make small improvements here and there. Finally, high tax rates on the rich may make the poor worse off by decreasing overall productivity.

    I think that even modest improvements in property rights would make things much better for slum-dwellers. With more secure property rights they have a stronger incentive to improve their homes and their surroundings with their own effort. Once they have the incentive to make long-term improvements in and near their homes, slum-dwellers build infrastructure more efficiently than governments. They have more information on what infrastructures best suit their own interests, and build them at a lower cost. More secure property rights also facilitate borrowing, because owners can use their property as collateral.

    The typical situation in slums is that homes are built on public land from which dwellers can be evicted at any time. That doesn't set the right incentive for long-term improvement.

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  3. In many years in Africa I never saw truly starving people in cities, only in rural areas. People are not stupid, they know that there are job opportunities and better access to health and educational services in cities.

    Rural poverty is not a threat to political elites, urban slums are. Perhaps that explains some of the otherwise puzzling elite preference for rural over urban slums.

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