Housing the world’s poor: the four essential roles of government
Not only is the world urbanizing rapidly, most of its urban newcomers are poor; and if they are limited to ‘market’ housing choices, the results are sprawling spontaneous communities that breed ignorance, disease, and crime. Because slums are economically rational, market factors alone will produce plentiful housing that is not affordable, and affordable housing that is not acceptable.
It’s been this way for over two centuries. London 1825, Boston 1855, New York City 1905, Mexico City 1995:
King Cholera,
New York tenements, 1895
Mexico City, circa 1995
Unless government steps in, rapidly urbanizing environments always create large, shapeless, persistent slums. What’s different today, in the twenty-first century, is our awareness that we can attack the problem of slums if and only if government takes a leading role.
In fact, four roles, each of which builds on its predecessors, as highlighted in my article, Housing the World’s Poor: the Role of Government, published earlier this month by the Harvard International Review, and further explicated on Web Update 56 (for a .pdf, click here).
Government’s role, however, is not to act unilaterally, not to bulldoze the settlements or try to drive away the squatters. Instead, government must see itself as a facilitator (”steer, not row”), providing the ecosystemic environment and tools that allow the private sector to profit from making slums history.
Government has one role here, private sector another
Each class of facilitation builds on the one before, each is more complex than its forebear, and each can be no better than its predecessors’ cumulative success.
Government should always been adding bricks to the pyramid
The four roles of government
(Mnemonic is LEaPS)
L: Rule of law. Without law that binds governed and governor, renter and owner, investor and builder, no one invests. This is a huge challenge for emerging nations.
E: Enabling environment for capital. Investing means capital dances with property, and housing is demanding: paybacks measured in decades, and collectibility only in situ.
P: Public-private partnership. Government is a great benefactor, a decent rulemaker, and a terrible owner. For that, you need entrepreneurs. (How to make public-private partnership work was the principal focus of the 2005 five-nation Bellagio Housing Conference, endorsed in its Bellagio Housing Declaration.)
S: Subsidy and financial contributions. Affordable housing always costs money. There is always a cost-value gap.
Government should always be making LEaPS,
Beyond its four roles, government must have an essential quality throughout — far-sighted patience. Individual housing properties are long-lived: long gestation, long development, long maturity. If housing properties were an animal, they would be the great land tortoise, slow-moving, durable, ancient. Add to that the complexity inherent in a successful interdependent housing financial ecosystem and it takes decades to create the end state desired by policy makers: functioning delivery at all levels of affordability based on the interplay of law, capital, partnership, and subsidy.
Every government, everywhere in the world, should be doing something for housing affordability — but just what is unique to every country because each country is at a different ecosystemic evolutionary stage, and thus has its own best government interventions.
