Slums are a wealth-extraction machine
Even if a slum is eradicated, it almost always returns. Why?
Robert Mugabe’s solution: slow genocide by bulldozer
The answer lies not in architecture, not in demography, not in law, but in fundamental economics. Yet because we are vision-oriented creatures, we imagine things first and foremost by what we see:
Structure not apparent, but essential
So for a slum, what we see is squalor, as shown by the definitions in the Free Dictionary (”A heavily populated urban area characterized by substandard housing and squalor”) or Wikipedia (”A slum is a district of a city or town which is usually inhabited by the very poor or socially disadvantaged”) — but these are only the manifested symptoms. Slums reconstitute themselves, seemingly without effort,
Keep trying to kill me, baby, and see where it gets you
restoring themselves to their previous squalid state. They do so because they are economically rational, and their economic reason is wealth extraction. Slums are a giant wealth-extraction machine, distilling human beings to their financial essence and pumping that value off-site. To understand this, imagine that money glows green and people are merely shades and phantasms, as if we are all seeing with X-ray eyes:
Think of it as money and it all becomes clear
Each of us is thus a faintly gray form with a bright rectangle on our hips (wallets) or by our ribs (handbags). Follow us from above on fast-forward throughout our days and weeks, hovering over a slum, and what do you see:
Morning
Every morning, small dim dots stream out of the slum, dispersing throughout the city.
Each of us is looking for a reward
People are seeking work (whether formal or informal is hugely irrelevant here).
Day time
Reaching their work locations, the dots settle, and as the day passes, their financial cores brighten as they earn money. Some brighten faster than others; some brighten irregularly. All generally end the day a bit more lustrous than before.
Evening
Bringing home the bacon
The dots stream home, and the slum into which they trickle glows more brightly. The dots swirl about as slum-dwellers transact one with another.
Pub in Kibera,
Over the week, the slum grows ever brighter.
Bakery in Kibera
Then comes rent day.
Rent day
Out goes a torrent of wealth, a concentrated beam going to the slumlords, almost none of whom ever live in the slums they exploit.
I sit on it, I don’t live in it
Their rent collectors may live in the neighborhood, much as every prison has trusties, but they are the thin upper crust and little different from those whose rent they collect.
From the slumlord’s perspective, therefore, a slum is a place efficiently to extract rent from those who must live somewhere and will live wherever it is cheapest to live.
Slum dwellers,
Since rent extraction depends on the customer’s income, not the quality of accommodation — where else can the poor live? Thus a slumlord suffers no penalty for not improving his property. In fact, because the slumlord lives elsewhere, in the land of property and plenty, he has no positive incentive to reinvest in the community.
(Now you understand why “absentee landlord” is so often a pejorative — the absentee landlord’s economic incentives can be diametrically opposed to the neighbors’ and the community’s.)
Why slums aren’t eradicable
With that as background, it’s fairly easy to see why slums resist eradication.
· Destroying the property doesn’t mean much; there’s very little property to destroy.
· Moving the people away is useless; they just flow back. They’re used to relocation.
Eviction in
· Building a symbolic outpost of better housing is all well and good … but it’s unsustainable relative to its neighbors, and the law of economic gravity drags it down.
That’s the problem with classical slum clearance — it’s flash-flood funding. Pump in money, build some wonderful new structures (e.g. high-rise public housing, in France and elsewhere, which simply creates the slums inside). For a few years, the desert blooms — the neighborhood looks better.
Enjoy it while it lasts
But the wealth extraction machine hums steadily along, all day every day, and like water poured through sand, out goes the wealth and the slum reverts.
We’re here for the rent
Just as a desert becomes green only if it can trap water, to make a community healthy one has to enable it to store wealth within itself. (As long as a slum can extract wealth, what goes out will rise instantly to equal what comes in.) Rule of law matters, otherwise portable wealth is simply stolen or extorted from residents. So does indigenous business and commerce.
Fruit and vegetable store in Kibera
Real estate is wealth made both visible and sessile.
You’ll need to protect it
Homeownership is personal wealth anchored to a place. It may be even less mobile than we would like (Hernando de Soto’s ‘dead capital‘), but whatever else may be, owned homes represent wealth earned, accumulated, and planted. Homes are the visible manifestation of excess labor, which is why we instinctively equate an attractive home with success. Look at my owner, says the house, he could afford to work on me.
I have described homeownership as “the sod on civil society’s hillside,” and that’s why: homeowners invest their capital long-term, and in so doing they add wealth to a neighborhood, wealth that can internally circulate. This is part of why so many great American immigrant fortunes came through property ownership, because they were the first-mover entrepreneurs who helped changed what had been slums into neighborhoods, communities, and urban assets.
To improve a neighborhood, raise the rent-paying power of its inhabitants. To do that, raise their ability to earn money, and with it their choices about where to live and what to invest.
How do you eradicate slums? You drive them bankrupt.
The way to win
