City Journal

Howard Husock
Slums of Hope
For displaced peasants, the world’s vast urban ghettos are a gateway to a better future.
Winter 2009
In the favelas of Sao Paulo, the World Bank is making incremental improvements, like sewers and potable water.
Marie Hippenmeyer/AFP/Getty Images
In the favelas of São Paulo, the World Bank is making incremental improvements, like sewers and potable water.

Close to 120 years have passed since Jacob Riis published How the Other Half Lives: Studies Among the Tenements of New York. Using stereoscopic camera, magnesium flash powder, and riveting language, the Danish-born onetime crime reporter seared bleak, iconic images of New York’s low-income neighborhoods into the American consciousness. Though today Riis is almost universally celebrated—new biographies continue to appear—he helped set housing policy on a course that would prove tragically misguided. In particular, he inspired a range of government policies that viewed slums as bleak wastelands that transformed their residents into paupers and criminals and therefore had to be radically changed or eradicated.

The problems that Riis and the housing-reform movement sparked are still relevant today, since slums, unlike many ills that worried nineteenth-century social reformers, remain very much with us. Indeed, their scale in the developing world dwarfs that of Riis-era New York. The United Nations estimates that in 2001, 924 million people, or 31.6 percent of the world’s urban population, lived in slums; the number today surely exceeds 1 billion. As Planet of Slums author Mike Davis writes, residents of the new slums constitute the “fastest-growing and most unprecedented social class on earth.”

The harrowing descriptions of the conditions in Third World slums in a tide of recent books on the subject, including Davis’s, are in the Riis tradition. But the books’ overall assessments and reform prescriptions often are decidedly not. A relative consensus has formed about how best to address the new slums’ problems, and surprisingly, it appreciates what the UN calls the “positive” elements of slum life, shaped by a population characterized not as oppressed and helpless but as resourceful and creative. Journalist Robert Neuwirth, for instance, extols slums as places where “squatters mix more concrete than any developer. They lay more brick than any government. They have created a huge hidden economy. . . . [They] are the largest builders of housing in the world—and they are creating the cities of tomorrow.” In keeping with this encouraging trend, the UN even describes the Third World’s informal settlements as “slums of hope.”

What, exactly, are slums? Some, especially in the developed world, are once-affluent neighborhoods gone to ruin; others were once public housing. But most are gigantic, tightly packed concentrations of flimsy shacks and shanties that rural migrants have built on the outskirts of cities—what the UN calls “vast informal settlements that are quickly becoming the visual expression of urban poverty.”

Most of these settlements are in the developing world. Of the 924 million slum dwellers worldwide in 2001, 554 million lived in Asia, in such cities as Mumbai and Kolkata in India and Karachi in Pakistan. Another 187 million lived in Africa, in places like Cairo, Durban, Johannesburg, and Nairobi. And 128 million lived in Latin America and the Caribbean (famously, in the favelas of Rio de Janeiro and São Paulo). Only 54 million were in developed countries.

The UN blames the massive migrations from rural areas either on population growth that the countryside cannot sustain or on economic prescriptions said to emphasize commercial agriculture over small farming, thus driving the poor off the land. Whatever the cause, this “urbanization of poverty” has resulted in the large-scale erection of primitive forms of shelter, either on public land or on private land owned by absentee landlords. Water, sanitation, and other utilities are usually lacking, making the incredible overcrowding even harder to bear.

One doesn’t forget visits to such places. When, during the late apartheid era, I traveled through black townships outside the beautiful seaside city of Port Elizabeth, South Africa, I met families living in what reportedly were converted Boer War–era British-built huts with dirt floors. Water poured only from a communal tap, and there was no electricity. UN official Naison Mutizwa-Mangiza recalls his first trip to Nairobi’s Kibera, Africa’s largest slum and home to 700,000: “There is the poor physical quality of the environment, overcrowding, houses so close together, tin-roofed, walls often of mud, with just a very small window. But it is the smell from lack of sanitation that hits you in the face. You have to jump over numerous small trickling drains, filthy and filled with smelly water mixed with other types of waste, including feces. There are no toilets; people use plastic bags in the night for defecation and then throw these out in surrounding dumps and streams.”

Riis’s Manhattan, even at its roughest, was never that squalid. True, some 20,000 shacks once squatted on the site of what became Central Park. And certainly the Lower East Side was terribly crowded. But even the worst Orchard Street tenements were actual buildings, not tin-roofed shanties with dirt floors.

For Riis, the slum’s biggest problem wasn’t population density, lack of sunlight, or even disease. It was what it did to the character of its residents. Slums were “nurseries of pauperism and crime that fill our jails and police courts; that throw off a scum of forty thousand human wrecks to the island asylums and workhouses year by year; that turned out in the last eight years a round half a million beggars to prey upon our charities . . . because, above all, they touch the family life with deadly moral contagion.” The “contagion,” Riis warned, included a lack of “domestic privacy”—meaning the potential exposure of children to adult sexuality. “His entire book,” writes Daniel Czitrom in Rediscovering Jacob Riis, “could be read as a plea for understanding how the tenement environment itself deformed character.” The slum dweller’s grim surroundings kept him from developing bourgeois virtues.

This “environmental determinism,” as housing historian Alexander von Hoffman calls it, led reformers to try to improve the behavior and prospects of the poor by replacing the slum environment altogether. A better living environment, it was felt, would produce better people. Riis himself promoted the “model tenement”: privately built apartments for the poor, constructed to higher standards made possible by investors’ willingness to forgo normal profits. No wonder Riis has wound up cast in the company of heroic reformers of the Gilded Age and early Progressive Era, such as Upton Sinclair and Ida Tarbell. In his new biography, Tom Buk-Swienty gushes: “Riis forced Americans to confront the squalor of immigrant conditions, and he demanded that those immigrants not be treated as second- or third-class citizens.”

But this uncritical view ignores how Riis’s environmental determinism led, gradually but inexorably, to the advent of large-scale public housing, which would have destructive unintended consequences. Public authorities and idealistic architects would demolish the slums and replace them with publicly financed and operated buildings that—or so it was hoped—would uplift, not degrade, by providing a clean, cheerful, well-lit environment.

With terrible irony, the replacement housing itself gradually became a blighted locus of social problems, but for seldom-understood reasons. Conventional wisdom still blames the projects’ design mistakes (the high-rise architecture criticized by Jane Jacobs and Oscar Newman) and so-called concentration of poverty. So the government keeps looking for the public-housing philosopher’s stone. HOPE VI projects, pushed by the Clinton administration (and perhaps to be revived by President Obama), replaced “distressed” public housing and mixed the middle class and the poor in indistinguishable townhouses. HUD’s Moving to Opportunity program uses housing vouchers to relocate public-housing residents to middle-class suburban neighborhoods. Such approaches still assume that an improved environment—one where poor families have both sufficient amenities and better neighborly examples to emulate—will somehow inspire uplift, and thus they continue the Riis reform impulse.

All such bestowed benefits, however, turn out to discourage beneficiaries from behaving constructively—saving money and accumulating assets, say, or making the prudent life choices, such as marriage and education, that truly help households “move up” to better neighborhoods. In other words, improved housing is an effect, not a cause, of the bourgeois virtues that Riis held dear.

That so many Americans could rise from slums into the middle class shows, moreover, that the Lower East Side was filled with such virtues. The neighborhood was a beehive of effort, including that of immigrant entrepreneurs who built and ran apartment buildings. In Riis’s book, writes Czitrom, “the complex day-to-day negotiations and textured lives of tenement dwellers simply disappear into a riot of pathology.” Czitrom quotes historian Jared Day, who described “the tenants who scraped together small sums to buy leases; they were the grocers, butchers, boarding house keepers and barbers who pooled their resources . . . and they were the immigrant bankers . . . who took the savings of average ethnic workers and invested them in local housing.” In Riis’s view, “the tendency of the tenements and of their tenants is all the time, and rapidly, downward,” as he wrote in How the Other Half Lives. But in a dynamic economy, it turned out, he had things exactly wrong. New York’s Tenement House Museum now refers to its historic building, tellingly, not as slum housing but as an “urban log cabin”—a starting point for upward mobility.

This is also how we should think of the sprawling new slums of the developing world: not as doomed, deforming environments but as the low-cost housing built for (and by) displaced, formerly rural, people drawn into the modern urbanized economy and energetically aspiring to a better life.

In Hong Kong—hardly impoverished but a powerful magnet for China’s rural poor—I was once taken to the top of one of the city’s ubiquitous four-story apartment buildings. There I found one of Hong Kong’s 50,000-plus “unauthorized building works”: three tiny boxes housing families that stole electricity from the floors below. In the event of a stairwell fire, they could escape this high-rise shantytown only by jumping off the roof. But aspiration was abundantly evident, too: I saw school uniforms neatly laid out on tiny mattresses and a kitchen table with a hot plate. In the South Africa township that I visited, similarly, one saw plenty of shacks, but also larger, self-built homes with their own Honda electric generators.

The Economist captured this atmosphere of activity and hope in a December 2007 article about Dharavi, a Mumbai slum. Dharavi had “maybe a million residents crammed into a square mile of low-rise wood, concrete and rusted iron,” yes, but its residents were also “thriving in hardship.” Small “hutment” factories, for instance, exported leather belts directly to Wal-Mart. Dharavi, the magazine observed, was “organic and miraculously harmonious. . . . intensely human.” The FinMark Trust, a South African housing think tank, has found no fewer than 335,000 businesses in one Johannesburg slum, one in seven home-based. They include everything from hairdressers and bars to welders and furniture makers.

These informal sprawls, for all their problems, may well prove to be a source of new products—and refinements and improvements of existing products—helping to fire future economic growth. Jane Jacobs envisioned this transformative churning in her landmark book The Economy of Cities—a process in which the poor, making the best of their circumstances, create substitutes for expensive imports and eventually develop superior products for export.

Happily, the debate about slums is no longer dominated by the project of replacing or eradicating them—in fact, that approach has become politically incorrect. “There is no drive to replicate the bureaucratic welfare-state housing-policy approaches of the mid-twentieth century,” observes Columbia University’s Elliott Sclar, a lead author of the UN’s 2005 Improving the Lives of Slum Dwellers. Even the Harvard Graduate School of Design—once led by followers of the architect Le Corbusier, the father of high-rise public housing—sponsored an approving exhibit last winter on the “nonformal cities of the Americas.”

Policy has shifted toward improving slum conditions incrementally, helping residents gradually become better off, even if still living within the slums. South Africa’s Reconstruction and Development Programme, for instance, has subsidized over 1 million modest, 344-square-foot single-family structures that families own and, over time, are expected to improve. The World Bank, too, whose work in developing countries long emphasized grand infrastructure projects like dams and bridges, is now financing modest but significant improvements in the world’s informal settlements. In Brazil’s favelas, it helped some 900,000 people obtain “potable water piped directly into their homes,” and about 1 million receive sewer services. Cost: just $84 per capita. Similarly, the bank has invested $192 million in the Mumbai slums to build privately managed pay toilets, used by more than 400,000 people. The UN’s Top Ten list of “slum upgrading actions” ranks “installing or improving basic infrastructure” first and makes no reference to government-subsidized replacement housing.

The incremental approach mitigates the risk of the kind of dependency that welfare states had unwittingly fostered in the poor in the past. After all, cities provide regular neighborhoods with sewage and water systems, too, so giving slums such services doesn’t give their residents an incentive to stay put. Further, incrementalism doesn’t undermine slum dwellers’ sense of personal agency. Living in a shanty that you can call your own and improve over time is preferable to moving into a spirit-killing welfare-state Potemkin village of “affordable housing.”

Those who see potential, not hopeless degradation, in the world’s new slums do disagree on something important. Does slum dwellers’ upward mobility depend on their actually owning their houses? Or will they eventually prosper if they’re simply granted the formal right to stay—but not to sell?

The second option is known as “security of tenure.” “It doesn’t matter whether you give people title deeds or secure tenure,” writes proponent Robert Neuwirth in Shadow Cities: A Billion Squatters, a New Urban World. “People simply need to know they won’t be evicted.” As Sclar observes, “secure tenure” would make it easier for slum dwellers to join the formal labor force, knowing that they aren’t at risk of arbitrarily being forced from their homes and that their possessions will still be there when they come home from work. But Neuwirth’s skepticism of Western-style property rights runs deep. He offers such Marxoid assertions as: “When property becomes a commodity—simply a means of making money—we have begun the process that leads to homelessness and abandonment of the social contract to care for each other.”

The most influential work about the new slums, the Peruvian economist Hernando de Soto’s The Mystery of Capital, published in 2000, takes the ownership side of the debate, underscoring the limits of security of tenure. De Soto argues that the “surprise revolution”—the movement of millions from the countryside to cities—has been choked in its potential for uplift not because slum dwellers lack talent or energy but because the legal systems in their new locales don’t allow them to be secure in ownership and accumulate wealth. New arrivals in slums, de Soto explains, face “an impenetrable wall” of rules that bar them from “legally established social and economic activities.” Even when they begin to accumulate assets, those assets aren’t safe. “Poor people save, but they hold these resources in defective forms: houses built on land whose ownership rights are not adequately recorded and unincorporated businesses with undefined liability.” Without the formal legal institutions that allow one to accumulate wealth and borrow against it to build businesses, wealth cannot be put to full use, maintains de Soto. It stays locked up, frozen. It is “dead capital.”

The logical solution, de Soto argues, is to bestow property on slum dwellers, a reform effort that has shown promise. A major “titling” program in Peru—the largest in the developing world—has issued 1.2 million property titles to poor urban households. The program has already had more immediate benefits: a study by the Harvard economist Erica Field concluded that it led to a “substantial increase in labor hours, a shift in labor supply away from work at home to work in the outside market and substitution of adult for child labor. For the average squatter family, granting of a property title is associated with a 17 percent increase in total household work hours. . . . [and] a 28 percent reduction in the probability of child labor.”

There are reasonable objections to titling. Is it fair for those who seized government land—or, worse, someone else’s private property—to be rewarded with a property title? Nor is ownership easy to disentangle. “How do you allocate titles within the dense fabric of Rocinha or Kibera?” Neuwirth writes. “Who should get title to each parcel? The family that built the house? The woman who bought it from them? The tenants who rent there? The man who owns his two-story home but sold his roof rights to a friend, who built two stories and sold his roof rights to someone to build an additional two stories?”

Still, given the Peruvian evidence, it is dispiriting that the UN hasn’t endorsed some kind of system of defined, enforceable property rights as a key to both slum improvement and overall economic development. Investing in improvements whose arbitrary loss they need not fear—and whose value they may someday capture through sale—can help slum dwellers move to bigger and better homes. And a property-rights regime isn’t just about owner-occupied homes, either. One of the time-honored ways in which property rights support upward mobility is allowing small landlords to acquire and maintain rental property as part of their own march toward affluence. A property-rights regime would be good, then, for both owners and renters in the slums.

Yet property rights and land title may not mean much in societies lacking developed financial institutions, including “mortgage lenders willing and able to go down market,” as the FinMark Trust’s Kecia Rust points out. And fostering those institutions—others include honest courts and a reliable and straightforward business-licensing process—is no simple matter. For mortgages, the value of slum buildings may not be well established, rendering them difficult to sell. Further, since many slum dwellers work in informal employment, their ability to repay home or business loans may not be obvious to potential lenders.

But Habitat for Humanity has found proxies for a steady paycheck that can indicate a household’s creditworthiness—regular payment of utility bills, say, and even regular church attendance. The explosion of microfinance lending, which has extended capital markets to the very poor, also points a way. In Latin America, the nonprofit Acción Internacional has used a model in which neighbors vouch for one another and are liable collectively for missed payments.

Rust envisions a potentially bright housing picture. Owners of extremely modest starter homes might borrow small amounts to improve them as the first link in a chain of entrepreneurial activity, leading not only to ownership of much larger homes but to becoming “an investor, providing housing for other low-income earners” and earning “income for retirement.” Already, the FinMark Trust has found, “small scale landlords provide accommodation for 1.85 million households across South Africa.” This is a great leap forward from twentieth-century housing-reform thinking, which presumed that only external benevolence could help slum dwellers.

Nevertheless, Rust’s concern about the absence of reliable financial systems is a serious caution. Even if property rights are granted in the new slums, what will happen if such systems do not emerge? Mike Davis explores that dark scenario in his pessimistic Planet of Slums. In Davis’s view, the emergent slums simply perpetuate inequality. Their small businesses are a bare alternative to outright begging. Their hustle and bustle are a war of all against all, sparked by the oppressive Western economic prescriptions that have driven the Third World poor away from agriculture. And their denizens could provide the shock troops for an armed uprising, like the 1993 attacks on U.S. troops in Mogadishu by “slum militias.”

One wishes that such portrayals could be easily dismissed. But unless informal slum economies can be brought under the rule of law and integrated into broader national and global markets, the gloomier forecasts about the future of the slums may prove right. Above all, the developed world must not choke off slums’ already scant incomes by erecting barriers against the products of the developing world.

So the good news is that this generation’s heirs to Jacob Riis seem to be avoiding the mistakes that he inspired. One piece of evidence that the popular view of slums (and slum dwellers) is changing: the surprise success of the new film Slumdog Millionaire, set in the shantytowns of Mumbai. Not only does the movie tell the story of the hero’s rise from the bottom; his success—in a TV quiz show—is the result of what he’s learned from the slums, not from school. A romantic view, true—it’s a romantic movie—but also a long way from Riis.

Improving the world’s new slums will require many institutions—Third World governments, international aid organizations, and Western nations and do-gooders—to get many policies right, from encouraging property rights to building a civil society to maintaining free trade. That, in the end, is what the slums—and we—must hope for.

Howard Husock, a contributing editor of City Journal, is the Manhattan Institute’s vice president for policy research and the director of its Social Entrepreneurship Initiative.

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