By Atulya Mittal
With respect to housing for the poor, what are should be the objectives of government? What are the apparent of objectives of government? If there is a gap, how will it be reconciled?
Housing for the poor is an acute problem that we will face in the upcoming decades due to urbanization. The problem consists of providing affordable housing for people in cities, where huge demand combined with supply constraints usually results in high land prices and consequently high home prices. Lacking affordable housing, poor people live in poor conditions within cities in favelas and slums. These slums lack sanitation facilities and utilities and are run by slum lords who run a parallel government creating compounding problems related to health as well as law and order. Thus, the objective for government seems simple – provide low cost housing in integrated in existing cities with proper sanitation facilities and utilities.
This simple objective is complicated by a two major factors. Firstly, “government” implies a homogenous machine operating at all levels of the countries systems with aligned objectives. However, in reality the government’s objectives change depending on which part of the political machine is being assessed. The national government, for example, may have an objective of inclusive growth. On the ground, however, local politicians may want to avoid inclusive growth in order to keep their vote banks permanently under their thumb. This is a common problem in redeveloping slums in India that might result in the displacement of people out of particular constituencies and leading to the loss of a local politicians vote bank. Leaders who want to make cities more inclusive have to realize this problem and find a workaround, otherwise their best intentions and objectives will be fouled by people who have a shorter term view but a enough clout to stop them.
Market forces create a second complication. In a free market economy, it seems incongruous to provide an area of land for low cost housing surrounded by multi-million dollar houses and apartment buildings. The land could be better used to provide housing aligned with the market with increases in taxes and collections for the government without disrupting free market forces.
These two complications can be resolved if the government’s shifts its objective and views the problem from a different perspective. The problem of a lack of low cost housing is a symptom of a greater problem of inadequate supply of connectivity and infrastructure. Slums shoot up because cities are not expanding fast enough to accommodate all members of society. The lack of low cost housing is a problem of high cost land. Improved connectivity through roads, rail and other urban transport solutions would unlock larger parcels of land, which could be incorporated into the city. The result would be falling land prices, falling home prices and the availability of affordable homes. To an urban dweller, the actual distance in miles is irrelevant. What is relevant is how long it takes him to get to his place of work, his customers or his friends. By adopting the objective of growing cities faster, the government will automatically provide enough space for market-driven affordable housing.