The sleeper hit film Slumdog Millionaire is being released on DVD today. The opening scenes were particularly powerful in depicting the destitute poverty that characterizes many cities in the developing world. What these films don't show, however, is how they are a spontaneous response to limited resources, often constrained directly by public policy.
Take the example of Dharavi, perhaps the world's largest urban slum. Nearly 1 million people live on 2.5 square miles, making it also one of the densest places on earth. Dharavi is in Mumbai (Bombay), Indiawhere more than half of the city's population of nearly 20 million people live in these slums. The slum-dwellings are typically 100 square feet or smaller for a family of four.
But, here's the question: Why do they exist? In the case of Mumbai, rent controls limit the incentives for private builders to construct affordable housing. Height restrictions also limit densities. So, the poor, often migrants from even more destitute rural areas, are forced to make due with what they can. Often, this means building ramshackle shacks out of tin and wood on public open space and railroad rights of way (a pattern fully evident flying into Mumbai during the day).
The ingenuity of slumdwellers is truly inspiring on many levels. Dharavi and other slums are homes to thousands of micro-enterprises, from tailors, tea shops, electronic repair shops, pharmacies, pottery shops to tanning factories. Unlike many slums in Western cities, these urban cities within cities are teaming with economic activity. And they are home to more than the poor; residents include policeman, bureaucrats, and others below the middle-income rung of the income ladder.
All of this activity is completely spontaneous, often independent of government by necessity (to avoid corruption and over-regulation).