From Planet of Slums, by Mike Davis (2006):
As a rule of thumb, both the popular and scholarly literatures on informal housing tend to romanticize squatters while ignoring renters. As World Bank researchers recently acknowledged, "remarkably little research has been done on low-income rental markets." Landlordism is in fact a fundamental and divisive social relation in slum life worldwide. It is the principal way in which urban poor people can monetize their equity (formal or informal), but often in an exploitative relationship to even poorer people.... To be sure, most of the urban poor in West Africa have always rented from landlords, as have a majority of residents in Dhaka and some other Asian cities (in Bangkok two-thirds of "squatters" actually rent the land they build their shacks upon). Renting has also become far more common than usually recognized in the peripheries of Latin America, Middle Eastern, and South African cities. In Cairo, for example, the more advantaged poor buy pirated land from farmers, while the less advantaged squat on municipal land; the poorest of the poor, however, rent from the squatters. Likewise, as urban geographer Alan Gilbert observed of Latin America in 1993, the "vast majority of new rental housing is located in the consolidated self-help periphery rather than in the centre of the city."
Mexico City is an important case in point. Despite a Model Law of the colonias proletarias which sought to ban absentee ownership, "poaching," and speculation in low-income housing, the Lopez Portillo government (1976-82) allowed slum-dwellers to sell their property at market rates. One result of this reform has been the middle-class gentrification of some formerly poor colonias in good locations; another has been the proliferation of petty landlordism. As sociologist Susan Eckstein discovered in her 1987 return to the colonia that she had first studied fifteen years earlier, some 25 to 50 percent of the original squatters had built small, 2-to-15-family vecindades which they then rented to poorer newcomers. "There is, in essence," she wrote, "a two-tiered housing market, reflecting socioeconomic differences among colonos." She also found "a 'downward' socioeconomic leveling of the population since I was last there.... The poor tenant stratum has increased in size." Although some older residents had thrived as landlords, the newer renters had far less hope of socioeconomic mobility than the earlier generation, and the colonia as a whole was no longer a "slum of hope."
Renters, indeed, are usually the most invisible and powerless of slum-dwellers. In the face of redevelopment and eviction, they are typically ineligible for compensation or resettlement. Unlike tenement-dwellers in early-twentieth-century Berlin or New York, moreover, who shared a closeknit solidarity vis-à-vis their slumlords, today's slum renters typically lack the power to organize tenants' organizations or mount rent strikes. As two leading housing researchers explain: "Tenants are scattered throughout irregular settlements with a wide range of informal rental arrangements, and they are often unable to organize as a pressure group to protect themselves."
Large peripheral slums, especially in Africa, are usually complex quiltworks of kin networks, tenure systems, and tenant relationships. Diana Lee-Smith, one of the founders of Nairobi's Mazingira Institute, has closely studied Korogocho, a huge slum on the eastern edge of the city. Korogocho includes seven villages offering a menu of different housing and rental types. The most wretched village, Grogan, consists of one-room cardboard shacks and is largely populated by female-headed households evicted from an older shantytown near the city center. Barracks-like Githaa, on the other hand, "is an entirely speculative village, built by entrepreneurs for rent," despite the fact that the land is publicly owned. Nearby Dandora is a sites-and-services scheme where half the owners are now absentee landlords. Lee-Smith emphasizes that petty landlordship and subletting are major wealth strategies of the poor, and that homeowners quickly become exploiters of even more impoverished people. Despite the persistent heroic image of the squatter as self-builder and owner-occupier, the reality in Korogocho and other Nairobi slums is the irresistible increase in tenancy and petty exploitation. [Citations omitted. All bolded emphasis mine.]
This excerpt illustrates a little-recognized phenomenon of the slums: wretchedly poor people making tiny, incremental moves away from the most severe poverty by exploiting even more wretchedly poor people as renters. (One fact that this passage does not emphasize is that politicians and thugs are as likely to exploit the extremely poor as are other poor people - people who sleep on the sidewalks have to pay neighborhood gangs for the privilege.)
The inequality that gets magnified is, to some degree, one of time - those who arrived earlier exploit those who arrive later. But other forms of natural or preexisting inequality are also magnified, such as differences in social connections, business savvy, and willingness to exploit others.
A slum is a pattern, a physical instantiation of a phenomenon that occurs at different levels of development. In rich countries and poor countries, slums are what happens when people are so poor that they fall out of the legally available housing system and must resort to "illegal" housing. The immense tent city slums of Los Angeles' Skid Row are similar in form to the cardboard shantytowns of Nairobi, despite vast differences in wealth between the two cities.
Most of the population growth in the Global South is happening in slums - in some cases up to 90% of population growth.
The slums are an emergency. Their scale is almost unimaginable, and they have exploded in the past few decades.
Plenty of people are born into slums. Plenty of them are smart. But this application of population magic does not seem to be having the effect Bryan Caplan hopes for when he assures us that "when population goes up, everyone gets extra choices."
As of 2006, only about 6% of the urban population of the United States lived in slums. But over a third of China's urban population, over half of India's, and a shocking 99.4% of Ethiopia's, are slum dwellers.
Both the absolute population of the slums and the percentage of the world population that lives in slums are growing. Fast.
"If such a trend continues unabated," warns planning expert Gautam Chatterjee, "we will have only slums and no cities."
I guess it's a good thing that poor people still smile.