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Lessons from Dharavi
Posted By Don Boudreaux On December 29, 2011 @ 10:55 am In Civil Society,Cleaned by Capitalism,Complexity & Emergence,Cooperation,Growth,Inequality,Myths and Fallacies,Seen and Unseen,Standard of Living,Wal-Mart | Comments Disabled
This long front-page report in today’s New York Times  is fascinating. (HT Karol) Here’s a list, in no particular order, of some of the lessons that careful readers take away from it:
- The relevant question to ask about any social situation – including that of the slum dwellers in Dharavi – is “compared to what?” By the standards to which even the poorest of us in the 21st-century west are accustomed, living and working conditions in Dharavi are worse than appalling; by the standards of the people living and working in Dharavi, their living and working conditions are better than their alternatives.
- Social order is spontaneous. The order – the complex and nuanced pattern of interactions – that prevails today in Dharavi was not designed by any overlord or sovereign; this order evolved and changes spontaneously. And again, while that order appears to western observers to be unacceptable, it is working for the people of Dharavi: that order and what it provides to Dharavians is superior to what Dharavians left behind – and, hence, to what would be available to these people if they were forced out of Dharavi and back into their villages.
- At least large numbers of people – at least at very low levels of income – care less about not lowering their relative economic standing and status than about raising their absolute level of material well-being. Better to be very poor in a city boasting nearby opulence than being very, very poor in a village where incomes are ‘distributed’ more equally.
- People peacefully and cooperatively, and with little or no encouragement or direction from the state, create and seize opportunities for mutually advanageous production and exchange.
- Even illiterate, dirt-poor parents will sacrifice to ensure that their children have better opportunities than they, the parents, have. Such parents even often pay for their children to attend private schools.
- (Following from the previous point:) The relevant time-horizon for judging the merits or demerits of any social arrangement is not just one generation. Mama and papa frequently are willing to endure risks that make their lives worse if the result of accepting those risks is a significant enough increase in the prospects for their children’s lives being made better. (This theme, btw, is beautifully woven throughout Russ’s book The Choice .)
- A great deal of recycling occurs when it is economically profitable.
- The greedy, crony-capitalist, rent-seeking itch that gave rise to the
property seizure theft at issue in the odious Kelo decision  is not unique to America or to the west; it is, sadly, universal.
- The familiar mantra “poverty causes crime” is far too simplistic; perhaps it’s incorrect.
- America’s unemployed poor people are vastly wealthier than are many employed, hard-working people in ‘developing’ countries such as India.
- Being desperately poor – poor even to the point of being physically debilitated – does not necessarily cause people to surrender to the fates; to quit; to do nothing save beg either directly or indirectly (by pleading for government handouts). Even the poorest of poor people often find peaceful and productive ways to make themselves (and their children) less poor.
- To make the previous two observations is not at all or in any way to imply that current unemployment in America is acceptable or that unemployed or poor Americans should be grateful. To make these observation, though, is to highlight one of the many fruits of sustained economic growth. The ability to remain unemployed for long stretches of time without suffering genuinely severe economic hardships such as malnutrition and no access to indoor plumbing reflects the benefits of capitalist growth (which itself is possible only because of capitalist dynamism and change). Better to live in a society in which if you are a discouraged worker you remain unemployed for a long stretch of time than to live in a society in which any sustained period of unemployment means your death.
Meanwhile, India’s government throws another noose around the neck of that country’s formal economy  – a noose that slows and shrinks the prospects for Dharavians to improve as much as possible their and their children’s lives – a noose that can serve as Exhibit A in the case for why Indians still have in their midst informal-economy slums such as Dharavi.
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URLs in this post:
 This long front-page report in today’s New York Times: http://www.nytimes.com/2011/12/29/world/asia/in-indian-slum-misery-work-politics-and-hope.html?_r=1&hp
 The Choice: http://www.amazon.com/Choice-Fable-Free-Trade-Protection/dp/0131433547%3FSubscriptionId%3DAKIAIXEFNBARM7QFJMCQ%26tag%3Dinvisiblehear-20%26linkCode%3Dxm2%26camp%3D2025%26creative%3D165953%26creativeASIN%3D0131433547
 the odious Kelo decision: http://www.pittsburghlive.com/x/pittsburghtrib/opinion/columnists/boudreaux/s_347344.html
 India’s government throws another noose around the neck of that country’s formal economy: http://mjperry.blogspot.com/2011/12/crony-capitalism-shuts-indias-doors-to.html
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