Give and take needed if poverty is to be tackled

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If we want a sense of why we need negotiation across our divisions, the shape of our cities provides it. An ideal example of the issues about which our interest groups need to bargain, if we are to make a serious effort to tackle poverty, is city land and housing.

But so far there are no signs that the key interest groups want the conversation to begin.In theory, the government has placed the issue on the agenda. Both the state of the nation address and the budget speech signalled that our cities are developing in ways that contribute to poverty.

But there is no sign that the state wants to address the problem through the hard bargaining that is the only way to make our cities antidotes to poverty rather than one of its causes.

The two speeches talked of the way in which the patterns of the past continue in our cities. They presumably mean that the cities continue to house the poor further and further from the economic core.

Before 1990, the law forced black people to live on the edges of urban areas. Today, it is land markets in the cities which force the poor to the fringes.

Land is more expensive the closer it is to the economic action, and so housing developments for the poor are unaffordable if they are located close to thriving shops, offices and factories. New homes for the poor are therefore built far away from the centres of economic activity, placing them beyond the reach of many who live in poverty.

Some get nearer the economic hub by packing into lowrent housing in the inner city but, despite overcrowding, which creates slums, there is not nearly enough of this housing to go around. And so the pattern in which the poor are housed further and further from economic opportunity hardens.

It is easy to see how this deepens poverty. If people are lucky enough to find jobs in the city, travel costs eat away a large chunk of their pay. If they are not, they are shut off from the opportunity to earn a living informally in the economic core. Informal activity feeds off the formal economy — people do far better selling their goods and services where the money is than they do in areas inhabited only by the poor.

This is why, in most cities around the world, the poor pack into the core, leaving those who can afford it to buy a life in the suburbs. And why our very unusual cities are an obstacle to dealing with poverty.

Describing the problem is much easier than dealing with it. The current patterns are underpinned not only by the workings of the market but by the attitudes of the affluent, who do not enjoy the prospect of poor people packing into those parts of the city from which they are now excluded.

A perhaps extreme example makes the point: turning golf courses into low-cost housing settlements would be likely to drive the affluent from our cities and to destroy their economic base, not to signal a successful attack on urban poverty.

During the Mbeki presidency, the government tried to address the issue — it proposed that all developers who were building up-market housing developments be required to include low-income homes in their plans.

But this has fizzled out — it certainly did not trigger a serious engagement between the government and those who feel threatened by changed housing patterns. The failure to bargain then was a missed opportunity, since urban land and housing can be addressed only through negotiation.

The problem can be tackled only by affecting the interests of the affluent: solutions require business people and professionals to accept changes to the way in which housing space is allocated in our cities.

But forcing change on them would make cities even less able to address poverty than they are now. And so the shift that is needed if we are to tackle this barrier to the fight against poverty will come only if negotiations produce agreement on a way forward.

City land and housing patterns are an important issue in their own right. But they also give a clear sense of why we need negotiation if we are to move to a sustainable growth path because it includes more people in the mainstream economy.

This is not the only case in which the affluent will need to accept change because current patterns in which they have a stake exclude the poor, but in which imposing change will do more harm than good to the fight against poverty.

In these other cases too, negotiated compromise is the only way to progress.

The housing issue shows that poverty persists in part because current ways of doing things need to change. Since some of us find these ways convenient, and those who do so often command capital and skills, which the economy needs, workable change is possible only through a bargaining process in which those who benefit from an unsustainable present are persuaded by compromise to endorse a more workable future.

Friedman is director of the Centre for the Study of Democracy

Source: Business Day


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