Caracas Chronicles

One of the things few of our politicians talk about is how to transform our slums into engines of growth. Sure, we talk about the barrios a lot – mostly about how politicians don’t go up the hillside shanties that dot Caracas (they do), but have we thought about a practical approach to solving their problems? How do you envision a post-chavista reality in these places?

As this comprehensive review paper by Marx, Stoker and Suri (2013) says, slums need a lot of things, but the three things they mostly need in my view are:

• investment in physical infrastructre geared to making people more productive
• basic public (can be privately-provided) services
• property rights

Ultimately, the problem with slum-dwellers is that they are trapped in a low-productive, low-income, low-wage reality. The target should be tackle those things that make them unproductive.

For example, a person who lives high up in a barrio can’t be productive for several reasons, but one of the more basic ones can simply be the lack of child care. Or it could be the fact that they have to walk for miles just to get running water. Or they can’t work long hours because of crime. Or perhaps they spend countless hours waiting for a jeep to take them to and from work.

I am reminded of my macro professor back in Michigan. We were discussing productivity, and he said that one of the biggest booms to productivity came with the invention of the lunchbox, and the paper bag after that. Once people could have their lunch at work, the became much more productive, and societies progressed.

Perhaps the person in the barrio can’t be productive because they are shut out of the financial system – if they could get a mortgage on their rancho, they could get use it as collateral for a loan in a small business, or for buying new machinery. Or perhaps they simply haven’t had the education to take advantage of opportunities that are out there.

It’s easy to feel daunted by the challenges our slums pose. But if we just zero in on the issues preventing people from being productive, perhaps we can make inroads. This should be a top priority once this nightmare is over.

(Note: I have the paper in case someone wants it. Email me)