Developing social equality and economic transparency for future cities Dr Claudia Murray School of Real Estate & Planning, University of Reading

Research seminar series: research context A report from the Government Equalities Office found that wealth inequality

in the UK has increased since the 1980‘s (Hills, et a., 2010) while a report by the

Economic Commission for Latin America, revealed that the region is the most

unequal in the world (González and Martner, 2012). Inequality materialises in the

consumer society but is more evident when it affects human needs, such as food

and shelter. In the UK, increase wealth and international migration has affected

land prices, putting a strain in the affordability of housing (Nygaard, 2010). In Lat.

Am., rural to urban migration and a housing deficit of 50 million units has also

affected the market (UN-Habitat, 2011). The city is indeed triumphal for a few:

while London is one of the world’s playgrounds for the global elite (Glaser, 2011),

Mexico City is home to Carlos Slim, the richest man on earth (Harvey, 2012). In

comparing urban environments in the UK and Lat. Am. there are the obvious

differences not only in geographical scale and volume of human traffic, but also

the intensity of the urban struggle as at the bottom of the pyramid the battle for

Lat. Ams. is many times for survival (Tironi, 2009). Notwithstanding, the resulting

urban inequality manifest with striking similarities in both contexts. Compare

the London riots in the summer of 2011 with those in Buenos Aires during the

summer of 2012 or those currently taking place in Brazil and Chile.

Unlike the UK social and economic issues in Lat. Am. have long suffered from

poor institutions and weak governments (Montaner, 2002). In addition, an

inefficient tax collection system poses an insurmountable barrier for local

governments to develop a welfare system (Benardi et. al., 2007). Accoring to the

International Labour Organisation (ILO) there are 127 million people working in

the informal sector in Lat. Am. This is nearly 50% of the population with no job

security an no taxation. In addition to this large sector, colonial style clientelism

and elitism means that most rich families manage to receive tax exemptions

from government officials. This places the burden in the poorest sector of the

population as value added tax is the main source of government income (Harvey,

2012). Policymakers, academics and experts are increasingly concerned over

the widening gap between Lat. Am. countries and developed economies such as

the UK. Some claim that globalisation is mostly to blame (Chomsky, 2010) while

others maintain that the problem of inequality is not related to recent changes

in globalisation but rather rooted in the regions’ own missed opportunities and

wrong turnings in history (Fukuyama, 2008). The main question for Fukuyama

We are grateful for the participation and support of the following institutions:

Developing social equality and economic transparency for future cities | Dr Claudia Murray

is why other countries in East Asia (Taiwan/South Korea) are closing the gap

with the developed world and Lat. Am. cannot? Responding to this question

Fukuyama mentions, among other factors, the neglect of economic inequality

that so far many governments in the region have shown, and lack of property

rights. The later, he claims, hinders long term investment; the very basis of urban

development and economic growth.

Peruvian economist Hernando de Soto also argues that lack of property rights

affects Lat. Am’s poor as they are unable to use their property as collateral and

become entrepreneurs (2001). His views have been challenged by academics

(Samuelson, 2001; Gilbert, 2002; Frankema, 2006) but followed and praised by

politicians (Clift, 2003). Following de Soto, many cities have taken a proactive

attitude towards regularising land titles for squatters. The Municipality of São

Paulo, for example, holds the view that regulating land rights to the poor will

also help the environment as urban services (sewage, waste collection, water, etc.)

can be brought into informal developments. Their view is that the investment

in infrastructure is recovered by the payment of services by the beneficiaries

(Boldarini, 2008, Sehab, 2011).

So while academic debate dwells over the benefit of globalisation in Lat. Am.

(Chomsky and Fukuyama), or over the benefits of regularisation of informal

settlements (de Soto and Gilbert), the reality is that Lat. American governments

are immersed in the task of bulldozing informal developments (along with their

communities) and replacing them with new housing blocks that are not often of

best or even adequate standard (Murray, 2013). Some argue the time for debate is

over and what is needed is action to solve the problem, as a practitioner recently

put it in an urban design workshop in Rio de Janeiro: “you cannot change the

tyre while riding the bike” (quoted in Nicholson, 2013). In other words, while the

argument unfolds, urban development in the region will keep expanding.

This is inevitable, cities produce 50% of gross domestic product that manifests

in increasing competition to attract development and RE investment (World

Bank, 2013). Still, parallel growth in inequality suggests that this expansion is

not benefiting all citizens (Lima, 2006). Urban sprawl has been directly related

to social fragmentation as well as to environmental disasters, and yet urban

planning systems in Lat. Am. have not responded to this combined problem

(Romero and Ordenes, 2004). Furthermore, there is a lack of relation between

planning, regional geographies, climates and cultural habits which is directly

affecting urban air quality (Romero et al, 1999). The main question is how to solve

these problems? Are methodologies used in the developed world transferable

to areas of rapid urbanisation (Jenks and Bugess, 2000, de la Torre et. al, 2009)?

There are several who outline the difficulties in adapting advanced methods

to the region. For example social fragmentation manifests not only in the

development of gated neighbourhoods but also in the widespread use of private

cars (Onursal and Gautam, 1997). So how to curb the carbon emission and bring

sustainable transport without addressing this refusal to mingle with others?

Another matter is whether Lat. Am. has the technology to develop greener urban

environments, some claim this is unrealistic (Lankao, 2007). Furthermore, what

financial mechanisms emerging markets have to adopt strategies employed

in the developed world (Satterthwaite, 2007)? In this context how can Lat. Am.

cities secure the provision of social housing with an inefficient tax collection

that historically constrained the welfare system (Montaner, 2002, Bird, 2003,

Benardi et. al., 2007, Harvey, 2012)? There are also critical questions regarding the

implementation of sustainable planning systems and the lack of power of local

authorities over certain elites (Bulkely and Betsill, 2005). Equally, in a divided

society the politics of planning encounter daily confrontations from lower income

sectors that see no benefit in strong neoliberal approaches that aim at attracting

private and foreign investment (Burgess et al. 1997).

The proposed seminar series will address these questions. Simultaneously it will

engage users (governments, policymakers and practitioners) in finding relevant

sustainable drivers that can be used to design practical tools to best guide ongoing

urban transformations and keep economic growth. In the past, the so called

import substitution industrialisation, which was supposed to help the region

closing the developing gap, generated a culture of poor quality products and bad

service for consumers (Macario, 1964). The necessity to keep riding the bicycle to

reach a forecasted GDP should not be this time an excuse to deliver poor quality

urban environments. The research seminars will therefore evaluate current

theories of sustainable development in planning policy, architecture, housing and

real estate valuations and investment, to evaluate their adaptability to Lat. Am.

The interaction with the UK, a country that despite its own mistakes and

shortcomings has a wider experience in developing design quality indicators,

affordable housing, securing property rights and implementing more

sophisticated and transparent mechanisms for long term real estate investment,

will be beneficial to Lat. Am. Simultaneously it will encourage UK academics

and practitioners to evaluate their own system by receiving comments and

criticism from a region that experiences higher levels of urban inequality and can

therefore better explain its dangers. It is timely and necessary for the UK and for

Lat. Am to change or patch the urban development wheel while at the same time

keep exploring new ways of addressing economic and social inequality, whatever

the intensity or degree of the problem that each region faces at home.

Developing social equality and economic transparency for future cities | Dr Claudia Murray

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