Penalosa: Only in 2009 or 2010 or 2008, the world became more urban than rural for the first time in history. The developing world’s cities are growing extremely fast. Latin American urban development happened mostly between 1950 and 2000. The same thing that happened in Latin America, going from about 30 percent urban to about 70 or 80 percent urban, is the same thing that is happening in Asia now between 2000 and 2050—only in Asia, urban population is increasing by like 45 million people per year. But the amazing problem is that we are not really well organized for this. It is something that is much easier than putting somebody on the moon, but yet we have slums in many, many countries, all over the world. We have people either in slums or people living in over-crowded rooms with their whole family.
Penalosa: So, if we find slums everywhere it cannot be because there was a bad Mayor or a bad President, because it cannot be that all Mayors are bad or stupid or corrupt everywhere in the world. There is a problem with the system. The system has a problem because the market economy, does not work well in the case of land around growing cities.
The market works well when prices increase–as prices increase, for example, in the case of tomatoes, the price of tomatoes increases, tomato production increases, and then the prices go down. But in the case of land around growing cities, if the price of land increases, the supply of land cannot increase—especially not the supply of land adjacent to the city where there is access to water, to schools, to jobs, to transportation.
That is really not justification for land around cities being private. In the countries, such as Sweden or Finland, since around 1900, 1904, all land around the cities belongs to the government. But in developing countries, a few rich people own the agriculture land around the city and they make enormous unjustified gains in the transformation between this land from rural to urban.
They are really are not effective tax gains, to tax earned profits from them. The problem is not so much that they make unjustified profits, but the problem is that the poor cannot solve their housing in a good well-designed neighborhood and the right places so that low income people go to the wrong places. Sometimes many, very often, to places who have high risks, such as landslide risk and some very high steep hills where they have to go to live or to flooding areas where which flood and many people die. Or anyway these surrounding neighborhoods, they have not enough public spaces, not enough roads, not enough parks, not enough anything.
Penalosa: We are at a time in where people believe in the market. That the market solves everything. In the case of cities, the market does not work very well. Government has to intervene. The market does not work well in the case of land around growing cities. The market does not, cannot, decide how wide sidewalks are or how high buildings are or how many parks we should have. The market will never create central parks. It’s government that will create the central parks and the pedestrian walkways. So, in this case of cities the market does not work well. Here is society, through something that we call government even though it is a dirty word to many people that has to decide what to do. The market will not created great cities. The market is creating gated condominiums in suburban low-density developments.