Identifying the symptoms, misdiagnosing the cause

Dave Killion — December 30, 2011

Over at Cafe Hayek, Don Boudreax has listed some lessons he feels careful readers will take away from reading this longish-but-fascinating New York Times article about Dharavi, India. Rather than simply repeating him here, I want to point out something else that I see all too frequently –

“The problem is that government hasn’t provided easy channels to be employed in the formal sector.”

“It is a visual eyesore, a symbol of raw inequality that epitomizes the failure of policy makers to accommodate the millions of rural migrants searching for opportunity in Indian cities.”

“If China’s authoritarian leaders have deliberately steered the country’s surplus rural work force into urban factories, Indian leaders have done little to promote job opportunities in cities for rural migrants.”

It is common for writers concerned about the developing world to talk about government doing too little, and of failing to provide infrastructure, opportunities, or what have you. This conveys a tragic misunderstanding of the situation. The fact is, if the formal sector is in need of employees, employers will themselves provide easy channels to employment. If the appropriate conditions exist, then the market will promote job opportunities in cities for rural migrants. And if rural migrants seek opportunities in Indian cities, entrepreneurs will slave to provide accommodation for them.

And since these things require no government action to come into being, it is safe to conclude that their failure to materialize is the result of too much, rather than too little, government intervention. I wish more journalists would get this right.

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