[smysore]

What's interesting in India is that you'll often find a slum right next to a super luxurious hotel like the Oberoi or the Taj. I've never been able to understand why squatting "sticks" there but not here (I've seen police trying to "clean up" the slums -- you'd think the violence would scare people away).

[gnufied]

Because it is political. Besides I find nothing strange about a slum next to a 5 star hotel, but I am an Indian. :)

[yummyfajitas]

In a country with rule of law and transferable property rights (most of the western world), one would expect market forces to prevent this. Underutilized land (such as a slum) would be purchased from it's owners by investors hoping to make more efficient use of it. Both parties would wind up richer because of the transaction.

The phenomena of nontransferable property rights exists only in a few parts of the US, so most Americans are unfamiliar with it. NY is one such place - claims on public housing or occupancy in a rent control apartment are a form of property rights (it's very difficult to deprive you of them) which is not transferable. NY is also one of the rare places where we have land used by very rich people directly adjacent to land hugely underused by it's occupants [1].

Most of the US is better run than NY, so phenomena like this are absent from most people's experience.

[1] Most of the value of the land is caused by it's proximity to institutions like GS or Bloomberg, but the lower middle class occupants of public housing and retirees living in rent controlled apartments do not make use of this proximity. Thus, the land is underused.

[liftman]

Yea, I noticed this as well. Probably because there is not much of a middle class. However, I have read cases and articles expecting their middle class to grow rapidly in the upcoming years.