Interesting article in recent Fortune business magazine called How Shantytowns Become Real Cities* by Robert Neuwirth highlights his experiences in living in shantytowns (basically, slums) on the outskirts of major 3rd world cities. These are people who are moving from rural to urban environments and having to setup their homes/shelters as squatters. He estimates that there are currently about 1 billion squatters and is increasing by 70 million per year.

He suggests that De Soto‘s suggestion of focusing on establishing legal title for these people is not the right priority and might even be negative right now. Instead, he advocates for two things: (a) “security of tenure”—confidence that they will not be arbitrarily evicted; (b) access to politics—some way to participate in the larger city.

He describes a success in an area on the outskirks of Instanbul, Turkey called Sultanbeyli where people began colonizing undeveloped land in the 1970’s with the usual lack of running water, electricity and sanitation. Today, they now have a city with a mayor who “presides over an amazing squatter establishment: a planning department, a department of public works, a sanitation department, and a municipal bus service. This squatter city of 300,000 people has stores, offices, restaurants, banks, Internet cafés, and a post office in its bustling downtown. Almost every home has access to legal electricity, water, and sewers. The community is exploring ways to compensate claimants who held earlier rights to its land. And it has even created rules to rein in its own growth, thus protecting adjacent forests that are crucial to Istanbul’s water supply. Sultanbeyli has done all this without title deeds.”

How did this happen? Turkey has a law that when there are 2,000 inhabitants, they are legally able to apply for recognition as a municipality, which gives the residents a chance at self-government.

*I’ve noticed that Fortune.com seems to make access to archive article available only for paid subscribers after a certain amount of time.