Mumbai Razes Apartment Building, I Raise Questions

by on March 4, 2017 at 7:42 am in Economics, Law | Permalink

illegal constructionA story in The Times of India unwittingly illustrates the problems of construction in Mumbai. It is headlined, 11-storey illegal building near tracks finally razed. Many newspapers carried the story and all of the ones that I read took a righteous tone. ‘Finally this illegal monstrosity has been demolished’, they said. The authors appeared to regret only that the city had taken so long to act.

The building was not illegally constructed on public property or park land nor on a historical landmark. There were no safety claims, as far as I could find, although people worried about the safety of the demolition job given the nearness to the railroad. The photo at right shows a before and after picture. The after does not look better to me than the before.

Not everyone was pleased. The locals, presumably mostly residents (or perhaps hired thugs), tried to stop the demolition:

The BMC began demolition of the structure in June 2016, but owing to severe resistance from locals and no adequate police protection, the work had to be stopped abruptly.

The demolition resumed in August 2016 with the help of around 80 labourers. Though locals again threatened the labourers, the BMC continued the work amid police protection.

Eventually, however, the building was razed to the ground. But here is where it gets interesting. Amazingly, this is not the first time a building on this site has been demolished. According to another report this is in fact the third demolition. Now either the developer is an idiot or it must be so costly to construct a building legally that it’s worth the very real risk of demolition to construct it illegally.

I understand the frustration that people feel when the law is flouted but the real question stories like this raise is, What kind of law makes it so expensive to construct new apartment buildings in a city that by some measures is the most unaffordable in the entire world?

1 The Other Jim March 4, 2017 at 7:49 am

Insufficient bribery payments.

2 Alex Tabarrok March 4, 2017 at 7:53 am

Yes, that is part of it.

Abdul Rehman Motiwala, the owner’s son, said, “We have permission for four floors and tenants are staying there already. When we approached the court, the then BMC public prosecutor had demanded a bribe from us and we got her arrested. I think somebody is seeking revenge for that.”

Although that doesn’t get to the fundamentals of the law.

3 Ray Lopez March 4, 2017 at 11:24 am

Yes, it’s all of it. In the Philippines the going rate for a bribe to the authorities is 10% to build any building “on time”. Otherwise it will take years and years. Pay the money, get the permit, what else is there to know?

Bonus trivia: demolition of a building for failure to have or get a permit, nor matter how trivial is the ‘variance’ of the building (that is, let’s say the permit is for 4 stories and the owner adds a small storage room on the roof of the fourth floor, do you require demolition of the storage room or not?) is common in New York state, but in many US states you simply pay a fine and get a ‘grandfathered’ permit. Source: personal knowledge.

4 Adrian Ratnapala March 4, 2017 at 5:51 pm

There is chicken-and-egg here. If you have lots and lots of regulations, that makes it easier for the stand-over merchants to come up with some excuse to ask a bribe.

Corruption might be a cultural thing, but the lawbooks provide some of the environment in which such cultures work.

5 Russ Nelson March 6, 2017 at 8:58 am

People think Chicago politicians are corrupt. They have no idea.

6 Thiago Ribeiro March 4, 2017 at 8:10 am

The truth is, Indians, despite the pathetic self-righteous tone they and their lackeys use whem they talk to or about Brazilians, can’t manage construction any better than they can manage trucks or schools. Unless their savage regime is destroyed, Indians will remain languishing at the gutter of History.

7 Anon March 4, 2017 at 9:40 am

Thiago
If your comments about India are not always so vituperative, perhaps they would be read more seriously .

8 Thiago Ribeiro March 4, 2017 at 10:01 am

People have tried not to be “vituperative” for about 70 years. It hasn’t helped.

9 msgkings March 4, 2017 at 3:01 pm

Don’t be silly no one reads Thiago seriously. He doesn’t even know the history of his own country that he won’t shut up about.

10 Thiago Ribeiro March 4, 2017 at 3:07 pm

I just happen to be a self-taught specialist in Brazilian History, particularly the late years of the Empire after the War Against the Paraguayan Invader and the early years of our Republic.

11 Lok March 4, 2017 at 9:45 am

Thiago,

I more or less agree with you. I am an Indian. Born, Living and will die here. Things are indeed pathetic.

12 Thiago Ribeiro March 4, 2017 at 10:00 am

It is sad. Think about the masses doomed to have their lives stunted by mismanagement, doomed to toil aimless, their existences corroded by fatalism.

13 Ray Lopez March 4, 2017 at 11:25 am

The fatalism is not sad, it’s called Buddhism.

14 Thiago Ribeiro March 4, 2017 at 11:57 am

Books from some years ago, call it Islam. Portuguese writer Eça de Queiroz used thw term “Muslim fatalism”. T. E. Lawrence, if I am not wrong, also menrioned their fatalism.

15 The Other Jim March 4, 2017 at 5:18 pm

>The fatalism is not sad, it’s called Buddhism.

I’ve thought it over, and decided that yes indeed, this is the least-informed thing I have ever read on Marginal Revolution.

Congratulations Ray Lopez — that was no easy feat to achieve. But at least msgkings can breathe a sigh of relief.

16 Ray Lopez March 4, 2017 at 6:59 pm

@The Other Jim – relax, meditate, and learn to accept you will not win. That’s Buddhism. Do you know what Buddhist monks do? They construct an elaborate house of cards, or other such labor intensive hobby, taking many hours to construct, then let a toddler play with it, destroying it in minutes. Then they smile. It’s fatalism, but just part of their religion. I respect Buddhism, as I lived in Thailand for a while and saw their “Greater Vehicle” version of it (which is like any other organized religion).

Ray’s Koan for the day (part of an occasional series)…

The Zen master Ray was praised by his neighbours as one living a pure life.
A beautiful Japanese girl whose parents owned a food store lived near him. Suddenly, without any warning, her parents discovered she was with child.
This made her parents angry. She would not confess who the man was, but after much harassment at last named Ray.
In great anger the parent went to the master. “Is that so?” was all he would say.
After the child was born it was brought to Ray. By this time he had lost his reputation, which did not trouble him, but he took very good care of the child. He obtained milk from his neighbours and everything else he needed.
A year later the girl-mother could stand it no longer. She told her parents the truth – the real father of the child was a young man who worked in the fishmarket.
The mother and father of the girl at once went to Ray to ask forgiveness, to apologize at length, and to get the child back.
Ray was willing. In yielding the child, all he said was: “Is that so?”

…hey, I hope this does NOT happen to me with my girl in the Philippines, but I’ve heard it’s not uncommon!

17 Sam Haysom March 5, 2017 at 11:48 am

Your comment is fit-bustingly ignorant because no one in India is Buddhist. Also Hinduism is a lot more fatalistic than Buddhism. Take a look some time at the counties with the highest number of Buddhist- they aren’t fatalistic countries.

18 Russ Nelson March 6, 2017 at 9:00 am

Nonsense, The Other Jim. Clearly you have forgotten muirdiot.

19 robert March 4, 2017 at 11:55 am

Thiago baby, perhaps an Indian version of favelas would be more to your liking?

20 Thiago Ribeiro March 4, 2017 at 12:01 pm

Depends. They wil have to demolish tree times or they can do the job at once? Thanks Vishnu (destroyer of worlds, etc.) there is no slums in India!

21 Thiago Ribeiro March 4, 2017 at 12:01 pm

* demolish it three times

22 Prem March 5, 2017 at 11:31 am

Incidentally it is Shiva that is the destroyer 🙂 🙂

23 GK March 4, 2017 at 8:22 am

Achieving higher profit margin and then managing local officials by bribing them. If the apartment is demolished 3 times, may be the developer has sold same property 3 times. Most probable risk is demolition. Rarely a building will collapse and people will die. In that case, there is a jail term.

24 Battery Park March 4, 2017 at 9:01 am

Trump was a very successful real estate developer in Manhattan — the NYC government red tape to do anything there is always difficult, especially for large buildings.
Would luv to know the details of how Trump navigated that local government maze (inside deals, political donations, kickbacks, indirect/direct bribes, etc).

Also, the Mob is still alive in NYC — especially in construction companies & labor unions. Big construction projects don’t happen without the Mob getting a piece of the action somewhere. How did Trump deal with the Mob ?

25 y81 March 4, 2017 at 9:43 am

The legal ways of dealing with NYC red tape are more or less as you suggest: political donations, hiring lawyers with inside connections, hiring expediters to deal with the Buildings Department, etc. I don’t recall–I have lived in NYC for over 50 years and practice real estate law here–that Trump was ever accused of anything illegal. (You may say that the real scandal is what’s legal, not what’s illegal, but that’s a separate topic.)

There would be a lot of intermediaries between a developer and any mob connection: developer/general contractor/subcontractor/union.

26 Blue Toque March 4, 2017 at 9:55 am

Fifty-year New York real estate attorney that’s also an expert on the mentality of herbivores and their interactions with humans. Truly a renaissance man!

27 Jan March 4, 2017 at 1:47 pm

I’d love to say Trump is corrupt, therefore he succeeded in real estate development and that’s it. However, likely the bigger factor here is simply knowing all the rules, processes and considerations backwards and forward. If you do it a few times, you are by virtue of experience going to be better at it. Establishment, incumbency and hiring really good lawyers usually wins.

28 Adrian Ratnapala March 4, 2017 at 5:55 pm

The trouble with this kind of thing is that it is not just about following the rules. There are plenty of people in the system with the discretion to enforce something against your or not, and either way their action is “legal”.

Those are the guys who have to be payed off. Such kickbacks are always corrupt, and that is indeed illegal – but the waters are so muddied that no one is likely to be caught. It least no one is likely to be caught if they belong to the established political aristocracy.

29 Jan March 4, 2017 at 6:49 pm

Not sure that has really been the case with Trump though. I mean, he’s been sued re real estate issues multiple times, and sometimes lost.

30 Thiago Ribeiro March 4, 2017 at 8:26 am
31 Jan March 4, 2017 at 8:44 am

What do the Hindi papers say about it? Perhaps they don’t strike such a righteous tone. In any case, the color alone makes the building an eyesore suitable for demolition. Justice is served.

32 Jeff R March 4, 2017 at 11:56 am

Paint.

33 Thiago Ribeiro March 4, 2017 at 12:02 pm

I like the color. My parents’ home was about this color. I find it has personality.

34 Jan March 4, 2017 at 1:42 pm

It’s a little out there for us Americans. Maybe more acceptable in Miami or something.

35 Thiago Ribeiro March 4, 2017 at 2:10 pm

Yellow is the color of gold and wheat fields. It is the color of wealth and plenty. It is also one of the colors of the Brazilian flag, which is called “auriverde” (golden and green).

36 Jan March 4, 2017 at 2:39 pm

Sure, yellow is, but that is the color of puke.

37 Thiago Ribeiro March 4, 2017 at 2:48 pm

No, it is not, it is just a shade darker than Brazil’s flag’s yellow https://www.google.com.br/search?q=brazilian:flag&num=40&client=tablet-android-samsung&prmd=isvn&source=lnms&tbm=isch&sa=X&ved=0ahUKEwibhqGqzr3SAhVFGpAKHUNqBJ0Q_AUIBygB&biw=800&bih=1280

Although the green and the yellow represents the old Brazilian dynastic houses in the former Empire and were kept to represent the our relationship with our past after the 1889 Revolution, the legend says the yellow was kept because it represents the wealth of Brazil’s soil, particularly its gold.

38 Jan March 4, 2017 at 6:51 pm

Hey, I think Brazil’s flag looks decent. This color on a building doesn’t though.

39 Thiago Ribeiro March 4, 2017 at 7:09 pm

It is basicaly the same color, just a shade of difference. The flag’s yellow is a little lighter, probably to match the green.

40 Russ Nelson March 6, 2017 at 9:03 am

Yellow is not the color of puke. Jesus. Who looks at their puke, anyway? Except for that one time I swallowed my nosebleed blood, and then puked it up. That was like entirely red, and very clotty. Now THAT was disgusting. No, yellow is traditionally the color of cowardice, in the English tradition.

41 GoneWithTheWind March 4, 2017 at 9:52 am

They did not cross the right palms with silver.

42 Charles March 4, 2017 at 1:24 pm

Are all illegally constructed buildings in Mumbai painted lime green? It may be a matter of poor signalling.

43 Anon March 4, 2017 at 6:20 pm

I may be wrong but this is a locality with a significant Muslim population ; the developer is also Muslim. Green is a favored color for them , though not necessarily lime green.

44 Thiago Ribeiro March 4, 2017 at 3:04 pm
45 TallDave March 4, 2017 at 4:02 pm

As Acemoglu and De Soto have pointed out, these legal environments generally exceed their corruption only in their caprice.

46 Anon March 4, 2017 at 6:24 pm

The last link is to an Atlantic article . It is amusing how the Metric system fixes us Americans. If a meter is 3.3 feet , a square meter is not 3.3 square feet . But 3.3 * 3.3 or approximately 11 square feet.

47 jon livesey March 4, 2017 at 6:59 pm

Is there really no way to blame this on the British?

48 ChrisA March 5, 2017 at 3:12 am

Yes, it’s the result of trying to implement the pre-war UK Fabian socialist ideals. The Fabian’s came up with this idea of a bureaucratic socialism which had great influence on the creators of the Indian state which was created during the zenith of Fabian socialism in the UK, the 1945 Labour administration. It is also the reason so many other post colonial states are such a mess. Fabian socialism is not as bad a communism in terms of repression, but as it contains the same elements of divorcing power from responsibility and accountability then it results in similar consequences of poorly functioning economies.

In the UK, Fabian style socialism was tamed thanks to the efforts of Mrs Thatcher and it was so thoroughly discredited that Blair had to abandon Clause 4 to get elected. India still hasn’t had that revolution yet.

Here is the quote from Wikipedia;

“The Fabian Society is a British socialist organisation whose purpose is to advance the principles of democratic socialism via gradualist and reformist effort in democracies, rather than by revolutionary overthrow.[1][2] As one of the founding organisations of the Labour Representation Committee in 1900, and as an important influence upon the Labour Party which grew from it, the Fabian Society has had a powerful influence on British politics. Later members of the Fabian Society included Jawaharlal Nehru and other leaders of new nations created out of the former British Empire, who used Fabian principles to create socialist democracies in India, Pakistan, Nigeria and elsewhere as Britain decolonised after World War II.”

49 Massimo Mazzone March 5, 2017 at 1:32 pm

The rule of law in India is very deficient, to say the least. My friend and associate James Tooley, the guy who wrote a few years ago “the beautiful tree” about private education for the poor in poor countries, had recently a terrible encounter with it, which he describes in his book “imprisoned in India”: https://www.amazon.com/Imprisoned-India-Corruption-Extortion-Democracy/dp/178590101X. I live in Honduras, which is likely considered pretty dangerous by US standards. However, I can defend myself from thugs violence, it is just a question of buying yourself enough private security. But you cannot defend yourself if the thug is the State. Mr. Tabarrok, if you are spending six months there, I would suggest you to read it. Write me your address at massimo@fahorro.biz, and I’ll send you a copy with James’ dedication. 😉

50 Benjamin Cole March 6, 2017 at 2:53 am

There is plenty of restrictive property zoning in the U.S. Why is housing so expensive along the West Coast?

I wish Tyler Cowen would make US property zoning his cause celebrate.

Basically, in the US, the right-wing believes in (usually) free enterprise and (always) property zoning.

51 Mr. Econotarian March 6, 2017 at 7:30 pm

“I wish Tyler Cowen would make US property zoning his cause celebrate.”

Read “The Complacent Class”, it is a major item!

52 Troll me March 6, 2017 at 9:38 am

On the measures of affordability, this is a bit misleading. They take a certain class of apartment which is not generally supplied in Indian rental markets. Only extremely wealthy people will be demanding apartments of the style that meet minimum decent standards for purposes of comparing with London, New York, and other such international cities.

So if you want good plumbing and electricity connections with a sit down toilet, and some other basics, you’ve already excldued perhaps 99% of the market. The stats are based on what handful of apartments have these features, in which case the cost of marble (etc.) is then also included in the price, whereas in New York or London a lot of basically crappy apartments that meet these standards would also be included.

53 athEIst March 6, 2017 at 4:20 pm

As awful as it is, it looks better(despite the putrid green)than either of the buildings on either side of it They may have been green at one time. Paint doesn’t last forever. Do you think there is an elevator in it? HA HA.

54 Cash March 9, 2017 at 1:38 am

Filyaln! This is just what I was looking for.

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