Tuesday, August 17, 2010

In Defense of Mall

So my two professors went to Manila this summer. One of them was amazed on how cool the malls over there, and the other offered an interesting interpretation: it's in many ways a form of private government.

Here is the reason.

Operating such huge (and usually integrated with business and residential complex) mall needs sophisticated technology and management. And it has to be efficient. With thousands of human resources involved as well as state of the art logistic, it needs high skills and knowledge to run the complex.

Now enter the common explanation for under-development in developing countries: lack of skills and "modern" culture.

These malls show that these line of reasoning doesn't add up. The businesspersons running the mall can deliver not only private goods (you know, from branded bags to broccoli to two bedrooms apartment) but also public goods, like open to public parks, between-the-shops-aisles for window shopping, or the water fountain dancing New York New York (to the dismay of barista Aco).

They are like government -- while the real government is busy doing something else. And the key is, I think, incentives that works, and it is profit motive.

I think it's a right observation. The mushrooming malls as well as those clustering real estates somehow also shows that government has failed, and, to some extent, private actors stepped in. And the blaming for lack of "modern culture" among the people seems to be unfounded.

1 comment:

  1. This sounds similar to Paul Romer's idea of charter cities, doesn't it? Although there, the social and political ramifications are much more complex.