Re: How do I battle Squalor?
It's probably ready to upgrade. Make the next Walls or Castle upgrade. The walls upgrade actually grows your town, it's the equivalent of Governor's Palace line of buildings from RTW. Other then that, make sure you get the government buildings and chirches for hapiness. Don't get the tavern line unless you plan to not have a governer there, as they give some pretty bad traits.
Re: How do I battle Squalor?
Sending a general with unrest and squalor-reducing traits should also help, as well as building buildings which increase happiness (like the councilor's chambers or churches to reduce religious unrest). But the key thing, as Myth said, is to upgrade those walls.
Re: How do I battle Squalor?
Squalor is caused by large population. The only thing which decreases squalor directly is upgrading to a larger city / castle. Happiness may compensate (prevent revolts) but you should avoid building too many buildings with population growth bonus. The bonus is percentage based and it really comes back to haunt you towards end game. It's great when your little village gains an extra 10 people per turn and becomes a town, but it really stinks when your huge city gets an extra 1000 people per turn due to the same percentage bonus. Be extra careful building things with population bonuses that cannot be destroyed later.
Re: How do I battle Squalor?
Putting taxes on high will stop population growth usually