Friday, October 29, 2010

Latin America : New trends on social mobility and implications

Recent data and research show that the middle class segment in Latin American economies is growing. While in 1990 53% of the population was in the middle class category, in the year 2010, 63% of the population has reached out such a condition, and the trend is to be even higher twenty year from now , (100 million additional people) as long as economic growth keep the pace.
The implications of this results are wide and complex: Wide because it means that the middle class get stronger. For a society as a whole, is better to have strong middle class, than the opposite. Middle class do support and prefer stability and consensus, it also asks for more information and involvement before making decisions, which is good for an higher quality of the debate and evaluation of alternative options, all of which end up with better public policies design. Free press have key target in middle class readers.
Complex because strong middle class, is helpful to shape a different approach on different subject concerning politics and leaderships, but not always this demand are listened. Middle class demand both different leadership, and better answers arising from Government and private firms as well . Thus, it is not a surprise that women are becoming more involve in Latin America politics. It is matter of style and tuning. The same apply for private firms and their focus on Social responsibility.-
Does it means that strong male leaderships are outdated? Not necessarily so. It is the requirement coming from Latin America middle class voters, to shape new directions for leaderships , no matter whether it is male or female. While in Latin America there was an important proportion of people in poverty conditions , strong and some time populist leadership fitted quite well , to fill the gap between the rich and the poor, had not with concrete result, at least with keeping the hope alive. Politics and economics were far away from each other, but now with economic growth at its current pace , and the expectations of further increase in good consumption, higher banking services demand and investment , the requirement goes on the line of broader and pragmatic consensus.
This time ,Politics needs to be closer to economics. Even Latin America integration , is actually better founded in the principle of politics inspired by business, than the other way around, business inspired by politics. Latin America economic Integration , will not be just because of Government support, but despite Government , private firms will take its place.
Following the implementations of reforms, since 1990 most of Latin America countries have increased its middle class segment. In Brazil(2010), 50% of the population is considered to be in the middle class. Chile (77%), Uruguay(72%), Argentina(71%); Colombia (61%) and Peru(57%).On the other side, economic crisis had an high a price for countries like Mejico (2008) and Argentina. In the later case, at the peak of the crisis (2001),30% of the middle class fall down to a poverty condition. Strong leadership and no conventional economic policies, made its way through to get the country to stand up again.
However, new directions and opportunities arise when middle class voters become more important. Thus ,it is up to the current leaderships in Latin America countries to move forward to take advantage of this trend.-

Friday, October 15, 2010

Water it is not longer a free good

When it comes to keep our health in good conditions, most of us count on food quality, but very few of us realize, how hard this is going to be in the future. Very much of what we need for our health, comes from clean water. Our body is 70% water, which means that the first condition for good health is good quality water. This a well known fact by physicians , but what about its implications when water is scarce?
The problem arise because clean water for human consumption unfortunately has already become a scarce resource. It will require tough competition among its different users, to get what they need. Let check the list(
a.- Every average person need around 200 hundred liter of water for daily consumption.
b.-To produce an hamburger requires 24 liters of water
c.- To produce lettuce 60 liters of water
d.- To produce tomatoes 88 liters of water
e.- To produce apples 332 liter of water
f.- To produce wheat bread 616 liters of water
g.- To produce chocolate 11388 liters of water !
g.- To produce rice 1612 liters of water
The list goes on and the issue is clear enough to look for ACTION. Check this web page out :(, for more .
Less than 1% of all water available on earth is suitable for human consumption. 42000 people die each week, because lack of clean water. Underground source of water are not huge such as to count on them. Productive activities such as agricultural and mining ( whose productive process is highly water intensive )will have to compete between each other for water. Thus, it is a real possibility that severe conflicts might arise because of lack of water.-
The Blog action day deal with a responsible call to make water preservation a duty.-
From the economics point of view , water scarcity means it has an higher price , which we are not paying . In fact in real terms we are consuming free water ,(those people who die because of lack of water are part of the price!), and it seems feasible that sometime in the future, we will have to assume an higher share of water cost in our budgets.
While in the last 40 years we have been worried about oil prices, in the next 50 years or so, we will have to be worried about water prices.-
Besides , water is considered a common good (The tragedy of commons), which mean that there is no restriction about its use, and the risk of over exploitation is real. The solution, include to assign property right ,and this rights might be sell to other customer. As long as to protect water has a price , users get more cautious about the way they use this resource.
But water preservation is not judt a market issue. Government regulations also are important. At the same time,it is also a Government responsibility. Some regular activities concern with such responsibility : Car wash, garden maintenance, laundry requirements are increasingly luxuries goods, but at a very cheap price!. Something is wrong when a distortion like this one is not solved. It is the well know market failure issue, for common property good, which requires efficient government intervention.-

Friday, October 01, 2010

Chile :Two hundred years later (1810-2010)(II)

As long as the State was key to design the new framework, ideology was the driven force in the following years. On this regard and as a condition to make the State stronger, the institutional profile , was bias toward the law and order, rather than freedom and rights.
The foundation of the new republic was based on the strength of its State and those who supported and controlled it. However, this emphasize on the State responsibilities ,left apart and on a secondary level , the citizens and their role as the most important source of contribution to a nation greatness .The Chilean State was in charge of education ,public health, infrastructure ,even the economy in the second half of the latest century (1940-1975) , was designed upon the State preferences .-
As a result , ideology replaced pragmatism because all what mattered was what to do with such a power . From time to time, politicians forced the institutional framework stretching ideology beyond the level which the system could absorb and sustain. Social unrest and repression was the outcome. From 1958 up to 1970, there was three different but not complementary government programs. Three different way to go nowhere because there was not a long run perspective to go through, other than to get control of the State. The main consequences of these stress, was a permanent social struggle between opposite forces ,with severe consequences as much as the system was not designed to protect rights, but mainly duties from certain segments of society. The human rights concern, is a recent phenomena in Chilean politics and society. Past history on this issue ,is quite fragile to say the least.-
At the beginning of the third century, Chile is in the path to become a development country, just the same way it was before, one hundred year ago. Thus, the question which arise is this : will it be able to make this time such transformation to lead the rest of the Latin America continent ,to higher levels of economic progress and performance?. Historically Chile has been leader on social issues: It was the among the first to recognize women rights, and to implement social security as well. At the end of the twenty century (25 years),it was the first to open up its economy to private sector and world markets getting rid of the State preponderance .Wealth creation became as much important as it was poverty reduction.
Others countries at a different speed, are also following their own path to improve conditions for economic progress and development, based on a more active role for the private sector .
Actually, there is an interesting process to get the development status, which includes almost all countries in Latin America. Politics and economics must be quite well fitted. Ideology is a risk because it might left some countries behind. The majority of countries are moving forward into this century , with a different approach concerning the real force of prosperity and wealth creation.
For Chile own expectation ,the challenge ahead goes on two complementary path to get such goal:
a.- Higher productivity and competitiveness
b.- Better education and innovation
A preliminary evaluation indicates that the chances to get substantial advances on the productivity level are higher, because a deep decentralization of the State, and its full scale modernization as necessary conditions depends upon political will, which has been one of the main assets in the latest 20 years for important reforms. Education improvements needs a very long period of time to show substantial achievements.