Headline August 18, 2016/ ''' THE WORLD'S HAPPIEST PEOPLE : *LATIN AMERICANS* '''



THE LATIN AMERICANS are well known for their love of the fiesta and when they can afford it, their very  *conspicuous consumption*.

Perhaps, that is one reason why they regularly figure in opinion polls as among  the *world's happiest people*.

Be that so, but in the future ahead, the region needs to save more, well, *for a rain day*  and figure ways how it can do so. 

Yet economists frown when households and governments  -spend with little regard for tomorrow. Latin Americans save much less than the experts think they ought to. 

Compared with the residents of the developed countries, and especially those of emerging Asia, Latin Americans stand out for their lack of thrift.

Foreigners have often been prepared to lend some of their spare cash to Latin Americans. But foreign capital is not a perfect substitute for local savings. For a start, it can be fickle, disappearing just when the region needs it the most, as happened in the late 1990s.

Second, in some Latin American countries, including Brazil, reliance on foreign savings helped to push up the value of the currency killing off other wise viable businesses, points out Augusto de la Torre of the World Bank.

Many economists believe that if Latin America;s economies are to grow at a 5% a year or more, they need to invest around 25% of GDP. Some countries came close to that during the commodity supercycle of 2003-13. But now that the commodity boom is over, growth has slumped and so has investment.

Not surprisingly, the attention of economists has turned one again to why Latin Americans,  save so little and how it might save more, and thus invest more. The Inter-American Development Bank [IDB]  devotes its latest report to this subject.

The  IDB  identifies three main problem areas: the financial system, pensions, government spending.
Although Latin America's financial systems are more solid than they were in the past and have grown,  they remain 'small, expensive and inefficient'' the IDB says.

On average bank loans to to the private sector  are equal to only 30% of GDP in  Latin America, compared with  80-100%   in rich countries or in emerging Asia. No wonder Latin American companies find it so difficult to grow.

The pension problem is severe. Although the population is ageing, only 45% of Latin American workers contribute any kind of pension scheme, the IDB says.

In the 1990s, at the urging of neoliberal economists, many countries wound down their traditional   pay-as-you-go   pension systems. Instead, they switched to a system of fully individual pension accounts, managed by private pension funds-

[Known as AFPS in Spanish] n which workers eventually receive a pension depending on the value of their investment.

There were good reasons for the switch. The old systems were often mismanaged. But the new ones hasn't work as intended: few workers contribute enough to get a pension.

''The AFPS have failed,''  says Santiago Levy of the IDB. He favours a small universal pension funded by an earmarked consumption tax, augmented by voluntary schemes. 

O'' Those Spendthrift Latins!

The Honour and Serving of the latest ''Operational Research'' on Life and Living continues. Thank Ya all for reading and sharing forward. And hope to see you on the following one.

With respectful dedication to the Students, Professors and Teachers of Latin America. See Ya all on !WOW!  -the World Students Society and    !E-WOW!  -the Ecosystem 2011:

''' Soft  Happiness '''

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless


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