Monday, April 30, 2007
It’s Time to
Break Up the Mexican Monopolies
By Patrick Corcoran
Both Lorena Ochoa and Carlos Slim have
recently made headlines for moving up in their respective fields. But while Ochoa’s rise to the top spot in the world
golf rankings was accompanied mostly by praise and best wishes from her countrymen and women, Mexicans don’t feel quite
the same about Slim.
Slim, of course, just supplanted Warren
Buffet as the world’s second richest man, and is within striking distance of Microsoft founder Bill Gates, who occupies
the top spot. Meanwhile, Slim has made himself the poster child for Mexico’s uncaring rich, and a symbol of all that
is wrong with the Mexican economy. And he didn’t earn any new fans when he seemingly scoffed at Gates’ charity
work, accusing the philanthropist of “going around like Santa Claus.”
Slim, whose wealth comes mostly from telephone
giant Telmex, has benefited enormously from his monopoly on the industry, a monopoly which the Mexican government has done
nothing to break apart. As a result, Mexicans rich and poor pay some of the highest rates in the world for service. Whatever
his faults, Gates is seen as contributing to society through Microsoft, while Slim is often portrayed as leeching off of his
More broadly, Slim is emblematic of the
inequality that continues to plague Mexico and Latin America. Even more than general poverty, inequality has the potential
to undermine democracy, a point made by both American scholar Francis Fukuyama and Chilean ex-president Roberto Lagos during
recent visits to Mexico.
Mexican inequality is both persistent and
alarming. According to the United Nations Human Development Index, Mexico’s richest ten percent of the population earns
45 times what the poorest ten percent makes. Different studies consistently reveal a population in which the wealthier group
earns about 40 percent of the national income, while the poorest tenth earns just over one percent, compared to figures of
30 percent and two percent, respectively, in the United States.
The concentration of wealth in the hands
of a notorious cohort of billionaires only magnifies the problem. The collective net worth of Mexico’s eight billionaires
is roughly ten percent of Mexico’s nominal GDP, a proportion that has grown in recent years. Slim’s earnings in
the two months preceding his leapfrog over Buffet alone are almost 11,000 times what
the average Mexican earns in his entire lifetime.
Smaller incomes are hardly the only measure
of Mexican inequality. The poorest fifth of Mexico suffers from an infant mortality rate four times higher than that of the
richest 20 percent. The wealthiest ten percent stays in school for about six times as long as the poorest sector. Presumably,
similar disparities exist for a catalogue of quality-of-life indicators, from life expectancy to child malnourishment.
Failure to make globalization work for
the poorer majority — whether in Mexico, Nicaragua, or the United States — feeds the argument that the reduction
of poverty is not reconcilable with globalization. The consequences of this failure are not merely economic. The perceived
injustice of globalization has fueled the much-ballyhooed surge of populism in Latin America, and business-friendly governments
find themselves under attack.
Even if it means angering his base, breaking
up the monopolies is in the interest of Mexican President Felipe Calderon and the nation. In a truly functioning market economy,
which Calderon claims to stand for, Slim’s Telmex, the broadcasting networks Televisa and TV Azteca, and other Mexican
monopolies would be forced to compete.
Politically, targeting the monopolies makes
Calderon less vulnerable to attacks from the left, and fulfills a campaign promise. Calderon has five-and-a-half years left
to do so, but given his present popularity, and Slim’s negative press, the president won’t have a better moment
An economy free of monopolies would give
all Mexican consumers (most of whom are also voters of course) a tangible benefit: lower prices and more options. It may not
lead immediately to a fairer distribution of wealth, but more spending money and a greater spirit of entrepreneurialism will
eventually help cut the economic pie into more slices.
If Calderon lets the monopolists rest on
their laurels and otherwise fails to combat inequality, he will feed the anti-market fire. Under the populist system that
could emerge as a response to a Calderon government that disappoints Mexico, the rich and poor would suffer alike.
Patrick Corcoran, a MexiData.info columnist, is a writer who resides in Torreón, Coahuila.
He can be reached at email@example.com.