Monday, December 10, 2007

Is Mexico’s Carlos Slim Really the World’s Richest Man?

By Allan Wall

Mexican mega-magnate Carlos Slim is the owner of the Teléfonos de México (Telmex)/Telcel/América Movil telecoms empire, and many other businesses under the umbrella of his Grupo Carso.

Is Carlos Slim also the richest man in the world?

That’s what Fortune magazine reported this past August – based on the value of Slim’s holdings as of July.  Fortune estimated Slim’s fortune at US$68 billion, thus surpassing Bill Gates’ fortune of US$58 billion.

Forbes magazine, on the other hand, releases its billionaire list every March. Last March Bill Gates was still listed as the richest. So in 3 months we can see what Forbes has to say.  (The 2007 Forbes list reported 946 billionaires in the world.)

Comparing the wealth of billionaires is difficult, because exchange rates and stock valuations are constantly changing.  Thus, proper accounting procedures require the comparison to be based on the rankings of all the billionaires on one single day, which is what Fortune does each year.

Then again, when you’re talking about this kind of money – what’s a billion here or there? – it’s undeniable that Carlos Slim is one of the wealthiest men in the world.

To look at Slim’s wealth in another way, it equals 7% of Mexico’s annual economic output.  The assets of John D. Rockefeller, in his heyday, equaled about 2.5% of the annual U.S. economic output.  

And Slim is not Mexico’s only billionaire, there are nine others. They are Alberto Bailleres (Peñoles, Palacio de Hierro), Ricardo Salinas (TV Azteca, Grupo Salinas), Jeronimo Arango (Walmex), Emilio Azcarraga (Televisa), Roberto Hernandez (Banamex, now part of Citigroup ), Maria Asuncion (Grupo Modelo), Isaac Saba (Casa Saba), Lorenzo Zambrano (Cemex), and, at US$1.6 billion the “poorest” of the lot, Carlos Slim’s first cousin Alfredo Harp (Banamex, Avantel and the Diablos Rojos baseball team).

As for beer heiress Maria Asuncion, not only is she Mexico’s richest woman, she’s the 31st richest woman in the world.  She recently married none other than Tony Garza, U.S. ambassador to Mexico (and George W. Bush crony).

So Mexico has ten billionaires, plus plenty of millionaires.

There’s a lot of money at the top, and it provides a definite contrast with Mexican poverty.

Not that Mexico is exceptionally poor by world standards. Mexican GDP is higher than world GDP.  And the country ranks a rather respectable #53 on the UN’s Human Development Index (HDI), even beating out some eastern European countries.

On the other hand, Mexican income inequality is quite pronounced, which bears with it potential for social unrest.

Mexico’s overwhelming exposure to the United States encourages Mexicans to constantly compare their economy with that of the United States. Most countries in the world are poorer than Mexico, yet it’s rare for a Mexican to point that out.  The fact that Mexico is more prosperous than Guatemala is true, but irrelevant to most Mexicans.

Is it bad that Carlos Slim is one of the world’s richest men, and that Mexico has nine billionaires and many millionaires?  Should their wealth be confiscated and everybody made equal?

Well, how well does that sort of scheme work? Even communist countries were never able to forge completely egalitarian societies – for one thing, the party apparatchiks were better off than the masses.

In the real world, different people possess different abilities and interests and perform different functions in society.

Nevertheless, you don’t have to be a communist to see that vast chasms between the rich and poor can be dangerous, especially if its economy can’t create enough good jobs.

The riches of Carlos Slim (and other Mexican plutocrats), if utilized properly, could be real assets for Mexico – if they were creating lots of jobs for the Mexican people.

However, despite all Carlos Slim’s wealth, political connections and near-monopolies, the man they call “King Midas” is not too efficient at creating jobs for his fellow Mexicans.  All of Carlos Slim’s enterprises combined only employ a quarter of a million [250,000] Mexicans. That’s rather pathetic, when you think about it.

On the other hand, Wal-Mart de México mostly put together by Jeronimo Arango (who only has US$4 billion plus) employs 1.7 million Mexicans in Mexico, making it the nation’s largest private sector employer.

Clearly, Carlos Slim could do a lot more to generate employment in Mexico. That would be much more important than going up or down a few notches on the annual Forbes billionaire list.

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Allan Wall, a MexiData.info columnist, recently returned from a tour of duty in Iraq.  He currently resides in Mexico, where he has lived since 1991. He can be reached via e-mail at allan39@prodigy.net.mx.