Slim Pickings – Foreign Policy
The biggest loser from early August’s global market gyrations may well be Carlos Slim, chairman of Mexico’s Telmex. Bloomberg estimated that he was down $8 billion in four days following the Mexican stock market’s decline over concerns about the U.S. economy. But before you shed too many tears for Mr. Slim, remember that $8 billion was less than half the distance between him and the No. 2 on Forbes‘s global rich list, Bill Gates. That, along with the fact that Mexico still has millions of people living in absolute poverty, suggests the country has some serious issues with its governance.
This March, Forbes calculated that Slim had a net worth of $74 billion, beating out Gates by $18 billion. To put that in perspective, $18 billion is enough to extend wireless broadband to 98 percent of Americans. What makes Slim’s wealth all the more amazing is that he is living in a country that still contains some of the very poorest people on the planet.
Worldwide, absolute poverty is defined as living on $1.25 a day or less. It is a level of income that suggests 60-plus percent of expenditures are going to food. The absolute poverty cutoff in Mexico is closer to 79 cents a day. More than 3.5 million people in Mexico lived on less than that in 2008, according to the World Bank. So the money Slim lost in the first few days of August is equivalent to more than seven times the yearly income of all 3.5 million people in Mexico living in absolute poverty.
The gap between Slim and the poorest Mexican is almost certainly larger than the richest-poorest gap in any other country worldwide. The poorest Mexican is maybe 50 cents a day from the very bottom in the world, while the richest is more than a million dollars a day ahead of Bill Gates. Even by Latin American standards, Mexico is an unequal country — the bottom fifth of the country earns about 4 percent of the income while the top tenth controls 41 percent. That a country could see such disparities suggests a failure of governance — in particular, a failure to control monopoly profits at the top and to create opportunities at the bottom.
ChrisB – Like Rockefeller before him, Slim is using his monopoly in Mexican telecommunications to amass absurd sums of money, while the poor people languish. The article does mention that the Mexican government has instituted a program called Oportunidades, which offers assistance to families that keep their children enrolled in schools and take them to doctors. The program has apparently had some real tangible success in reducing the inequality gap. However, it seems nothing substantial will be accomplished until there is some competition for these massive monopolies.
For more information on how insanely rich the richest in the world are, check out how their wealth stacks up against world GDPs.