Monday, June 13, 2011

The World's Richest Man on the Poverty Industry

FT publishes an interview with Carlos Slim, the world's wealthiest man, who got that way partly by being granted a near-monopoly on the telephone business in Mexico:
Yet even as others are trying to shrink his vast wealth, Mr Slim is pondering how to put it to best use when he is gone. “Read this,” he says, pulling out a well-thumbed edition of Kahlil Gibran’s The Prophet, that staple of student spirituality. He points to a line on page 487: “You give but little when you give of your possessions.”..

“When I go, I will be naked. So what do I do?” he asks rhetorically. “Do I give the companies to my children? That’s a responsibility. Do I leave them 90 or 98 per cent of my wealth? Absurd. If I sell, who would buy – a foreign company? So, do I give it all away to Mexico instead?”

Famed for reading a balance sheet like no one else, Mr Slim performs a quick mental calculation. “After tax, that would be $300 for every Mexican. It’s mere charity.”...

Rather than charity, Mr Slim believes the solution to Mexico’s problems, and his own conundrum, is more investment, especially among small businesses as they create the most jobs. It is an apparently contradictory claim given criticisms that his own market dominance squashes smaller players. “Human beings are contradictory,” he shrugs.

“A lot of people make money out of poverty – studies, conferences, NGOs – it’s a massive business,” Mr Slim observes. “The answer is jobs, jobs, jobs. Work is the only way to dignify the receiver. It meets an emotional need. And it encourages development.”

Mr Slim breaks off the conversation and heads to a small bathroom in the corner of his office. He does not bother to close the door. Arturo, his son-in-law, who has been sitting quietly smoking, smiles wryly.
Slim is clearly an oligarch, who has benefited significantly as a result of his ability to get the Mexican government to grant his businesses special favors. But this doesn't mean he isn't shrewd. He is very shrewd. His point on simply giving his wealth away is accurate. In the long-run, what is $300 per person going to do? As he correctly points out, investment is the key, which will result in producing goods and services and truly raise a country's standard of living.

His observations on the poverty industry are very interesting. The man who can obviously spot where dollars are being made sees that there are a lot being made in the poverty industry. That's a lesson that needs to be learned in the United States and the world. Like the drug war, many now earn dollars not by seeing a problem going away, but by "helping" solve the continuing problem.

Poverty will never be solved by handouts, minimum wage laws and creating disincentives for people to work. It's by allowing people to work, whatever the wage, so they can learn work skills and understand that hard work can be a way to advancement. As Slim says, "Work is the only way to dignify the receiver. It meets an emotional need. And it encourages development."

1 comment:

  1. This is a man who knows his numbers! Charity has been with us always, not to solve problems but to keep problem people occupied while they "take" their clients. It was a way the old monarchs had to busy their difficult followers and is still in play with our new leaders who live better than an ancient king ever thought he would! It builds the clacgue while they skim the froth!