Last Saturday I had the very unusual opportunity of having lunch with Warren Buffet and his wife Astrid, and Bill Gates and his wife Melinda. While my wife and I were eating with them, I remembered they are no longer the richest men in the world. In March this year, Forbes magazine –which every year makes a list of the world’s biggest fortunes– placed Carlos Slim as the second richest man on Earth. Slim has displaced the American Warren Buffet from a position he had occupied for seven years. Now, according to Business Week magazine, the fortune of the telecommunications tycoon has already reached 67.8 billion dollars, above Microsoft founder’s 59 billions. Carlos Slim’s fortune has surpassed Bill Gates’ and has put him in the place Gates had maintained for a long time: the one of the world’s richest man. Forbes magazine will publish its updated ranking in September. I’m  interested in this story because I think that, although Mexicans may feel proud of having the person who has made the world’s biggest fortune working from Mexico, Slim’s story can be considered a proof of two Mexican disgraces: the awful distribution of wealth and Carlos Slim’s ability to reach a monopoly level with Telmex, which is hurting Mexican consumers. 

Carlos Slim Helú Aglamaz entered into the business world at the age of eight, when his father asked him to help him with Orient Star –the family store named like that in honor of their Middle West roots. After graduating in civil engineering, he inherited some important real estate from his parents, and then challenged the conventional opinion to enter into a frenzy of acquisitions. This race, which up to now has never stopped, began in 1965 with the bottling plant Jarritos del Sur, but the takeoff would be in the late 70’s. His assets became part of Grupo Galas S.A., renamed later as Grupo Carso, which works in such different activities as department stores, restaurants, real estate, hospitality, construction materials, mining, chemicals, tobacco, metallurgy, spare parts and railroads. Later inversions would give rise to the creation of two new holding companies: The Inbursa Financial Group, dedicated to Stock Exchange transactions, banking, insurances and pension funds administration, and Carso Global Telecom, which is made up of companies related to telecommunications and Internet.

During the 80’s, more than thirty companies joined the group, including renowned names such as Industrias Nacobre, Hoteles Calinda, Grupo Condumex, and Inmuebles Cantabria. During this period, one of Slim’s most successful transaction was the acquisition of the majority block of shares of the tobacco company Cigatam –the manufacturer of Marlboro in Mexico–, of which he sold 50% to Philip Morris in exchange of a stake and a place on the Board of Directors of that American company. The perfect finale was the purchase of the Sanborns chain, which included restaurants, gift shops, personal care shops, music stores and bookstores, which in the 90’s would be joined by the Department Stores Sears and the country’s three biggest music-store chains.

But his name surpassed the business environment in 1990, when he won the bid for the privatization of the state monopoly Teléfonos de México (TELMEX), in partnership with France Telecom and Bell Canada. Carlos Slim bought Telmex during the privatizations carried out by the then President, Carlos Salinas de Gortari. The sale was done through a “public” auction, and although several foreign groups had offered higher amounts, the Grupo Carso –the major shareholder of which is Carlos Slim– won the bid, since one of the determining requirements was that the majority ownership would remain in Mexican hands. And from then on, it controls the telecommunications monopoly in Mexico. The company is now the biggest in the country, controls 90% of the land lines, and has now a market capitalization of more than $20 billion.

Moreover, the companies Slim currently owns cover several areas. In 1997, Slim bought shares of Apple Computer Inc., just before the launch of the iMac, thus multiplying his fortune. He also acquired Prodigy (an American Internet Service Provider), turned it into a powerful provider of different Internet services, and then was able to forge an alliance with MSN by launching a Spanish portal with Microsoft’s support. Furthermore, he is the President of Comertel Argos, Red Uno, Uninet, Sanborns, Teleco, América Móvil, SEARS, Telcel, Codetel, Bachoco, Cigatam, IMTSA – Impulsora Mexicana de Telecomunicaciones, Dorian’s, Inbursa, Altria Group, and has SAKS FIFTH AVENUE franchise in Mexico. And he is also a shareholder in Herbalife, Televisa, Compusa, Soulkeeper-company, Volaris, Ix-informática, Mixup and Coca Cola. To have an idea of what this means, you just have to read “A day without Slim”..

It is surprising that even though Mexico is getting too small for him and his growth must continue outside the borders, one of the characteristics of Slim’s fortune and history is that he made his fortune from the inside. Twenty years ago, when the Mexican economy was going through a turbulent period that led many businessmen to abandon the ship and search for salvation in foreign currency, Slim decided to commit to Mexico. He took advantage of the asset stripping and in a few years he had fully surpassed the wealth of the most opulent Mexican businessmen, from whom he had bought their sometimes-moribund companies at considerably low prices. Thanks to his ability to revive them and the power attained by him, he is known as King Midas (the one that turned everything he touched into gold) or as Aztec emperor. Another characteristic of Slim is that he stands out in the tycoon world because no other multimillionaire on Earth has been able to accumulate so much money in such a short time: in 2003 he had a fortune of 7.4 million dollars, but on the 2006 list he appeared with 30 billion dollars, which implied climbing from the 35th position to the 3rd on the list of the richest people in just three years.

What bothers me about this story is precisely the combination of these two characteristics: the great monopoly power attained so quickly and the fact that he did it in a country like Mexico where there is so much poverty. Two years ago I traveled around the Mexican Pacific

Coast, and the poverty I saw was devastating: barefoot children, adobe houses…something you don’t see in countries like Uruguay, for example. It’s not that I think Mexico does not offer good business opportunities or because I don’t believe in the abilities of the Mexican people or in Slim himself, my problem with Slim’s fortune is that it was all made in Mexico, a country where the average citizen lives much worse than in Argentina. It’s true that Slim replaced Gates, and he was also accused of monopolizing the market. But the difference lies in that Gates’ fortune has been made on a world scale and the US laws continuously control his business decisions. By contrast, Slim’s fortune was built in a country in which 62% of the companies admit they set aside some of their income to pay bribes to government employees in order to obtain some benefit, and 30% of all public resources allocated to Government contracts are set aside for corruption. Furthermore, his fortune increased with the purchase of a state-owned company.During the 90’s, there were many privatizations of State monopolies in Latin America, especially those with regard to electricity, petroleum, telecommunications and transport. The aim was to promote these companies’ productivity and efficiency, and to make them work for the “protection” of the citizens, and not to depend on Government subsidies and promote corruption and the distribution of privileges. But in some cases, the only thing achieved was the transfer of public monopolies to private hands, often with the subsequent sale of public assets to the highest bidder and to the friends of the Presidential Palace.

Particularly in Mexico, the analysts and many citizens were against Slim’s purchase of TELMEX, taking into account that he would obtain the company for an exceptionally low price (1.76 billion dollars). Even Business Week placed Slim among the plutocracy protected by the government of the then President Carlos Salinas de Gortari, who was accused of putting a real “gold mine” in the tycoon’s hands. The American companies AT&T and WorldCom also made a formal complaint against him before the World Trade Organization (WTO), accusing him of monopoly practices. Slim answers these criticisms saying that the growth of TELMEX is due to the inversion done as well as to his marketing strategy. He also says that international criticism is due to the fact that the international organizations push for developed countries’ companies to control the markets, and in many cases they manipulate the information they provide. He states that nowadays it’s hard to think that in certain countries there are more than three competitors and the important thing is not only the number of competitor but also the prices and services offered to the public.

The fact is that the Slim’s holdings monopolize 40% of the Mexican Stock Exchange and his incomes are worth 25% of the national budget. And, consequently, it is hardly likely that a government (of whatever kind) can avoid such a share of power. So I think that beyond the pride some Mexicans might feel for Slim’s worldwide success, his history embodies the eternal problem of the developing countries: weak institutions that restrict transparent growth. When there is corruption and the government institutions (elections, judicial power, bureaucracies, etc.) don’t work in a completely efficient and transparent manner, two things happen: many companies cannot prosper and they drown in a jumble of papers, inefficiency and bribes; and many (not all) of those that do prosper use unethical mechanisms to achieve success. But what happens in all the cases is that there is always a doubt about people’s honesty, because when governments are weak, temptation is too strong and hard to resist. If someone succeeds, was it because of him or because he received help?

This is also more noticeable in those situations such as privatizations. The neoliberal reforms introduced in Latin America didn’t have the expected results in terms of economic growth and social equality. On the contrary, poverty grew considerably, at the same time that investments decreased. Besides, terrible mistakes were made regarding policy design, and there were shocking incidents of corruption. Thus, it’s in this sense that the Aztec emperor’s fortune can be seen as a disgrace for Mexican people. Regardless of what Carlos Slim did or didn’t do –whether or not he used political and monopoly mechanisms– he represents the eternal cloud above Latin American governments, companies and future: the fact that one can become very rich through corruption and can be very poor despite working honestly.

What could Carlos Slim do to make all the critics of his career change their minds about his supposed bribe race to acquire an enormous economical power in Mexico –a country in which the average citizen is 40% poorer than the average Argentine? In my opinion, he could do what his successors on the list did and donate 1/3 of his fortune to improve the average Mexican’s life. I’ve been with Carlos Slim twice in my life, and I don’t think it’s impossible that he might do something like that.

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xm carreira on July 21, 2007  · 

Privatisations can be good or bad. There are lots of really bad privatisations even in quite liberal economies (i.e. railways in the UK, electrical supply in California…).

I did not know about the richness of Carlos Slim so your post was helpful. I wish he created a foundation to promote higher education, research and industrial development in Mexico, but I am very reluctant. I also expected Amancio Ortega (Inditex) to be another Barrié de la Maza (Banco Pastor-Unión Fenosa) in the NW of Spain.

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Simon on July 22, 2007  · 

“In my opinion, he could do what his successors on the list did and donate 1/3 of his fortune to improve the average Mexican’s life.”

It’s funny that everyone think it’s rich peoples duty to give most of their money to charity and poor people.

You critisize his way of making money, but does it get any better if he gives away 1/3 of his fortune?

I don’t hear any poor africans complaining about average european citizens not giving away 1/3 of their income =/

My personal opinion is that no matter how many or little money you have, as long as you earn them legally, the only person who have anything to say about how to spend them is _you_ and no one should expect anything else.

If I got lucky and earned billions, I would for sure give alot to charity, but I would get reeeeaaaally offended if anyone said I “should give 1/3(more/less) to charity” 🙂

That’s my opinion 🙂

I like your blog by the way, interesting reading.

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Simon on July 22, 2007  · 

And do you know if a translation of “A day without Slim” exists?

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yasinumur on August 6, 2007  · 

@ “Simon”

“””I don’t hear any poor africans complaining about average european citizens not giving away 1/3 of their income =/”””

I guess that what you DID NOT understand is that Carlos Slim is Mexican, and so the millions of poor in Mexico
You should learn to read and understand and the , just then post a comment, otherwise you just show yourself as an ignorant person trying to get a fught..

As for the article, congratulations, a very nice reading and researched, kudos for you.

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sergio cruz on August 9, 2007  · 

I am mexican and i think that the person who wrote this article doesnt know the huge invesment that many mexican enteprenurs have in argentina and that 150000 argentinians had inmigrated to mexico in the last decade,by far people live better in Mexico than in Argentina.
Nowadays the mexican empresarios are the most visionary in latin america and i think that bothers him
and yes is true,Mexico is a country were half of its population is poor, but life is a mistery isnt’t it.

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pedro on August 10, 2007  · 

you think because donating 1/3 of your money will help like gates and buffet did come on if i donate 20 dollars to a poor family i have to be donation 20 dollars a month for the rest of my life and the family would be as poor as always but if you give them a job and instead of donating money you give them a pay check for there hard work trust me there family would be getting much better and they woulnt have to eat my 20 dollars that how buffet things and that what he is doing. for the ignorant people in here that doesnt know that how he is helping people plus shit go read this read the economy part and than come here and write ok north americans ajaja

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pedro on August 10, 2007  · 

like all of u people says omg(oh my god) The fact is that the Slim’s holdings monopolize 40% of the Mexican Stock Exchange and his incomes are worth 25%

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rob a. on August 17, 2007  · 

I thought Mexico had one of the most expensive telecommunications services in South/Central America? Slim’s Telmex has a virtual monopoly. I don’t have a problem with sucess by competition and efficiency,but with an expensive monopoly,I do. The good thing about Slim,though, is that he uses his profits to build and develop Mexico.

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Salvador on August 19, 2007  · 

Carlos Slim is a Mexican patriot that believed in his country , risked his money in the bad years of his country and made his fortune working out for his country, Poverty is a responsibility of the social and political systems,not only of the country itself but also the global political network and history ( What a powerful Mexico We may had if California and Texas were not stolen from us in 1848?)… true, internal politics also creates the monopolies that creates this types of fortunes, but, what about the homeless people I have seen in my countless trips to the US ?? is Gates responsible of all the Louisiana poor people that got uncovered after the 2005 hurricane?? Having a third world business leader in Latin America may be more good than bad for the Latin economies,Yes señores,in Mexico We are still all of us indians but now wear the feathers only at home .

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Mario on October 16, 2007  · 

I think most people in the U.S. find it interesting and surprising that someone from Mexico is the richest man in the world. However, that is mostly a matter of arrogance and to some extent ignorance when it comes to an understanding and knowledge of economic and political affairs outside the U.S. border. The average American has a limited appreciation for just about anything and everything outside the U.S. This is particularly true of those Americans with limited travel outside the U.S. The media also plays an important role in this misperception most Americans have about Mexico. The media never tells you that Mexico has the 11th largest economy in the world and that Mexico ranks 17th in the world with the most billionaires. Certainly Mexico has its share of significant economic and political problems much of which is driven by its i) disproportionate distribution of wealth, ii) heavy corruption and iii) drug trafficking. These underlying conditions limit economic growth, free trade and more importantly job growth in Mexico resulting in millions of Mexicans seeking economic opportunity in the neighboring U.S. Most Mexicans which come to the U.S. are the unemployed and very poor of Mexico. That’s mostly what Americans see on the television news — poor Mexicans crossing the U.S. border illegally. No one is interested in news reports about educated, middle class and upper class Mexicans not needing to flee their country because they can afford to feed their families and can afford to purchase a home. That’s not interesting and it doesn’t sell newspapers.

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Ricky on November 24, 2007  · 

by donating 1/3 of his wealth, i don’t think he meant dollar for dollar. he most likely meant helping in building the future of the country, like education, jobs, and other means of improving the life and promoting the well being of his impoverished people. as far the legality of his fortune, no one is sure whether it is or it is not!

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Paul on December 28, 2007  · 

What the writer says is true, it´s not ignorance. It´s not just about making the money legally, but also honestly. In Mexico there are no monitors or enforcers of fair business practices it appears, even if there were, corruption would kill them. Also, there are no laws in the U.S that state that any business be owned in the majority by a U.S. native born citizen. Only in Mexico. Slim´s wealth comes largely from the oppression of the country´s poor who pay large and unfair prices for products and services, especially telephone charges. I am one of them as I live in Mexico. No mexican government official will stop him because he has more money than the government and will simply pay bribes. The point of the article is that as such a large percentage of Mexicans are poor, Slim´s wealth only proves the huge wealth dispartiy within the country. Slim is the reason we pay such large and unfair prices in a country where we earn very little money, unless we work for the government and steal money, that is. Put the same Slim in the U.S and he´s no where near the richest man because you can´t buy the government there. I love Mexico but come on, let´s be real, the rich become rich only at the expense of the poor and very few “rich” have become so by working honestly. It´s unbelieveable that in this country a congressman can actually decide how much money he will earn and decide to keep government surplus funds for christmas bonuses. Its enough to make one sick. But, VIVA México, right?

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Edgar on February 4, 2008  · 

Ok. First I want to say something about what the author wrote about 60%of Mexico is poor, this is old data since the movie industry and the percentage of rich people is growing everyday more. Now its the 50%. Now yes of course you dont see that much poverty on the coast of Argentina since the real poverty is by the center of the country.
Now i think he meant Mexican Golf, or well Golf of Mexico, where all the oil companies or company have the factory to treat the oil. That makes the value of property go down, and since its really cheap of course only really poor people can buy in that area, which is the reason of why you see alot of extreme poverty around that area.
Now corruption is everywhere, we can see it on the reelection of Bush 4 years ago.
I dont really agree that someone rich has to give money to the poor people, because they are poor because they want to be poor not because the country is not allowing them to be rich. THe problem with mexicans is that they are lazy,now im not saying everyone is but must of them. The economy of Mexico might go even higher if Slim shares the company. or it might not. he has good things as well. The bad thing is that, yes, he might be showing how bad the corruption could be in Mexico. But he is showing to other Mexicans thats its possible to get richer no matter what, that they will have to work hard, of course, but that is in every single part of the world.
By the way I am Mexican and in my opinion ,Mexico is not having any economic problems anymore

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dawood salma on February 19, 2008  · 

i think i,ts really awesome what mr. carlos is doing and what he is about to do.I am just inquiring if i can be one of the lucky people he is sponsoring.I really need help.

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Monica on May 10, 2008  · 

Well done!!! I fully agree that there is no pride for Mexicans to have a men like this…Diego Rivera, Pancho Villa, Emiliano Zapata, Carlos Monsivais, Subcomandante Marcos? Yes!! “Heros” are defined by their capacity to give themselves to others. I think that some other comments missed the point of your article and try and turn the discussion into a simplistic dicotomy – Mexican versus Gringos. I particularly would like Slim to keep his hands off my country, Uruguay and invested somewhere else, not because he is from Mexico – who I love dearly – but because he would be controlling substantial part of what I consider should remain within Uruguayan control, as much as possible (read goverment).

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Carmen on August 12, 2008  · 

Monica, do you know who Pancho Villa was?
Pancho villa was a man who belived in stealing from the rich to give to the poor… Just like Robin Hood, remeber him? (Of course Mr. Villa was cynical about it) He was notorious for doing everything he did… But then again this is not about Pancho Villa, Its about Carlos Slim…. And I do agree with most of the people here… Mexicans are poor because they want to be poor. No one is holding them down to their life style.

Born in Mexico and raised in the United States, let’s be honest the only reason I live here is because my father wanted to earn more money, he didnt want to settle making 150 pesos a week. However, could have gotten a great education in the Universidad Autonoma de Zacatecas. My abuela was willing to pay for his career, but just like the typical Mexican decided to go to “El Norte”. I don’t blame Slim for living in the US I praise my father for being a lazy bum and not wanting to get an education.

Anyway, hopefully I wont get knocked up by some ex convict named Jose a.k.a Pelon. I want to continue school, go to college break this stupid Acheivement Gap and become and educated Colored “Mujer”.

Unlike Slim, I will give back to my country, I just wouldn’t know which one to start with, as far as I know both countries are just as F**** up.

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Eduardo on March 11, 2009  · 

Mexican Labor with no doubt is on top of all Latin Americans countries but many Mexicans don’t have good European manners like the rest of the Latin Americans countries even though Mexico was conquered by Spain.
Argentines in the other hand are more Europeans.
Mexicans little by little start getting there and like Carlos Slim eventually all Mexicans will be at the same level. Then you will be able to understand that poverty in Mexico is mainly due to ignorance.

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