Vast Wealth in Mexico - But Not For Sharing [Updated]

Mexican kids juggling for tourists near the Tijuana border crossing by Roberto63

Carlos Slim, a Mexican, is now the world's richest man, beating out even Warren Buffett and Bill Gates. You probably have read this in the papers. What you probably haven't heard is just how obscenely wealthy this man is in real terms - he is worth $67.8 billion in a nation where half the population lives on less than $5 a day. Bill Gates is incredibly wealthy too, but he resides in the US, where the average income is more than three times Mexico's. Moreover, a huge amount of Gates' wealth comes from sales of his products worldwide, while almost all of Carlos Slim's wealth was generated in Latin America only. In other words, it's very debatable as to how much wealth he's actually bringing into Mexico, as opposed to simply taking it out.

Here's another way to look at it: Slim effectively owns 8% of Mexico's wealth. For Bill Gates to do that in the USA, his wealth would have to increase to $13 trillion, or 17 times its current total.

You might think, well OK, he is one really rich guy. But is this really a problem? The answer is yes.

The problem is that this is also a reflection of Mexico as a whole. While the average income in Mexico is about $10,700 (which is actually far above the world average), that income is distributed far worse than in the United States (where the average income is $44,000).

One article paints a pretty grim picture:

Islands of luxury Mexico's wealthiest residents inhabit a parallel universe of fortified mansions, posh shopping malls and separate movie theaters. They go to the United States not to work illegally, but to shop or attend Ivy League universities.

They live in surreal mini-cities of gleaming, geometric towers. And most are breathing a big sigh of relief that next week conservative Felipe Calderon will be sworn in as president and not his bitter rival, Andres Manuel Lopez Obrador, who vowed to end the privileges of Mexico's elite.

Experts say the expanding wealth comes mainly from the growth of manufacturing and exports under the North American Free Trade Agreement and the burgeoning telecommunications and banking industries.

"There are people who live in bubbles," said Guadalupe Loaeza, author of several books detailing the lives of the very rich, adding that there are some who don't even know downtown Mexico City. "They go to the markets like tourists, like gringos. Downtown seems like Calcutta to them."

In Mexico, the wealthiest 10% have an income 24.6 times that of the poorest 10%. In the United States, that gap is 15.9 times (In Europe, it hovers around 10 times). This may not seem like a huge difference at first, but in real terms it is, when you consider that there is far less wealth to go around in Mexico in the first place. On this chart, you can also see that higher inequality rates are all associated with dysfunctional economies. (Additionally, as you can see here, the rates in Mexico have gone down and the US have gone up almost precisely hand in hand with the rate of flow in illegal immigration.)

So what to do about this? I don't support forced redistribution of wealth; it was tried everywhere from the French Revolution, to Communist China, to Uganda under Idi Amin. It was a complete disaster in each and every case, causing entrepreneurs to flee the country and private investment to totally dry up.

Reigning corruption would be a good start. And it usually starts at the top. According to a report in the Jurist, three former Mexican presidents are directly responsible for mass killings of political dissidents. And no, they never faced justice for it. Making the wealthy pay their fair share of taxes would be another good tactic, as would cutting off the US as a "safety valve", preventing Mexico from exporting its disaffected populations to the US, thereby staving off a significant amount of political opposition.

Some other suggestions worth considering are detailed here. Whatever is tried, it should be done in a gradual manner.

Of course, there are other ways to get attention to your plight: In Mexico City, stark naked women [link removed - now broken] are making regular protests over a land seizure in the State of Velacruz 15 years ago. They claim the the governor at the time unjustly seized 2000 hectares of their village's land and jailed 350 people. (warning - graphic nudity at the link - and these are not young and beautiful models...)

UPDATE 09/07/2007 05:43:00 PM: Steve Sailer has a pretty good down and dirty rundown on just how Slim became so incredibly wealthy. It was, by and large, technically legal, but not terribly ethical.



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