October 02, 2006

Memo From Mexico, By Allan Wall

Mexican Magnates Make More Money—Mexican Migrants Keep Heading North

Mexico is a desperately poor country, we’re constantly told, and if we don’t open the borders all those poor Mexicans will starve to death.

It’s not true. But it’s an argument used to make middle class Americans feel guilty enough to tolerate mass immigration.

By world standards Mexico is not that poor—except compared to the United States. About half the country lives below the poverty line.

It’s not because there’s no money here in Mexico. There’s a lot. Mexico has a fabulously wealthy upper class.

As I discussed in a previous Memo from Mexico, Mexico has at least 10 billionaires. And that’s in addition to mere millionaires, of which there are many. (And when I say millionaires and billionaires, I refer to dollar millionaires and billionaires—not pesos.)

The wealthiest Mexican of all is Carlos Slim, the third-richest man in the world, right behind Bill Gates and Warren Buffett.

And Slim is getting richer. In March, Forbes magazine reported that Slim was worth 30 billion dollars. In August, the Arizona Republic reported his wealth at 37.6 billion.

Apparently Carlos Slim made 7.6 billion more dollars in just five months. Not too shabby.

So what is Carlos Slim doing to help poorer Mexicans?

Well, let’s be fair. Slim has a few charitable foundations with endowments adding up to about $3 billion dollars. That’s commendable.

Reuters reported in September that Slim is willing to give away part of his wealth to help poorer Mexicans. [World’s Third-richest man to give away chunk of fortune CNNMoney.com Sept. 6th, 2006]

The Reuters article reported that

“… Carlos Slim, the world's third-richest man, will give away a chunk of his fortune by matching donations to health, education and social programs in Mexico, a close aide said Wednesday.”

The aide, Arturo Elias, explained the Slim giveaway plan:

"We want to offer Mexican or foreign foundations that we will match any amount they invest in social work in Mexico. The idea is social programs focused on real needs: education, health, nutrition, research..."

That sounds good, as far as it goes, but it’s still vague.

If Slim really wants to help reduce Mexican poverty, it seems to me that investing in employment-providing enterprises is the way to go. More jobs and better-paid jobs.

Well, Reuters tells us, Slim’s thought of that:  “Slim has in recent years become increasingly vocal about the need to create more jobs and improve education in Mexico.”

Well, the guy has 37 billion dollars. What’s he waiting for? He can invest his money right now!

Slim has advice for Mexican politicians as well.

"He (Carlos Slim) spearheaded an initiative in 2005 that called on politicians to reform Mexico's justice system, fight crime, boost public finances, improve health and education and develop infrastructure."

OK, that’s all great, but how about looking for more ways to use his own money to invest in job-creating enterprises in Mexico?

But it’s encouraging that even the mainstream media is noticing Mexican wealth these days. Check out the informative article for the Arizona Republic entitled Mexico’s Rich Build Dynasties. [By Chris Hawley, August 16th, 2006]

So what are Mexican magnates doing with their wealth? Well, some of it they are investing in the United States. In 2005, Mexican plutocrats had 6.7 billion dollars invested in the United States. You might even be buying their products.

Some are obvious. Corona beer, for example. That’s owned by Maria Asuncion, Mexico’s richest woman who’s now the wife of Tony Garza, Bush crony and U.S. ambassador to Mexico.

But a lot of Mexican products are things we’d have never guessed.

How about Mabe? That’s a Mexican-owned company that manufactures 35% of the refrigerators and stoves in the U.S.

Other Mexican-owned products are Thomas English muffins, Oroweat bread, and Entenmann pastries.

Grupo México, owned by the Larrea family, owns a few mines in Arizona.

Carlos Slim owns the CompUSA chain, America Móvil and part of Saks Fifth Avenue, and the Texas Supreme Court just handed him a victory in a big lawsuit (Ganan Carso y Sanborns pleito legal en Estados Unidos, Notimex, August 30^th).

The biggest cement company in the U.S.A is Mexico’s Cemex firm, owned by the Zambrano family.

So if these guys are so rich—why can’t they invest more money in Mexico?

If they can buy up enterprises in the U.S. and other countries, why can’t they build more factories in Mexico? Why can’t they invest in depressed rural areas? Why can’t Mexico’s super-rich get together and put together a development plan for Mexico?

And why doesn’t the government of Mexico put more pressure on Slim and other magnates? According to the Mexican Constitution, Article 25, the government of Mexico is responsible for the guidance of the Mexican economy.

So why doesn’t the Mexican government use its constitutional authority to pressure Mexican tycoons to invest more in Mexico?

Why doesn’t the Mexican congress change Mexico’s tax laws to encourage more domestic investment? There are ways to do it.

The reason: Mexican leaders already have another economic program.

Mexican political leaders (of all parties) and Mexican tycoons prefer this other economic program, because it’s much simpler for them.

The other, preferred economic program is called EMIGRATION.

For Mexican magnates, it’s easier to buy up U.S. companies than figure out how to create more jobs in Mexico.

After all, they have the American taxpayer to take up the slack north of the border.

And, for some mysterious reason, that’s just fine with our own president.