The Good, the Bad and the Wealthy
I have recently come across several reports where an internationally recognized NGO expressed its concern over increased inequality in Mexico, citing that in 20 years, the wealth of the 25 wealthiest families grew from $US25.00 billion to US$142.90 billion. In my opinion, the way in which these articles were written makes us think that for some strange reason, "being rich is bad". I think that this is not a message that leads to greater prosperity.
In a previous blog entry I shared a link to a video in which Margaret Thatcher debates the difference between inequality and wealth with a member of the U.K. Parliament.
Naturally I do not agree with those who confuse inequality and poverty or with those who want to convince us that wealth is somehow perverse. What is disgusting is poverty and we must fight it with all our efforts.
I can see that in our society wealth has been subject to a strange Manichaeism that sometimes glorifies it and sometimes demonizes it, in ways that are equally irrational. This Manichaeism is atrocious and it subjects us to underdevelopment. I would like to start by answering a question that I am frequently asked.
How does it feel to be a billionaire?
Precisely to answer this question I wrote one of my most widely read blog entries. The short answer is that I have always distrusted the famous "list of billionaires" and it is not something that is worth paying attention to.
To illustrate the complexity of this issue, first it’s worth asking: what is material wealth?, what advantages does it bestow?, how is it measured?, is it money in a bank account?, income after taxes, gold bullion in a vault ?, is it represented by the changing value of non-liquid equity deposited in firm hands?
For practical purposes, each definition is different. Apparently, those compiling the "lists of billionaires" use the latter definition, which is also not very valid due to the impossibility of liquidating the totality of a controlling interest in a corporation at market value and within a reasonable time frame, and also because the nature of the markets is always changing.
Behind all this, one of the points that I would like to illustrate is that wealth has different forms and even though we can often identify a "rich" person, we can barely agree on what type of material wealth matters the most and for whom.
Is wealth really "bad"?
I have constantly said that there are mindsets that prevail in Latin America that have become terrible obstacles on the road to economic development. Some of these mindsets are related to our concepts and myths about wealth. If we are able to destroy these fallacies and see wealth and its process of creation objectively, we will have taken a big step forward.
Paradoxically, in a Manicheanism bordering on schizophrenia, extraordinary properties, good and bad, are conferred on material wealth, which in the best of cases are unrealistic.
On the one hand, I can’t help but note how many people in our time have become famous only for being "rich" -or trying to appear so-, when in the past much more important traits were taken into account, such as wisdom, commitment, prudence, or courage, in achieving recognition among our peers.
In reality, despite all the power bestowed on them in the popular imagination, the so-called millionaires often administer only a fraction of the financial resources that a politician in charge of the state or federal treasury might control, which can reach tens of billions of dollars. Interestingly enough, the political power of the rich also tends to be magnified, which also is often much less than that of a lofty politician.
For these and other strange reasons, in Latin America the idea persists that "wealth is evil". From childhood on we are taught that "it is easier for a camel to go through the eye of a needle than for a rich man to enter the Kingdom of God." I do not think that being rich is bad in and of itself-unless, of course, the wealth in question is ill-gotten, in which case the law must be strictly applied, since the violation of property rights or the theft public property also plunges us into backwardness.
What bestows or fails to bestow virtue to wealth is the way it is managed to create or destroy our common future.
It is the key responsibility of those of us who have been given the task of administering wealth to think about how to rationally invest the assets that were given to us temporarily, because in the cemetery they will be of no use. At the end of the day, our legacy will be measured by the good that was created for society with these resources.
In my case, the wealth that I administer corresponds almost entirely to equity in companies that carry out a variety of activities and whose aim is to meet specific needs of millions of customers, a large part of them at the Base of the Pyramid.
My companies give credit and receive deposits, generate energy, offering insurance, informing and entertaining, providing connectivity, and producing means of transportation, among many other activities in which we face formidable competitors. They have also created more than 80,000 jobs and pay taxes.
If for some reason I were to sell off all of the equity that I control in order to distribute the resources among thousands of people, most likely such securities would lose a large part of their value almost immediately. This would make it difficult for us to resolve the problem of poverty, which is the real enemy that must be tackled, since, with the stroke of a pen, hundreds of thousands of direct and indirect jobs would be wiped out.
Viewed another way, let’s suppose that we decided to expropriate a large part of the wealth, in whatever form, from Mexico’s hundred richest families to be distributed among the million poorest families.
Hopefully this would eradicate poverty in Mexico. The most likely outcome, however, is that in the process, much of this wealth would disappear, probably in the hands of the political leader that expropriated it, as we have seen in Cuba, Venezuela and most recently Argentina.
Even assuming naively that this does not occur, maintaining wealth is almost as difficult as creating it, so that in any event, the only thing that would have been achieved is greater equality in poverty.
This is without mentioning the problem that, even with the best of intentions, all governments worldwide have proven to be terrible wealth managers.
Is wealth really the problem?
Some "experts" alarmingly point their finger at the wealthiest because they want to convince us that they are responsible for increased inequality, when the real problem is not inequality in and of itself, but poverty. The socialist models, by focusing on inequality, have only achieved equality in misery. Think of Cuba, Venezuela, and North Korea. Is this really what we aspire to?
We must be honest and ask ourselves if what is repugnant is that there are millionaires or, in reality, what we must reject is that in the 21st century, there are people living in extreme poverty, unable to meet their most basic needs. In the end analysis, no one has been able to demonstrate that the former causes the latter, as much as they have tried. Wealth is not a "zero sum game", just the opposite.
I have no doubt that the real evil is poverty and it is precisely in eradicating it is where we must focus all our creativity and energy.
Far from getting involved in the easy and useless exercise of attacking the rich for the sole virtue of being wealthy, we must think about how we are going to lift millions of people out of brutal grip of poverty in which they are mired, often for generations.