Carlos Slim, The World's Richest Man

Carlos Slim is now the richest person in the world. Congratulations, Mr Slim. In honor of the news, let's generalize wildly from this one datapoint.

• Slim, like the man he ousted, made the bulk of his fortune in what investment bankers like to call TMT: technology, media, and telecommunications. Mainly the phones. His bank is tiny, his land holdings are negligible; the overwhelming part of his wealth is basically on paper, in the form of stock in his companies – or, as it's also known, future profits. You could make a billion dollars a year for an entire working lifetime and still not become as rich as Carlos Slim: in order to get this kind of wealth, earning money isn't enough. You need to build and own a company, ideally with...
• A monopoly. But while Microsoft's monopoly was global, Slim's monopoly is very local – it's basically confined to Mexico. And a very large part of his wealth comes from his holdings in other countries or other industries, where he has no monopoly at all.
• Is it surprising that the world's richest person is Mexican? Yes. Mexico is not particularly huge, nor is it off the charts in terms of inequality, nor does it have massive oil wealth. (And insofar as it does have oil wealth, that doesn't seem to have helped Slim very much.) Mexico is not a fast-growing emerging market like China, nor is it an established superpower like the US. Really, it's just another second-tier country, from a big-picture geopolitical point of view.
• But what about Nafta? And Mexico's position neighboring the US? Surely that helped Mr Slim? Again, not really. When Slim expanded internationally, he looked south, not north. And although he does own some manufacturing companies which export to the US, again they're pretty small in comparison to the rest of his holdings. Indeed, by far the single largest portion of Slim's wealth can be put down to one thing:
• Prepaid, pay-as-you-go cellphones. When the rest of the world was trying to lock everybody they could into long-term cellphone contracts, Carlos Slim was making billions from Mexicans paying for their calls in advance. It's a business model which has only ever been niche in Europe and the US, but it's huge in Latin America, and it has made América Móvil the envy of other cellphone companies around the world.

Which means that Carlos Slim is basically a very astute businessman. He's not some kind of synecdoche for the 21st Century Globalized World; he's just really smart, as well as (of course) lucky in terms of being in the right place at the right time when Telmex was privatized. But Telmex alone would never drive Slim to Number One on the global wealth chart. That position is entirely due to América Móvil, which was Slim's creation from day one.

Update: A loyal reader points me to a survey by the UK telecommunications regulator, Ofcom, which says that in 2003 71% of mobile phone users in the UK used a prepaid package, while only 26% had a monthly contract. (The other 3% had an all-in-one package.) So pay-as-you-go seems to be just as popular in Europe as it is in Latin America.

 

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