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.