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Is Wealth Evil?

ICE Graveyard 3/05/2016 Ricardo B. Salinas
CEO PAY © Rob Friedman via Getty Images CEO PAY

My advisors assure me that defending millionaires is unpopular and politically incorrect. Nevertheless, in my opinion, the issue at hand is not about defending millionaires or billionaires in a senseless class struggle. Something greater is at stake, namely, our future.
Some prevailing Latin American mindsets represent terrible obstacles to the road of economic development. Therefore, we need to continue pushing for a cultural change to banish some toxic ideas that have poisoned our minds for centuries. My commitment is to do everything in my power to bring this about and if this requires publishing uncomfortable articles, please excuse me.Some people and organizations seek to promote the idea that "wealth is evil" when what is really unacceptable is poverty. For example, I recently came across an article with the headline: "Four businessmen own 9% of GDP." In this tendentious article, based on "information" from Oxfam, once again a group of successful businessmen are attacked because they "benefited from the privatization of public companies," which to begin with is nonsense.
The statement is senseless for many reasons, but mainly because the assets that were privatized in the 1990s, not only in Mexico but throughout the world, were not public property in the economic sense of the term but rather business-type resources that generate considerably more value in the hands of the private sector. Thanks to these privatizations, many governments managed to put their finances on a healthy footing and boost their economies, and Mexico was no exception.
The study by this NGO contains a number of methodological flaws. To begin with, it does not distinguish between public goods, in the economic sense, and private assets that typically lose value in government hands. The study also confuses market value with wealth, flows with balances, and inequality with poverty. One of its most notable shortcomings is that it does not differentiate between wealth concentration and wealth generation, the latter being the desirable direct result of business activity.
The article mentions the wealth of two owners of mining companies, but forgets to note that the market capitalization of both corporations is at a ten-year low given the worldwide drop in commodity prices.
They and other businessmen around the world have experienced a brutal decline in the profitability of their operations, at no cost to the public treasury, precisely because they are prepared to face these types of risks, with austerity and discipline. If this were not the case, they would not be successful businessmen. I wonder if we can say the same thing today about companies in government hands. With the 21st century well underway, some of these companies continue to be frequently capitalized with our taxes--instead of using this resources to tackle poverty as it should be.
The article also specifically mentions me as a "beneficiary of privatization," but omitted to clarify that the profitability of TV Azteca has been eroded by profound changes in the media industry around the world. It also neglects to mention that when it was in the hands of the government, TV Azteca was a company that posted huge financial losses that were always funded with public money.

Another big mistake in the methodology of the study is that it confuses the market value of a company with revenue: two very distinct concepts. While the former measures what investors are willing to pay for a company at a given time, revenue is a variable that is meaningless if costs and expenses are not subtracted to determine cash flow.
Do we want to put an end to the wealth or poverty?
A few months ago I wrote about this terrible tendency to see things in black and white, attacking wealth and exalting poverty, when we should be doing exactly the opposite.
Let's just consider the history of the last hundred years. In the former Soviet Union, North Korea, Cuba, and more recently in Venezuela, it has been shown that attacking businessmen, far from eliminating poverty, sinks economies into terrible backwardness and underdevelopment, because when material resources are confiscated, wealthy families simply take their human capital, which is far more valuable than money, to other countries. This is precisely what is occurring today in Brazil and until recently in Argentina and France. The loss of businesspeople in one country is a gain for another.
Those who propagate anti-business ideology in Latin America probably seek to lead their respective countries toward socialism, which is a form of government that destroys freedom and plunges millions into poverty -unless you are close to the top comrades.
Finally, we must consider that businessmen and entrepreneurs are an extremely valuable resource because: (1) they take risks that nobody is willing -or prepared- to assume; (2) they accumulate and multiply capital to deal with these risks; (3) they creatively and innovatively resolve problems; (4) they provide products and services that the government is unable to offer in an efficient, acceptable, and timely manner; (5) they create millions of jobs; (6) pay taxes, and last but not least, (7) generate wealth.
Inequality exists in every human society in which talent and other qualities are distributed or acquired in exponentially different ways. Let's just consider a musician such as Yo-Yo Ma, a soccer player like Lionel Messi, a filmmaker such as like Steven Spielberg, or a writer such as Mario Vargas Llosa. They are all extraordinary in what they do. We have never seen musicians clamor that Yo-Yo Ma "concentrates too much talent," for that would be absurd. The same applies to business.
The problem is not inequality in and of itself, which exists in all human fields, but poverty and the inequality of opportunity, which is what is really offensive. It is clear to me that this is where we should be concentrating our efforts, in creating opportunities for everyone to live a full life.
Attacking Latin American businessmen, far from resolving the problem of poverty in the region, will sink us into misery. Businessmen are an extremely scarce resource that we need to nurture.

Tackling poverty is no small task, but a good start is to create more successful companies that create jobs and well-being for families, as opposed to senseless public policies that destroy prosperity.

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