Tuesday, September 27, 2011

Advice for America from a Mexican Tycoon

Carlos Slim Fixes the Economy
Mexican telecom tycoon Carlos Slim Helú—whose family fortune of about $74 billion makes him the world’s richest human (well ahead of Bill Gates and Warren Buffett on the Forbes list of billionaires—plays against type.


How do we fix this recession?

“With the same things that were done in 2000 and 2001, when it was temporarily solved with big expenditures and very aggressive monetary and fiscal policy,” he tells me. “Aside from lowering taxes, we should be directing more money to the real economy, not to the financial economy. The volatility of the markets is so great that more is won or lost in a single day than in five years of accumulated interest. And that’s not a good thing.”

I ask if he agrees with President Obama’s so-called Buffett rule, which would mandate that rich people like Warren Buffett—who benefits from a 15 percent tax rate because his money comes from capital gains—pay at least the same rate as their secretaries.

“I don’t know what Warren Buffett pays,” Slim says, “but I think that the fiscal policy should be fair. You don’t need to raise taxes on rich people, because they create capitalization and investment. But you need to tax speculation—meaning capital gains. Why should it be just 15 percent? Salaried people pay 35 percent. Why shouldn’t that be paid on capital gains?”

Anything else?

“The welfare policies that you are following—you and Europe—are unsustainable,” Slim argues. “You cannot have people retiring at 60 years old, and you cannot provide universal health care the way you do. That’s crazy. The focus should be the support of small- and middle-size business. That is where the employment is. And there should be investment in the real economy. Infrastructure is an example. And the best way to do that is with the private sector. It’s more efficient.”

I ask what should be done about the terrible violence surrounding the illegal Mexican drug trade, with grisly murders in the tens of thousands.

“It’s a problem coming from the United States,” Slim says.

Because of the demand?

“Because of everything. You stay with the money and the drugs. We stay with the weapons and the violence. And you’re selling the weapons to the consumers in Mexico. And the retail price [of the drugs] is, I don’t know how much bigger, let’s say 10 times in the U.S. what it is in Mexico. And that means the demand is here and the money is here. It’s like what used to happen during Prohibition in Chicago. You had a lot of violence there.”

What’s the solution?

“Follow the money.”

Would it help to legalize the drugs and, as with Prohibition, eliminate the incentive for crime?

“It doesn’t ‘help,’ ” Slim says. “It finishes.” [...]

Interesting. The article has a photo.

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