“My life has been about competition,” declared Mexican tycoon Ricardo Salinas. Salinas, the founder and chairman of the international conglomerate Grupo Salinas and one of Forbes’ “World’s Richest People,” was discussing his bid to challenge the telecom monopoly of his countryman Carlos Slim, the richest person in the world. Salinas characterized his long relationship with Slim as “good” but warned of the dangers of price discrimination and noted that they “parted company” over the issue.
Moderator Matthew Bishop, business editor of The Economist, opened the evening by relating to a standing-room-only crowd at the Paley Center in Manhattan a Twitter exchange between the two men from earlier in the day. When Bishop tweeted news of the interview and a request for questions to his followers, Salinas “bravely replied, ‘I am ready.’”
Bishop began the conversation by asking Salinas for his views on the global economic climate. “Europe is a big problem, and America is coming back,” said Salinas, who was wary of European countries with debts they can’t possibly pay back. Those governments are in “a film we already saw in Mexico.” He was cautiously optimistic about the U.S. About his own country Salinas was downright bullish: “Mexico is doing very well because it’s a young country, [and] there’s lots of human capital” with a population of 112 million.
“Mexico actually seems to have come through the past three years pretty much better than everyone felt it could at the time,” agreed Bishop. “What’s been the secret?”
Salinas offered a Mexican expression: “If America catches a cold, then we get pneumonia.” Yet while the financial crisis of 2008 and 2009 was terrible for Mexico, Salinas believes the economy came back quickly thanks to a national character that is generally hardworking and honest and a strong internal market that will only improve as more Mexicans enter the middle class.
Salinas acknowledged that most of the news out of Mexico is bad. But he feels that the media focus has been skewed by the fact that “good news is no news.” President Felipe Calderón’s drug war is “a failed strategy,” but the problem isn’t just a Mexican one. “As long as American drug addicts consume these huge amounts of drugs and continue to send tons of cash into [Latin American] countries,” he asserted, “there’s no way this war is going to be won.” He feels a better strategy would be to treat drugs as a health problem–and to decriminalize drug use in both countries.
In Salinas’ view, Mexico is a victim of longtime political mismanagement. He recalled how, in the early to mid 1980s, his family’s business went bankrupt as the U.S. dollar went from being worth 20 pesos to being worth 800 pesos over five years. Salinas managed to turn the company around, and what was 54 stores became thousands, along with a banking arm that serves millions today.
In one year, Grupo Salinas’ microfinance program at Banco Azteca was able to move from zero customers to 400,000; next year they expect 1.5 million women to take out loans. Recently, after meeting with 1,200 of these women, Salinas was “amazed” by the creativity of the businesses they’d started. The only thing holding them back, he said, were government restrictions that make getting a small business off the ground difficult.
Bishop asked about an immigration-related event that Salinas and Mayor Michael Bloomberg are putting on in New York. “We need to look at things the way they are,” said Salinas. There are millions of immigrants in America, and they aren’t going away. In an age of free exchange of information and trade across the border, human capital, too, he argued, should flow freely. He swiftly dismissed Republican talk of electrifying the fence between the two countries as “crazy.” America shares one attitude toward its immigration problems and its drug problems: “Make believe it doesn’t exist.”
Bishop asked Salinas if, like Bill Gates and Warren Buffett, he’d be signing “the giving pledge” to give up half his wealth by the end of his life. Probably not, he said, citing the fact that it’s a family business he’d like to see continue into the future rather than a commodity to be bought and sold by an investment bank. He does philanthropic work through Fundación Azteca, which supports a variety of charities including youth orchestras.
During an audience question-and-answer session, Salinas was asked if he was looking to grow Grupo Salinas’ investment in the U.S. Yes, he said, and he’d love to come to the U.S. with a bank for the bottom of the economic pyramid. But “the interest rate cap is the biggest obstacle.” He explained that the fixed cost of any size loan–be it $500, $5,000, or $5 million–is the same, and so the interest rate for smaller loans is necessarily larger. For a $400 loan, you need a 100-percent APR–which is still “the best and most competitive option” available to the poor and for which he believes a market exists in the U.S.
Bishop concluded the evening by asking if Salinas is worried about America. “Fifteen trillion dollars in debt!” Salinas replied. This country needs to cut spending. But ending on a more positive note, he reiterated his fundamental optimism and belief that human capital–young men and women in both the U.S. and Mexico–comprise an immense force that will overcome the current economic climate.
*Photos by Don Pollard.