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Who's the new richest person in the world?

Mexican businessman Carlos Slim, with a net worth of $67.8 billion, has passed Bill Gates to become the richest person in the world.
Mexican businessman Carlos Slim, with a net worth of $67.8 billion, has passed Bill Gates to become the richest person in the world.
Image used in the public domain

­How would you feel about making $19 billion in a year? That's what Carlos Slim Helu did for the last six months of 2006 and the first six months of 2007. A Mexican financial magazine called "Sentido Comun," or "Common Sense," believes that the 67-year-old Mexican billionaire, who's frequently referred to as Carlos Slim, is now the richest person in the world. The magazine estimates that Slim is worth $67.8 billion, whereas Bill Gates, the richest person in the world for more than a decade, is worth about $59 billion.

How did this immigrant son (his father came to Mexico from Lebanon) become the "Warren Buffett of Latin America"? For one, he's shown a knack for turning around struggling companies. Shrewd investments and a booming Mexican stock market also help. From January 2007 through the end of June 2007, several major companies that Slim is involved in experienced huge gains in their stock prices. Some of those gains include:

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  • America Movil -- 39 percent
  • Telefonos de Mexico (Telmex) -- 34 percent
  • IDEAL -- 28 percent

Slim's companies collectively make up about half of the Mexican stock exchange's value. He owns a third of America Movil, which amounts to $36.2 billion. He also owns computer retailer CompUSA, but is trying to sell it. Besides telecommunications and computers, Slim has a wide range of holdings and investments, including construction, tobacco, restaurants, retail stores and music.

Charity and Challenges

Around 53 percent of Mexico's 108 million people live in poverty [Source: BBC]. Because of this and of the examples set by billionaire businessmen/philanthropists Bill Gates and Warren Buffett, Slim has been called on to give more money to charity.

Recently, Slim increased his charitable contributions. The public can view his art collection in Mexico City's Museo Soumaya, named after Slim's deceased wife. His company Telmex has its Telmex Foundation, whose $1.2 billion endowment makes it the largest corporate charity in Latin America. In 2006, he increased the size of the Carso Foundation, a charity run by his family, to $2.5 billion. He has also reportedly spent $4 billion on education and health projects, such as paying for operations for poor children, and contributes to an effort to revive Mexico City's historic downtown area.

Slim's fortune and vast business holdings already make up a formidable dynasty, one that's unlikely to be disrupted. Three of his six children help run his business empire. Unlike the United States, Mexico does not have capital gains tax or an estate tax. Slim could sell his stocks and would not be taxed on the profits, nor will his estate be taxed upon his death. He may, however, face government regulation in the near future. Many industries in Mexico are dominated by one or two companies, and the government is being pressed to crack down on monopolies. Telmex, a landline phone company, claims 90 percent of the Mexican market. America Movil has 70 percent of the Mexican cell-phone market and is the biggest cell-phone carrier in Latin America. Despite any impending regulation, Slim has money, a diverse group of companies, well publicized charitable contributions and a raft of lawyers on his side. Undoubtedly, his fortune will not suddenly evaporate, and he may remain the richest man in the world for some time.

On the next page, we'll take a look at the world's former richest man and what it means to be among the mega-rich.

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Bill Gates retired from Microsoft to focus on his charitable foundation, the largest in the world.
Bill Gates retired from Microsoft to focus on his charitable foundation, the largest in the world.
Image courtesy of the President of the Republic of Poland

Still identified by many people as the richest man in the world, William Gates III, Harvard's most famous dropout, now comes in second to Carlos Slim. "Common Sense" estimates the Microsoft founder to be worth $59 billion. His good friend and occasional business advisor, Warren Buffett, is the world's third richest man, believed to have a fortune of around $52 billion.

Gates has retired from most of his duties at Microsoft in order to focus on the Bill & Melinda Gates Foundation, the largest charitable foundation in the world. The foundation had $33.4 billion as of March 31, 2007, with almost $30 billion more on the way from Buffett, who has pledged to give away most of his great wealth.

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Gates' fortune has fluctuated tremendously because much of it was tied up in Microsoft stock. His net worth peaked at around $100 billion during the height of the dot-com boom. Gates now sells 80 million shares of Microsoft stock a year, though half of his worth is still tied up in Microsoft [Source: Forbes]. Gates' investment diversification has made his net worth difficult to verify. Much of his non-Microsoft investments are managed by Cascade Investment, LLC, a private equity firm. The firm invests on his behalf in a wide range of companies, some of which, like the photography company Corbis, he owns.

With private and public investment soaking up much of the wealth of the world's mega-rich, the title of the world's richest person may continue to shift. No one individual has $30 or $40 billion in cash or gold, so the mega-rich can see their fortunes fluctuate up and down by billions of dollars a year. After all, Gates was once worth more than $100 billion, so "on paper" he's lost $41 billion. Most of Carlos Slim's fortune is tied up in the shares of the companies that he owns, which Slim says he has no intention of selling, so his net worth is prone to some fluctuation as well.

John D. Rockefeller was one of the richest people in human history, as well as a noted philanthropist.
John D. Rockefeller was one of the richest people in human history, as well as a noted philanthropist.
Image used in the public domain

Reportedly, Slim has said he's not interested in competing to be the richest person in the world, but it's interesting to consider what actually grants a person that title. Is it who has the most wealth on paper? Or is it who has the biggest bank accounts, the most important investments, priceless art or the power to influence world affairs? Ownership can be a tricky question, too. Many heads of state, both ancient and modern, have had the resources of an entire kingdom or empire available to them, but may not personally "own" them. Look no farther than the royal families of some Middle Eastern states. The vast oil wealth these countries garner is frequently distributed between a variety of state-owned and private companies, royal family members, investment groups and offices of the government. At times, it can be difficult to pinpoint where the government ends and private ownership begins.

It's possible to identify who was likely the richest American ever. John D. Rockefeller (1839-1937) was America's first billionaire. At one point, his wealth comprised 1.53 percent of the U.S. gross national product (GNP), something not even Bill Gates, at less than a quarter of a percent of U.S. GNP, can claim.

For more information about Carlos Slim, the mega-rich and important charitable foundations, check out the links on the next page.

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Sources

  • "#1 William Gates III." Forbes.com. March 8, 2007. http://www.forbes.com/lists/2007/10/07billionaires_William-Gates-III_BH69.html
  • "#3 Carlos Slim Helu." Forbes.com. March 8, 2007. http://www.forbes.com/lists/2007/10/07billionaires_Carlos-Slim-Helu_WYDJ.html
  • Adams, Lisa J. "Report: Carlos Slim World's Richest Man." The Associated Press. Forbes.com. July 3, 2007. http://www.forbes.com/feeds/ap/2007/07/03/ap3882862.html
  • Barr, Alistair. "Gates 3.0: Stock-picking for the world's richest man." Market Watch. Nov. 10, 2006. http://www.marketwatch.com/news/story/Story.aspx?guid=%7BEE769ECD-837F-4340-B2F0-FB2E89AECF23%7D&siteid=
  • "Mexican 'world's richest person.'" BBC News. July 3, 2007. http://news.bbc.co.uk/2/hi/business/6267714.stm
  • "Mexico." CIA World Factbook. June 19, 2007. https://www.cia.gov/library/publications/the-world-factbook/print/mx.html
  • "Overview." Corbis. http://www.corbis.com/corporate/overview/overview.asp
  • "Richest Americans in History." Forbes.com. Aug. 24, 1998. http://members.forbes.com/asap/1998/0824/032.html
  • Smith, Geri. "Carlos Slim's Fat Fortune." Business Week. July 4, 2007. http://www.businessweek.com/globalbiz/content/jul2007/gb2007073_887601.htm?campaign_id
  • "The Wealthy 100: A Ranking of the Richest Americans, Past and Present." Get Rich Slowly. July 29, 2006. http://www.getrichslowly.org/blog/2006/07/29/the-wealthy-100-a-ranking-of-the-richest-americans-past-and-present/
  • Thelwell, Emma. "Carlos Slim usurps Bill Gates as richest man." The Telegraph. July 5, 2007. http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/07/04/bcnslim104.xml

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