“Charity Doesn’t Solve Anything” According To Richest Man Alive

A guest post by Michael –

Since my forum/blog is about credit card offers, that’s normally what you will see me writing about; superficial topics related to cash back, balance transfers, and the like. So when I have the opportunity to blog about something other than credit cards – and instead – a topic that actually matters, I jump for it. Charity is one of those topics that matter, but according to the richest man alive it does not.

If you’re not familiar with Carlos Slim, he’s a Mexican business tycoon who happens to be the world’s richest man for two years and counting. Over the decades he has acquired stakes in a broad array of companies and industries, but is most famous for being “Mr. Monopoly” thanks to Telmex – a company which has a 90% marketshare of Mexican landline phones.
So much are we talking here? His wealth is equal to 7 or 8% of Mexico’s GDP! $74 billion for 2011. That’s almost 40% higher than the $53.5 billion he had last year. Despite the fact he’s making money hand over fist, most of this worldly wealth of his stays put in his piggybank. In his own words, here’s why:

“Trillions of dollars have been given to charity in the last 50 years, and they don’t solve anything”
“To give 50%, 40%, that does nothing” (in reference to the Gates-Buffett Giving Pledge)
Before we get to his next quote, I just wanted to say… how the heck can he even make such broad statements like that? Giving hasn’t solved anything?!
“What we need to do as businessmen, is to help to solve the problems, the social problems,” he explains. “To fight poverty, but not by charity”

That last quote may sound less brash – maybe even sensible – upon your first glance of it. He says that “being a Santa Clause” is not the solution to poverty and building businesses is. “The only way to fight poverty is with employment.”
With all due respect Mr. Slim, I completely disagree with you and here’s why:

Reason #1: You first have to be able to work
Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime. I’m all for that mindset. But what if the man physically can’t work yet, due to malnutrition and disease? Or maybe the man isn’t starving, completely. But he has to spend several hours every single day fetching water and – if he’s lucky – gathering firewood to boil it. You spend seconds flicking a faucet, he has to spend hours.

In Western societies, the vast majority of us are able-bodied and are ready to work at the drop of a hat, if need be. If we’re unemployed, there’s a good chance we still have a roof over head, food on the table (even if it’s not our own). I lived below the poverty threshold for years, but my dumpy shared apartment and broken-down car was still living in the lap of luxury, compared to what even the well-to-do have in say, the horn of Africa.

So yes, in places like the US, employment is the solution for many [but not all] living in poverty. But that’s because many [but not all] in this country have their basic necessities already; food, water, emergency healthcare, etc. We have a leg up. You won’t find that everywhere… there are basic needs that need to be met first and without charity, that’s unlikely to happen.

Reason #2: Some won’t ever be able to work
Okay Mr. Slim, let’s say we follow your advice and erect a sweatshop as an act of charity (ha). Chances are there indeed will be many able-bodied individuals who can slave away on those sewing machines, widget makers, or whatever product is being concocted.
Alright so we have some folks working and it’s all gravy, but what about everyone who physically can’t work? Tell me Mr. Slim, do we throw the quadriplegic to the wolves since he can’t participate in this “solution” of employment?
For those who are truly unable to work due to physical or mental disabilities, then charitable acts of some form or fashion are ultimately the only thing that can be done. They can’t be taught to fish, so the fish will have to keep coming from elsewhere; either from the public or private sector (charity).

In the U.S. there are some forms of public assistance, but whether they operate sufficiently is another can of worms. Saving that argument for another time, let’s just talk about the other 95.2% of the world’s population for a moment. Nearly 50% of them live on less than $2 a day. What help do you think the disabled are given in those places? Do you think the governments in those countries are sending them Social Security checks and food stamps? Not a chance. In many of those places, there is zero – ABSOLUTELY ZERO – help from the government for the sick, blind, and lame. That leaves charity or nothing at all.

Reason #3: How much is enough, Mr. Slim?
Based on what he has said in various interviews, he won’t be bequeathing his estate to charity when he dies. So where will it go?
Even if his six children were left with “only” $1 billion each, it would be enough to support literally the most extravagant lifestyle imaginable. Each could buy their own Gulfstream 500 at $60M, throw down $100M on real estate, and they would still have $840M left over – each of them – to spend on sustaining that lifestyle. So that’s $6 billion accounted for. Is it really that repulsive to you, Mr. Slim, to divvy up some of that other $70 billion or so “being a Santa Claus” and helping some folks in need? Even if it’s only the sick, blind, and lame whose poverty cannot be cured with a job?

Michael runs CreditCardForum, a site for discussing credit card offers and benefits which admittedly, aren’t important at all in the grand scheme of things.

(Note from Joe – I met Michael this past weekend at the first annual Financial Blogger’s Conference. A warm, genuine person, it was an honor to spend some time and get to know him.)