Mr. Carlos Slim met distinguished UNAM students, teachers and researchers to talk about diverse Mexico’s problems, Mexico’s insertion in the current world, its institutions, UNAM and the world as well.
The talk came about in UNAM campus. Dr. José Narro Robles, UNAM rector, welcomed Mr. Slim.
México City, June 21, 2010
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Carlos Slim Helú: Domestic economy is linked to market economy.
Ciro Murayama: Sure, of course. Let me underline production, which is linked to workers and wages. In fact, successful economic models tend to increase wage aggregation in respect to GDP. Let me assume that our economy is a tertiary one: How we could meet the employment challenge? Subsistence economy is becoming smaller. Agriculture jobs are gradually decreasing. So, the sum of subordinate workers is growing up. Subordinate workers not only include highly-trained productive labor force; it includes those distributing goods and services. So, we should distinguish small and medium-size firms from workers. Salesmen being hired by big firms hired are usually named “small businessmen”, while they actually are dependent workers. Reforma newspaper’s street vendors are called “small businessmen”.
Have you have envisaged a model for creating quality jobs, not only highly-qualified ones? I am not alluding to Warren Buffet-style’s philanthropy. I am thinking, instead, about an entrepreneurial model. Ford did create one by doubling wages at a decisive technological transition…
Carlos Slim Helú: In fact, Ford did double wages to stop labor rotation…
Ciro Murayama: Right, yet he profited from technological advancement to increase wages and create an industrial model resulting in middle classes expansion. We should think alike. Workers should be treated not as businessmen. How do you think about quality jobs in that economic era? Thanks.
José Narro Robles: Luis Abel León Mercado is pending for that round.
Luis Abel Léon Mercado: Good afternoon, I am glad in being here in with all of you fellows. I am afraid education has been overstated. There are three questions I’d like to pose: First, It seems that growing technology use implies educational revolution. I ask Mr. Slim how to train people for that new technological era. Mechanized agriculture greatly differs from plow labor. Mechanized agriculture demands new training ways.
Second, had we had many talented people, I’d not be worried about brain fly. How to transform scientific and engineer formation into trading goods?
Third, communication and technology had gone hand-in-hand historically. As Mr. Slim has said, our technology pace is not laggard, yet we need more openness. Think about Brazil and China. Why there is not Mexican manpower in both these countries? Why we have not a closer cooperation with them? One reason for that is absent State. How private actors could fill that gap? As we know, many private firms use to send employees to train abroad. How do you think about it, Mr. Slim?
José Narro Robles: Mr. Slim, please go ahead.
Carlos Slim Helú: Technology encloses many educational applications. Past education, elementary school above all, was less good than the current one. Past education rested upon learning by heart. Current education, instead, encourages thinking, research, examining. Past elementary education required you learning Aztec emperor names, birth dates and deeds by heart. You were also required to memorize verse and other texts.
There are many uses for technology in education. The first step is internet navigating, not as a goal by itself, just as a means, as Alán has correctly stated. Mixing up means with ends is a common error. By instance, macroeconomic stability (low inflation and low fiscal deficit) is just a means for growth, yet it has been conceived as a goal. We have lasted about 20 or 25 years in such a mess. The real goal is sustained development, social wellbeing, middle-class growth, etc.
Main current economics did assume that healthy public finance stood for automatic economic growth; imbalances were corrected by market forces. We know nowadays that such a condition is not enough. It is a means, not an end by itself. Technology is also an instrument for many goals, by instance knowledge and information access. Internet navigation for accessing information is like reading a book.
Elementary-school teachers should manage internet, of course. Ignoring it is like ignoring print word during the print era.
Information technology has become critical for higher-education mass-access. I am talking about all of the universities, mainly public ones. At least they adopt distant education, they will no be able to enroll growing applicants. In pursuing that goal, information technology stands for the fittest instrument.
Teachers would change their transmitting function by a conducting one: they’d coordinate the screen-broadcasted content being transmitted by the best teachers in all fields. All students, including the remotest ones, could have access to the finest content by the finest teachers. Examination could be performed by technology too. Such is the way for solving the enrollment growing problem at very low costs. So, technology will help us to improving educational quality, enlarging both access and enrollment, and lowering costs.
In respect to Dr. Murayama’s remarks about domestic market growth, quality jobs and worker-businessman overlapping definition, let me start by answering the last one question. Of course, a newspaper salesman is not a businessman, at least his provider supplies him extra copies for a marginal gain, or he links his main activity to others of his own, like selling cigarettes, by instance.
Well, quality-job creation is the important thing. The main requisite is job-seeker abilities, which means education. Unlike Alán, I’d not harshly distinguish educated people from trained one. Trained people are usually able to be employed in many fields. The other main requisite is investment for economic activity. We should single out strategic areas, perhaps, or creating a job program. Small and medium-size firms stand for a strategic area. Some credit lenders are supporting big retail-stores’ small providers, like Wal Mart ones. That is a case for small and medium-size financing.
Another strategic area is house-building because it creates many jobs, besides fostering family savings by creating family patrimony.
I want to underline that social and economic laggard stand for growth opportunities. Mexico’s housing deficit is about five million homes. That is a big opportunity. The Mexican building industry builds about 400,000 homes per year. It could build 800,000 per year for the next 10 or 15 years. That is another strategic area for job creation.
As I have said, money and resources are available. If government lack them, let’s making public-private partnerships. That arrangement works as follows: public works are long-term financed by private investors. By instance, a public university or a hospital is financed by private capital at 20 years, to say. Then government pays a monthly payment for it during a 20 years period. Fee highways can also be granted to private investors to maintain and operate them in exchange for a fixed payment. There are many ways by which government could encourage infrastructure building while keeping healthy public finance.
Saving funds are in trouble because of deficient –almost negative– returns for holders. Returns are negative because they are invested in public bonds. A workable solution is that the government invests public saving in long-term infrastructure-building programs, instead of paying out meager returns for them. So, public saving could help to finance infrastructure while obtaining bigger returns. Agriculture economy could be also stimulated in such a way.
In respect to brain fly, let me consider health services. We could create medical centers in border cities or tourist centers to attend American patients at 60-70 percent lower cost than U.S. Centers ownership wouldn’t be a problem. They could be owned by big American health firms, even. The crucial thing is that they be installed here in Mexico. Doctors fly would be stopped since they could be employed in Mexico at high wages.
We need concrete job programs. Unfortunately, many development institutions have been ruled out, development bank, by instance. Nafinsa seems to be unfocussed. Brazil’s development bank, BNDES, instead, is playing a critical role. Current available cheap money stands for development bank’s big opportunity.
Investors are eager to invest. Many of them participate in big public works. A highway construction takes about six o seven companies. We built the foreign relations building in Centro Histórico without a legal framework. Its bidding was legally flimsy, yet four or five banks did participate.
In respect to social immobility, I think modern society greatly differs from those of the past. Hindu castes, feudal nobility, slave societies were socially stagnant. That is not the case for Mexican modern society. Think about UNAM whose enrollment accrues more than 300,000 students each single year. Registration fee is very cheap. Public health and education count for the main social-mobility instruments.
Perhaps contemporary big firms do create needs, yet the consumer is not defenseless; he is able to distinguish real form false needs. You can choose buying junk foods, colorful watches, bewildering cars, etc. On the other hand, as society develops, new needs arise. You are able to decide which needs fit your own wellbeing.
About thirteen years ago, when I was in a hospital bed, I realized that doctors used to take upgrading courses to increase their own income. Of course, some of their needs were superfluous, but most of them (children education, vacations, books, computers, etc.) were legitimate.
Distinguishing vision from visibility has a point. Both of them are needed. I have talked about past times just to see social-process functioning, which help us to see the future, like Alvin Toffler has done.
Cold you repeat your thought about essential and not essential State’s functions, Alán?
Alán Ortiz Cisneros: Telecommunications (internet, television, media, etc.) are being developed by private companies, which is good. What is the role for the State in that respect?
Carlos Slim Helú: The State is required to regulate (organizing, legislating, law abiding, law reinforcing, providing security, etc.), not controlling every activities; it should respect and foster freedom, democracy, plurality and diversity.
Alán Ortiz Cisneros: With regard to recent past, many public enterprises were sold to private investors during the eighties; then a private-capital boom began.
Carlos Slim Helú: Regulating private firms is one thing; seizing them is another. By performing its regulatory function, the State gets able to channeling wealth production while raising taxes from consumers, workers and firms, either domestic or foreign ones. In such an arrangement, bankruptcies got paid out by firms themselves, not by tax payers.
The State should guide the economy by specifying desirable economic goals and being able to foster some activities while discouraging others. By instance, Brazil charges high tariffs to certain imports in order to get them domestically produced.
Now, health and education remain to be essential public functions, like justice. In respect to U.S. TV signals, like CNN, you can watch them all over the country. By technical reasons, however, Northern states viewers enjoy a broadest menu.
With regard to your point about social adaptation rather than social evolution, I think that society is improving itself as a whole. Of course, some individuals tend to evolve faster than others.
With regard to the education-or-training dilemma, I think that education mainly depends upon student’s effort. Those eager to get educated will succeed. On the other hand, education is not limited to learning; it involves relationships with many people and activities. UNAM have people from all over the country and many places of the whole world. Now, callings and talents are varied. Some people are more spirited than others, etc. Calling is linked to talent. Your performance will get better when working in the field you like more. Team work also matters.
José Narro Robles: Now the third round… I ask you to be concise. José Gilberto Parra Leyva, please…
José Gilberto Parra Leyva: Globalization is a fact; the question is how to profit from it; each country should embrace it according to its own peculiarities. What about agriculture, meat industry, fishing and forestry? We have visited state-of-the-art forestry sustainable projects in Michoacán, which include ecotourism facilities, solar energy, community jobs, etc. How these projects could be replicated in other places of Mexico?
José Narro Robles: Thanks. Now Miguel Ángel González, please.
Miguel Ángel González: I am worried about the neglected rural sector. What do you suggest to improve it?
José Narro Robles: Thanks. Iván Sánchez Mendoza, please.
Iván Sánchez Mendoza: By considering small and medium-size firms high-mortality rate (about 2-3 life years for 95 percent of them), what kind of strategic support would you deem for them? Second: how to achieve sustained employment? Third: how to efficiently use both human capital and intensive labor force? Fourth: what technology sectors we should develop?
José Narro Robles: Thanks, Iván. Doctor José Saniger, please…
José Saniger: I suggest creating a strategic alliance between Grupo Carso and UNAM. If it already exists, I’d suggest to reinforcing it to continuing both human and physical capital formation, quality-services development, and prospective studies. I’d also suggest creating Carso-UNAM educational-technology and health laboratories. Thanks.
José Narro Robles: Mr. Slim, please.
Carlos Slim Helú: Thanks. Since many years ago, we and UNAM have set together about many projects. About 3,500 or 4,000 UNAM students are recipient of Telmex scholarships, including those managed through Fundación UNAM.
As I have said, we are supporting the Chicxulub meteorite project and have proposed to install Wi-Fi networks in all of UNAM centers. As to my knowledge, UNAM authorities will make a decision about it next week. Am I right? We both have made a lot of projects together, and we are glad of it. According to the original fellowship idea, each scholarship student should stand behind or to bond a grant for a new student when graduated. We proposed, instead, unconditioned grants, except academic performance, of course, and graduate reciprocal responsibility to UNAM.
We always have stood ready for giving support. Even more, at the time the grant program was accorded, I made a 40 million dollars contribution to UNAM. I don’t remember the actual amount; we have never kept account of. The Centro Histórico project included UNAM projects, including digitalization of San Agustín Library and English language and computer courses there. Are English courses operating still?
About five years ago, we outlined a plan to digitalize Hemeroteca Nacional through Fundación UNAM, but Google put its own stake to controlling information, which its own business, and the plan was entrusted to it. Digitalization, however, has not been done yet.
We have also contributed to several UNAM projects by invitation, and we will continue doing so. By instance, Arcadio Poveda invited us to contribute to the telescope project when I thought it was already done.
We’d be glad in keeping cooperation. We maintain a close and ample relationship with Rector Narro. When invited to support Pumas soccer team, we did accept, and Arturo Elías did perform the job very well. He rescued the team from bankruptcy, Pumas won two championships and defeated Real Madrid.
With respect to the questions about employment, service economy and Mexico’s global role, let me consider the following: We are now living in a new civilization, the service society, with globalization as its paradigm. Mexico’s function into it should be according to its own interests and cultural diversity. I assume that we all agree on this. So, the point is deciding how we should get inserted into this new society. Nobody is forcing us to play a definite role. Decision is ours, yet we should make it in an active manner, not waiting for events coming to us.
In this new civilization, primary goods no longer stand for the decisive terms of exchange, although its relative position in respect to manufactured goods could improve. Manufactured goods relative position will diminish because of automated production, so the differential margin between primary and industry goods will lessen. Commodities-producing countries will improve.
That picture seems to refute Malthus and Club of Rome prediction about primary goods scarcity because of growing population. In fact, primary goods growing demand comes from new modern consumers. Subsistence population demand is small because subsistence people use to consume its own output. They do not offer neither demands consume goods.
Growing demand comes from about 50-80 million people entering into modernity each single year in China and India, mainly. At a lesser scale, Brazil and Mexico are also contributing to growing demand. Migrant workers remittances are playing an important role in this process. Agriculture production has become very important. I mean modern agriculture production, not subsistence one. So, we should conceive plans to improving our own primary-goods production, not only food stuff. In spite of up-and-down prices and bare speculation, countryside gains will improve.
Now, figure out how many people is pending to entering into modernity, 3,000 or 3,500 million, I guess. That figure is bigger when considering durable goods growing demand.
The countryside should be strengthened, of course. It harbors about 22 percent population. By modernizing it, we could create many jobs there.
Obviously, exporting goods is better than exporting labor force to the U.S. Don’t worry about brain fly only; think about rural migrant workforce, which counts for the boldest people we have. To maintain their own families, they use to risk their own physical and moral integrity. We should absorb them through employment to produce export goods and services here in Mexico.
With regard to biodiversity, we have signed an accord with World Wide Fund for sustaining biodiversity in six Mexican areas: Sea of Cortez, Chihuahua Desert, Monarch Butterfly, Mesoamerican Reef, Lacandona Forest and one more. The Mexican team includes Mario Molina, José Sarukhán, Julia Carabias and Exequiel Ezcurra, the best specialist we have. They were the responsible for setting up the Mexican agenda, which has been upheld by WWF. The main idea is transforming sustainability into an asset.
Human capital is good, yet not-educated workforce is not bad; in fact is very good, creative and versatile, and it learns quickly. We have proved it in many building works employing many non-qualified workers. We have recently built a singular building, a museum with an unusual structure and many hand-made parts, fully made in Mexico, from structural calculus to workforce. Mexico has a lot of problems; workforce, however, is not one of them.
José Narro Robles: This meeting has come to an end. It has been rich, useful and suggesting. Many questions and possibilities are now on the table. So, I hope this gathering be just the first one of many to come with Mr. Slim.
I’m grateful to all of you and especially to Mr. Slim for sharing with us his own working time, knowledge, experience and views, which have been very useful to us. In the name of UNAM I’m grateful to him. Through his own foundation and Fundación UNAM, he has made many good things for our own university. He has been generous every time we have asked him for help. Perhaps we have not asked him enough. I commit to abet myself.
Thanks and good afternoon.
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