It’s not often that you hear a billionaire join a conversation about income inequality. But that’s what happened last Saturday in Puebla at the City of Ideas festival. While liberal economist Robert Reich debated with conservative Stephen Moore about how much wealth was enough, Ricardo Salinas Pliego stood up from the audience to speak. “I’m a billionaire. I’m qualified to answer,” he said.
At the beginning of the presentation Reich had told us that the assets held by the 400 wealthiest people in the United States equals that of the poorest 150 million. Or more dramatically, the world’s 85 wealthiest people own as much as the poorest 3.5 billion!
Reich went on, “How much do people at the top need as incentive? Forty years ago U.S. Fortune 500 corporation CEOs earned 20 times the salary of their average worker. Today they earn 290 times the earnings of their average worker! How much is enough?”
Stephen Moore maintained, “It’s a decision to be made by shareholders not the government.”
That’s when Salinas stepped into the foray. He is the chairman of Grupo Salinas and Grupo Elektra and listed by Forbes as the 126th wealthiest person in the world, worth $9.9 billion. “How much is enough to create a new company, to create new jobs, to make new investments, to take on new risks?”
“People should have an incentive to do things. Now, people who criticize extremely rich people like me probably don’t have the experience. You cannot eat more--bad for your belly. You can’t drink more--bad for your mind. There are lots of things that are limited.”
He continued, “This wealth isn’t like you have it in your checkbook and you pull it out. It’s in the form of assets. To sell the assets you’d first have to find someone interested in buying them. Then you’d have to pay lots of taxes. And then what would you do with it? You loan it to the government. These days that’s what you do – at a ridiculously low rate. So the whole concept of wealth is something most people don’t understand because they don’t have these amounts.”
“I can sincerely tell you, it is all about investments. I just sold a company yesterday for $2.5 billion. Now, if we get a tax hit and I end up with $500 million I’m still going to invest it. But the other money is going to go into government coffers to no effect.”
Reich replied: “Where do we get the resources to provide good education and good health care for everyone? We are in a system where the wealth is going to the top. So that’s where you get the resources to finance the education at the bottom. It’s just logic.”
Reich continued “unless you have a growing middle class you don’t have the purchasing power to keep the economy growing. In the United States we have so much money going to the top that the middle and lower classes no longer have the purchasing power to basically get the economy out of first gear.”
Salinas challenged the two U.S. citizens. “You gentlemen mentioned some very good policies but you didn’t touch on a key point of which I need to remind you. You Americans have this misnomer called the Defense Department. It’s not the Defense Department-- it’s the War Department waging war all over the damn world and spending trillions of dollars, money we can’t even contemplate, on bombing people somewhere else. Why don’t you cut the war spending?”
Robert Reich looked at Ricardo Salinas and said “I’m nominating you for Secretary of the Defense Department.”
Salinas answered, “War Department. If you change the name I’ll take it.”
Reich replied: “If you can get defense spending down, and you can transfer it to education and healthcare in the U.S., that would be great.”