Mr. Carlos Slim imparted the keynote address Challenges and Leadership in the First International Congress of Miraflores College former students
February 12, 2011, Mexico City
Mr. Slim said that “a true leader does require three scarce attributes: intelligence, courage and benevolence. Some leaders are brave and smart, yet bad-tempered and destructive; others are benevolent while lacking the two other attributes. The three attributes are required.”
Mr. Slim narrated the main civilizing steps of mankind and shared his Letter to the Young he wrote in 1994, in which he said: “they lived free from fear and guilt; fear and guilt stand for the worst human feelings because they debilitate and inhibit human action, and depress human beings; guilt weights down thinking and action in life; it hampers present time and obstructs future.” After Mr. Slim’s keynote address, a questions and answers round ensued.
Challenges and Leadership: Mr. Carlos Slim’s keynote address in the First International Congress of Miraflores College former students, February 12, 2011.
Introduction: Just two weeks ago, Mr. Slim had his birthday. He was born in January 28 in Mexico City. He studied in UNAM and, while coursing his career, he imparted algebra, linear programming and other subjects. As a young man he created his first firm; the rest is history. It is a privilege for me and you, I guess, having Mr. Carlos Slim Helú herein today.
Carlos Slim Helú: Good morning to all of you. I am very pleased in sharing with you the Fiftieth Anniversary of Miraflores College. Just a few minutes ago I was telling to Madre Salud that in lecturing about challenges and leadership, she is fittest than me, yet it is my turn, so I hope my participation will go well.
I will talk about thirty or forty minutes and then a questions and answers round will be opened up.
Of course, I would like to congratulate Madre Salud for having the Miraflores College First International Congress during its fiftieth anniversary. In order to give reason to questions, I am going to talk about the new civilization or new society in which we are living now, about what is already happening, things to come, and also about past to understand both present time and future.
As we all know, we are living in a new technological society, also named digital or technological knowledge civilization with almost 90% of the labor force being employed in service sector, while primary and secondary goods are being easily produced by few people. In thinking about the origins of our own civilization, we easily realize that societies have progressed due to innovation, technology, discovery, scientific development, and thinking. Through these means, societies have evolved, often by concentrating activities in specific areas and epochs.
We can see that opportunities to communicate between us and entering into globalization have been very important. Starting by the use of horses, then by the big discovery of sail navigation, the steam engine and light-speed telecommunication nowadays, communication has been crucial.
Such an evolution has been decisive for societies in which communication has played the key globalizing role in some areas.
Obviously, some societies have experienced globalization in an immediate and deep way, while others have been laggard, like some areas of Amazonia, some remote islands, and some places of Africa, where people still lives as its ancestors did thousands years ago.
Without a doubt, sail navigation stands for the first big civilizing leap since it made possible that Mediterranean people became globalized through trade, knowledge, cultural and even ethnical exchange. Phoenicians stand at the center of that process. Such big advances during three thousand years were the cradle of the development leading to the present society. After Phoenicians came the great Greek civilization, and then the Roman Empire with its big engineering and architecture innovations, the arch, the vault, the long roads, bridges and tunnels. We still stay in awe in the face of such amazing developments.
Yet, those early agriculture societies were very unfair since they rested upon class divisions, social immobility and men exploitation. Such were the reasons for slavery, while social mobility was almost impossible. Conquest and war stood as permanent temptations. Many centuries later industrial society began —a big leap since it transformed the whole 19th century landscape. By instance, railroads multiplied agriculture production by twenty times, etc.
During and after the Second World War, the technological revolution did accelerate, so transforming the world in a very important way. A sea change has transformed the social conditions while new paradigms have emerged. In the present time, in my view, these changes are not been conducted in a continued form by advanced countries governments, so burdensome crisis recurrently occur. That’s why we should know what is going on and visualize things to come to be able to conduct such a change in an adequate and fast way. Technology is transforming the world too fast, so governments and civil society should adapt to it. That civilizing change is bringing about big challenges not only for countries getting out from concentrated political power, rather for those requiring leadership.
I want to recall and give some perspective to successive civilizing steps: agriculture society began after glaciations and it lasted about 10 thousand years. The successive stone, bronze and iron ages lasted thousands years. Animal traction power and wheel driving force were unknown then; the industrial age lasted about 200 years. Nowadays, changes occur from a generation to the next one.
What has been the role for technology through the ages? It has lessened physical effort and arduous work. Carrying weight by humans is no longer needed because modern equipment can do the job in an increased and safest way; modern machinery can produce more output than many workers, while increasing productivity by five or ten times more. Instead of having worn out-workers by the hundreds, remote-control operated machines substitute them. Unemployment is a consequence of that change. So, the unemployed should be trained to produce alternative goods and services.
The new civilization is generous because do not rest upon human exploitation, rather it procures its wellbeing. Having comfortable, educated, trained and healthy people is good for everybody. The poor and destitute living in survival economy should be incorporated to modernity by enabling them to demand goods and services, so sustaining development.
China is already experiencing such a transition. Once a rural-survival economy, China has transformed itself. Even the Confucius-attributed saying “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”, no longer applies since it gravitates around survival economy. Nowadays you should teach people to commercialize the fishes it catches, so people will be able to buy goods and services.
The society in which we are living now requires few people for producing goods. Henceforth mankind will require less physical work and more people providing services, instead of producing goods. Old films used to describe rural life and factory workers; the new ones tell stories settled in hospitals and banks. Modern society is based upon services; all of the countries have embraced that course, not only the developed ones.
So, what is going on? In spite of difficulties and disputes, people getting out of poverty in China, India, Latin America, and soon in Africa will enter into the modern world by demanding goods and services, so enlarging the economic activity, primary-goods production, etc.
Yet a crisis is developing because the pace of change is creating bottlenecks. The upshots of wealth production lack planning, while newer and productive activities for the young are scarce. Besides, child mortality-rate lessening has translated itself into bigger young generations demanding middle and higher education, and jobs, of course. So, we have many young people without school and without job.
One of the biggest challenges is to provide health, nutrition, education and job opportunities for the young. Traditional ways of providing both education and health will not fill the gap. New educational ways and a fresh focus on job-promising careers are needed. Educational programs and careers should be transformed to create human capital for socially needed activities, rewarded jobs and individual development. The big challenge for all of the countries, mainly for the developing ones, is guiding civilizing change. The big challenge for governments is leading social change, forming human capital and fostering economic activity to employ people.
China is doing very well by having big economic growth. We in Mexico grew during 50 years. China is already growing at 8%-10% each single year and it has embraced an intense educational process. Tens of thousands young Chinese are studying abroad, coursing careers not available in their own country, while many more are entering into the labor market in industrial-urban zones.
Of course, that social change should be handled in freedom, democracy, separation of powers, and strong institutions and, certainly, by learning from other’s mistakes. After Second World War, developing countries, by instance, steered a course of increasing taxes to freely provide early retirement, universal health care and unemployment insurance up to deplete financial resources. This is the very cause for their current crisis. Omnipresent, all-powerful state is already exhausted. It cannot longer afford retirement to sixty-year old people when longevity rate is 85-90 years old. Recently the French government aimed to extend retirement age from 60 to 62 years old, just to step back in front of angry protests. The government of Spain is facing a similar conundrum. In my opinion, policy-change initiatives in these countries are insufficient. Huge transformations are needed, yet governments lack political power.
That new civilization poses new requirements, mainly both bigger civil society involvement and private investment. Civil society is called to actively participate in solving social problems, while governments should hand over many fields for it.
As I have said, education and health care can no longer be provided by traditional systems. Technology should be used to provide both distance and open high-quality education. Such is the answer for the many young without a place in classroom; such is the way of accessing to education, human-capital formation and employment.
Jobs creation depends on economic activity and investment, and that is a task for private capital. Rising taxes is not an option because it melts income into current spending, so swindling otherwise valuable investment for economic activity. It is the private sector who is efficient in managing these resources to propelling economic activity and creating jobs. At the same time, we should identify the areas which could create more jobs. Which are they? In my opinion, elder care is going to be very important because 60-80 years old people and older are growing –I am one of them. By instance, there are many retiree Americans without personal care. They could come to be cared in Mexico. We are able to offer them Mexican human capital, high-quality medical services and care.
Another promising field is environment. Biodiversity protection, forestry, clean-energy production and transportation will demand many jobs. Information technology is another, of course. Computer use and centralized information have become needful. At the extent the new society increase free time, entertainment, tourism, culture activities and sport services will demand jobs.
Nowadays, Mexico, Latin America and all of the developing countries are free from developed ones fiscal burden. We have introduced fiscal changes in an easier way. By instance, retirement funds are individualized while retirement age has been extended. Brazil, Mexico and many other developing countries have introduced changes because their people need to work.
Before starting the questions and answers round, I would like to share with you a good definition about a leader: A true leader requires three scarce attributes: intelligence, courage and benevolence. Some leaders are brave and smart, but they are also destructive; others are benevolent lacking the rest of the attributes.
Harboring strong moral values is very important, I think. Values are fundamental, yet individuals in charge of political, institutional or business responsibilities are called to temperate them with a little bit of pragmatism to avoid rigidness. Living free from fear and guilt is a fundamental thing because fear inhibits action, while guilt is a heavy weight to be unburdened in order to live, and above all taking aside negative feelings because they weigh too much. All of us know what these feelings are; capital sins remember us which they are, so avoiding them is very important.
I think that we are near to break through the underdevelopment barrier by enlarging middle class. During the next ten years or so, Mexico, Chile, Colombia, Argentina, Brazil and others will overcome such a barrier; then we will embrace an irreversible path to development by incorporating the less-favored social classes to wellbeing.
During years I have said that the best investment for both government and private capital is fighting poverty. Even from an egoist point of view, getting people out of poverty is good business because educated and trained people will demand more goods and services, schools will have more students, Miraflores College will have more students, hotels will host more people, phone users will grow, etc.
I thank you very much.
Question: In respect to moral values, brave heart, going ahead though firm steps, as our motto and hymn say, please give us your advice, how to stand oneself steady in life, in the face of death, in respect to troubled sons, in the face of unemployment, our distress in explaining what we need, please talk about that human aspect.
CSH: The very first and fundamental thing is loving life. Caring ourselves has to do with self-esteem and self-knowledge, and that is the way leading us to love the others. So on earth as in life, forcefulness and decency come from family and friends. To love life one should be curious about it, being minded to knowledge and enjoying nature. That sounds platitude, I know, yet it is rare that the most important things in life –love and friendship– have no cost. Family and friends in life and work, whatever the function we perform, count for the source of forcefulness and decency against discordant impulses like ambition, envy and some other negative feelings which pull us to the wrong way.
Child education is very, very important. We should make sure that kids love each other and stand up on their side since birth to avoid unpleasant bewildering during adolescence. The best way to educate them is, of course, living together in family reunion —a qualitative rather than quantitative use. Living together is not staying with children all the time, rather sharing quality time with them. One should make sure that brothers love each other, avoiding quarrels. In a lovely family, children’s problems are parents’. One should embrace moral values and pragmatism. In educating children, one should be flexible. If they get bad school notes, one should not scold, rather comprehend and support them to improve. If we know ourselves well and recall our own bad moments, we will be able to comprehend our own children. I have a dearest and respected 99 years old friend, and asked him to write a note about love, friendship and life –three very important things about we should meditate. He is a great thinker, however his note is brief.
I am afraid we have no time; if you will I would like to read a letter to the young I wrote in response to an acknowledgment I received in a meeting with excellence students from Mexico and the United States in 1994. It is just to communicate you a little bit of my life experience. I think that another person should read it.
Question: In respect to professional careers, which are the outdated ones?
CSH: Not so many years ago, as you will recall, there were many car-service talacha shops in Mexico, which made all kind of minor fixes. Technology has engulfed such a craft, and it has transformed many professions too. Nowadays, accountants, book sellers, etc., are called to perform their work in a new technological environment. Systems management has substituted many activities, while specialization is constantly creating fresh branches. At the time I was an engineering student, my career had a few branches: mechanical, electrical, and civil engineering. Nowadays there are much more, while newer careers are looming.
In respect to professional careers lacking employment, I have not the figures. What we know is that medical technicians, by instance, are scarce. I have heard that U. S. health care is very good because medical technicians abound there. So, we should create careers for them in Mexico. In respect to education, we couldn’t graduate teachers indefinitely because we lack the financial means to pay for them and building classrooms. Education should be imparted through technology. With selected teachers and adequate programs, education could be imparted to the millions through internet.
We should meditate about outdated professional careers and match them to our own preference. It is clear that we need security professionals. The first aim of the “Acuerdo de Chapultepec” we have signed, states the need for strengthening the rule of law and public safety as basic conditions for a democratic regime guarantying freedom, human and social rights, physical security and lawfulness. To achieve these aims, institutional functioning is very important. Physical safety is crucial because if you are afraid in going to street, your freedom gets curtailed.
I have recalled the “Acuerdo de Chapultepec”, so I will stress its aim for reaching out sustainable economic growth and employment. Economic growth and employment should run together because you could have growth without jobs and jobs without investment. By instance, exploiting a bountiful oil well could bring about economic growth, yet employment wouldn’t grow. Conversely, maintaining highways and developing archeological sites could create many jobs with little investment —Mexican growth across the board.
We should create human infrastructure, I mean human capital, education and health care, mainly. Grupo Carso supports maternal nutrition during pregnancy, prenatal care, health care and nutrition. It also builds infrastructure, housing, highways, telecom networks and airports.
Question: What about social immobility in the remote past?
CSH: As we know, Egyptian Pharaohs claimed to descend from divinity; the feudal society was strictly divided —the noble court and feudal landlords on the top, and peasant villagers at the bottom. Even today, India is divided into castes. In the remote past, the only way to social ascent was war deed. In the Aztec civilization one could ascend through trade. Illiteracy was generalized and people did not conceive social mobility. Most people worked and lived in the countryside, agriculture was the main economic activity, and consume was meager. That was the reason for slavery. Slavery ended by its own obsolescence, not only because of Spartacus heroic deed.
Question: What about social status in Mexico, it is easy to ascend socially?
CSH: Public health care and education count for some of the biggest changes in Modern Mexico. They have served as steps for social mobility since I recall and they should abide, I think. Without a doubt, the best leveler for social, political and economic improvement is education. Presidents Benito Juárez and Porfirio Díaz, just to name a few, came from humble origins. Social improvement comes from merit, and spirited people do advance. Vocation, talent and hard work are needed, although circumstances also matter.
Educated, hard-working people will surely ascend, even in business. We support hard-working, problem-solving outstanding employees, even young ones.
Question: What about your firms’ social and economic commitments and challenges?
CSH: Since some years ago, our commitment is to contribute in improving Mexico and, for myself, Latin America. We are pushing for change and improvement. Our field is neither politics nor government. Our field is investment, human capital formation, health care, infrastructure and, above all, education.
We are investing a lot in infrastructure. Just the current year we are going to invest 1,600 million pesos in telecommunication and 1,200 million pesos in highways, water treatment, etc. We are going to launch a digital-open university anytime soon by introducing technology into education, as I have said before. Our upcoming university will impart courses and careers through broadband internet for all those eager to get educated.
We are also working in environment conservation since several years ago. With World Wild Fund we have contributed 100 million dollars in support of five conservation programs in Mexico: Sea of Cortez, Mesoamerican Reef, Desert of Chihuahua (downward San Luis Potosi), jaguar and Monarch Butterfly conservation. We are also participating in some United Nations commissions in respect to climatic change.
In respect to health care, past year we made 119,000 surgeries. That program is 15 years old. The first year 2,000 surgeries were made. The program has been extended to Peru, where we are planning to make 50,000 surgeries during a three-year period. It is a very interesting program and it works as follows: National Surgery Academy doctors working in public health centers make surgeries in rural areas for free, while teaching local doctors, who also arrange community participation. We contribute viaticum, surgical instruments and material.
We are running many other programs. By instance, “Amanece” has donated 2,400 prenatal-care equipment sets to public health-care centers. Our program “Arranque Parejo” provides bicycles to rural-communities children to attend distant schools.
We are also supporting sports. In cultural activities we are going to inaugurate Soumaya Museum in Polanco soon to permanently exhibit our own collection of European art —free entrance for everybody. I could send you our foundations programs whole list, if you will.
Question: What is the required profile for job solicitors in your firms?
CSH: Team spirit, assuming our own philosophy and being agreeable. We don’t like competing cliques. We support hard-working, committed people. We have had 28 years old directors; they have attained their positions after four or five years. We have two very young directors nowadays. What we expect from our employees is study, training, problem-solving focus, and hard work, not politics.
Question: How do you get a balance between job and family?
CSH: I would like to stress that individual strength comes from family, friends, personal life and love for life. Work alcoholics are unable to organize themselves and tasks overwhelm them. Except for extraordinary circumstances, you should not work 14 or 16 hours a day. You should delegate responsibilities and get organized yourself. Delegating responsibilities is not an easy decision because of risk, yet if you do not do so, tasks will overwhelm you.
Family time is qualitative, not a quantitative one, and it is a basic condition for an orderly life. Family life is not only compatible with work; it is crucial for getting your own job done.
One should be a good administrator and a practical person also. Being practical could clash with ethical values sometimes. One should aspire to combine ethics, values and practicality in a synergic way. Values are ethical fundamentals. Being practical, instead, means acceptance of diversity of manners. By instance, you shouldn´t expect that subordinates solve problems in your own way. Each person has his own ways according to his individual talents. So, being practical means that you should know the others in order to weigh what you should expect from them, not asking them for the moon or forcing them to the point of incompetence. By instance, firing an employee because of delaying time schedule could be a little bit drastic. You should weigh his abilities.
Self-employment and developing new entrepreneurs are very important. We should lessen business mortality rate and support small and medium-size firms because they create most of job posts. Two things are needed: abating regulation from, say, 140 requisites down to 115 ones. Clean business should be allowed to first settle them and then notify the authority, not the opposite way. They should be dispensed with annoying fiscal transactions, by instance, not contracting accountant services. They would be able to pay out taxes in the same way they pay out land tax, water, electricity or phone service.
We in Telmex have a financing program for small and medium-size business by which we give them 35 or 40 months credit. The original idea came from Fundación Telmex. We asked Grupo Financiero Inbursa and Telmex to give and charge credit while Fundación Telmex served as collateral. Such a scheme turned to be unnecessary at the end, and Inbursa decided to give credits and take the risks, while Telmex collects monthly payments through phone receipt. In case of default, phone service is cut off. The program serves more than 30,000 businesses nowadays.