Background Briefing

Carlos Slim - Image courtesy of Reuters

The world's richest man is Mexican entrepreneur Carlos Slim, and Mexico City has the population of Australia. Mexico is one of the worst countries in the world for wealth disparity. The cultural adjustments for Australians living there can be shocking, delightful, exciting and disturbing and fascinating all at once. Reporter, Michelle Crowther.

Transcript

This transcript was typed from a recording of the program. The ABC cannot guarantee its complete accuracy because of the possibility of mishearing and occasional difficulty in identifying speakers.

Please note this is a draft transcript

THEME

STREET SOUNDS

Michelle Crowther: This is the crush of Mexico, home to 106-million people. You first notice each person's struggle for their space in the world when you brave the traffic of the country's capital, and find everyone vying for a patch of road.

Almost the equivalent of Australia's entire population is crammed into this megalopolis that is Mexico City.

The few Australians who come here find it fascinating, dangerous, frustrating, and incredible.

Javier Mata: You land in Mexico and all of a sudden you're confronted with the size of the place. And I guess it doesn't matter whether you come from Melbourne or Sydney or Perth or Brisbane, it's just daunting, the fact that a city never ends, and that any one of the bigger suburbs in Mexico City is bigger than Perth. Just the fact that you're never alone, and that to me is an experience that you have everywhere in Mexico, it doesn't matter where you go in Mexico, you can't be alone, there's always people there.

Michelle Crowther: Sharing the choking air and noise-clogged airwaves, are ten of the world's billionaires, and millions of very poor people. Astride them all, the world's richest man, Carlos Slim Helu.

Despite abundant natural resources, Mexico's potential for great wealth lies stagnant for most of its population because of a class and income chasm that leaves the rich and poor together in geography only.

Today Background Briefing explores some of those issues, and finds that the story of Mexico is one of ironies and contradictions. I'm Michelle Crowther, reporting for ABC Radio National on this country's very unique place in the world.

Alberto Saracho founded Fundacion Idea when a non-profit policy think-tank in Mexico was an abstract concept.

Alberto Saracho: If you consider the entire economy with the 11th or 10th largest economy in the world, so you would say we're not that poor. The problem starts when you go into the number. More than 60% of the population lives with $2 or less a day, and of those 60% more than half, so that would be around 40% of the population, live in extreme poverty, which is between $1 and $1.50 a day.

Michelle Crowther: Why? Because Mexico currently falls 13th out of 126 nations listed by the UN for wealth disparity.

Looking at Mexico from the outside, it's this half that we see, on the news footage, of people sneaking across the border to the United States, in the statistics that show about a million people attempt that feat every year. It's the half about whom we constantly hear debate over how enthusiastically to fence them out.

Figures aside, a cab ride through the city brings the whole picture into a much sharper focus.

LANGUAGE

Translation: There are zones here where up to five families live in a house together to save on rent. We're talking about a family of four kids each. They're earning $100 or $200 a month.

Michelle Crowther: And then charging out of left field, on what can only be described as Mexico's uneven playing field, comes an extraordinary figure. Carlos Slim Helu, the richest man in the world.

When Carlos Slim knocked Bill Gates off the perch, it was with some shock that most of us realised we had absolutely no idea who he was.

The telecommunications tycoon represents Mexico's less recognisable face, the richest 10%, in possession of extreme wealth.

Georgia Melville is an Australian who's been living in Mexico for five years. She's the sort of woman who stands out here: tall, fair, with dark hair and dazzling green eyes. And a shoulder bag containing her sausage dog tucked under her arm.

Georgia Melville: I remember thinking before I left for Mexico, am I going to be living in a house with no floors, with chickens running around, or something like that? When I arrived, I was living in one of the wealthy universities of Mexico in Puebla, and I was just really impressed at the level of richness that a lot of people had in Mexico, it was just amazing especially a lot of the students that I was studying with were just incredibly wealthy, more than I could have even imagined. I mean in Australia I think you hear sometimes of wealthy people, but not to the same level as what you find in Mexico. I remember for instance, seeing one of the girls getting picked up by her driver in some flashy car, and taken back to Mexico City where she was living. I went to visit her one day and she had paintings by Salvador Dali hanging on her walls, she had all the maids helping out in the house, and I was just astounded because I had never seen anything like that before.

Michelle Crowther: But while this side of Mexico has, to date, been less well-known, that's all changing. Despite being notoriously media shy, the new face of Mexico's rich, Carlos Slim, is becoming more recognisable by the day.

What is so surprising to us about this new player? Is it his relative anonymity? Or the fact that he doesn't fit with the picture that we have of Mexico?

Today we look at the business of being rich in this country, and what happens here when privilege and poverty collide.

Carlos Slim: That's what we think is very important words.

Michelle Crowther: Carlos Slim knows how to talk the talk, as demonstrated at the 2006 Clinton Global Initiative Forum.

Carlos Slim: I think that business community should get very deeply involved in the solution of the global problems, especially poverty. I think that to fight poverty is also a very good investment, and we have seen in the last 50 years that trillions of dollars have gone to try to solve the problem and the problem is still there, and very strong. I believe that the only way to solve this problem is with education and employment. We need to have a war against poverty.

Michelle Crowther: The question is, does he walk the walk?

Newsreader: Mexican billionaire Carlos Slim has been the target of heated criticism since he was declared the richest man in the world, according to Fortune magazine. This week, Slim opened a heath centre for the poor. He inaugurated a $500-million hospital in Mexico City, the private and non-profit centre is the latest charitable effort undertaken by Slim. He was criticised for his enormous wealth and alleged business monopolies in a country where 40% of the population lives under the poverty line.

Michelle Crowther: Like his country, 67-year-old Carlos Slim has two very different faces. Some see a ruthless monopolist, who's amassed his fortune with the forced help of his dirt-poor countrymen. While others will tell you about an affable philanthropist with an ever-growing bulk of charitable trusts.

It's no wonder he took us by surprise. His rise to the top has been meteoric. Just last year when the Forbes list of billionaires was released, he was far behind both Gates and Buffett, but in July this year, the unthinkable happened.

Reporter: You can never be too rich or too slim. This is said to be the new World's Richest Man, Mexican tycoon, Carlos Slim. According to the Mexican online financial publication Sentido Comun, Slim is worth an estimated 50-billion Euros, due to the rise in the value of shares in his telecommunications company, and other businesses. Forbes magazine recently reported he'd moved from No.3 on the World's Richest list, to No.2. Now it seems he's overtaken Bill Gates, whose Microsoft shares are up just 5.7% in the second quarter, compared with rises of between 11% and 20% for Slim's companies. Slim's fortune is said to be the equivalent of 8% of Mexico's Gross Domestic Product.

Michelle Crowther: Eduardo Garcia's financial news site, Centido Comun, translates to Common Sense. Garcia's latest calculations have Slim's worth at $62.8-billion, while Forbes' latest estimates puts Gates at $59-billion.

But for a man so relatively unknown, the question is, how did Carlos Slim do it?

Forbes magazine lists Carlos Slim's fortune as self-made, although he inherited a slew of inner-city properties from his father, who was also a prominent businessman in Mexico. Julian Slim was a Lebanese Christian immigrant to Mexico, who changed his name from Salim on arrival. Legend has it that as a child Slim kept a leger of every peso he spent. Carlos Slim did well in maths and taught algebra in university before graduating with an engineering degree from the National Autonomous University of Mexico.

After starting a brokerage firm in his early 20s, he then got into the business of buying companies.

Eduardo Garcia.

Eduardo Garcia: Carlos Slim was a fascinating businessman, even before 1990. Just a little bit of background: in the '80s Mexico was facing constant currency devaluations and we had the foreign debt crisis. Many people left the country, investors were not pouring money into Mexico, Carlos Slim was. He was buying up companies that others were selling at cheap prices because he as a businessman, was doing the numbers and looking at the value that these companies had, and saw great potential. And he was very visionary in doing so.

Michelle Crowther: This began something of a trademark modus operandi for Carlos Slim: buying underpriced companies, whipping them into shape, aggressively beating out competition, and watching their prices skyrocket.

It's small wonder that Carlos Slim says he's lost count of the companies he controls. While the backbone of his empire is telecommunications, Mexicans find themselves putting cash in the pocket of the world's richest man when they go to the bank, hit a department store, take a flight, even smoke a cigarette. It's pretty hard to get through one day without buying or using something that's owned by Carlos Slim.

But Slim's really big break came in 1990. Mexico's government went on a privatisation blitz after the financial crisis of the '80s. President Carlos Salinas sold the State-run Telefonos Mexico, or Telmex, to a consortium headed by his friend, Carlos Slim, for a bargain basement price of $1.7-billion and it came with a couple of added sweeteners.

Alberto Saracho, Executive Director of think-tank Fundacion Idea.

Alberto Saracho: Telefonos Mexico got a tax exemption for the next ten years after it got acquired from the government. So that income tax exemption is enough to pay itself. So if you think about it that way, Telefonos Mexico basically was given away for free, because they didn't pay income tax for ten years. So I wouldn't be able to say that the transaction itself was dodgy, but the conditions for the transactions were certainly questionable.

Michelle Crowther: While the condition of the deal will probably always be disputed, the dream run that followed is fairly unambiguous.

Sentido Comun's Eduardo Garcia again.

Eduardo Garcia: And that was a huge breakthrough for him, because he did acquire a very poorly run company, but got tremendous assets and a great potential for generating a lot of revenue, and net income. And he was given seven years before any competitor could arrive in the long-distance telephone market in Mexico. His critics also say that because he had this fixed phone line company, that he was subsidising his cellular enterprise, and he realised that cellular was going to be the future of telecommunications. So in order to finance that, he used the other side of the company. So he was using his resources in a very smart way.

Michelle Crowther: Now you mentioned Slim's critics there, saying that he had used one company to prop up another. I think in the first year call costs increased 247%. What was the picture like then, and was he making ridiculous amounts of money?

Eduardo Garcia: He was probably charging, not probably, he was charging more than what other markets were charging for long-distance telephone calls, without a doubt. And yes, the company was making tons of money. But he was reinvesting a lot of those profits into the company to revamp it and to make it efficient, and to be able to face competition in the future.

Michelle Crowther: Carlos Slim poured the profits back into making Telmex's operations efficient and reliable. Any Mexican in the street will tell you about the bad old days before he took over, back when it took two years to get a phone line installed.

But Slim also cornered the market in such a way that when competition did open up, no-one could compete.

Today Telmex still has 94% of the landline market, and its affiliate company, America Movil, has almost three-quarters of the mobile phone market.

The lack of competition has had its effects: only one in five Mexican homes has a telephone. Broadband access is the privilege of 4% of the country's population.

Fundacion Idea Executive Director, Alberto Saracho.

Alberto Saracho: And the problem is that those sectors affect Mexicans' everyday lives. We're talking telephones, we're talking cement. We have also some public monopolies: electricity, oil, energy, so that has even further even more the inequalities of Mexico. And the problem is not private companies, the problem is the government and its regulations, and the fact that they are really influenced by very wealthy individuals.

Michelle Crowther: Firstly there's a knock-on effect for your average Jose in the street. Mexico City's airwaves are heavy with the sound of construction. But development here comes at a cost. For example, when it comes to housing in Mexico, they love doing it with cement.

Head of the financial news site, Sentido Commun, Eduardo Garcia again.

Eduardo Garcia: In Mexico we pay the highest or one of the highest cement prices in the world. And this is a country that needs schools, roads, hospitals, houses, and the little guys that are building their own cement homes can't afford to add a room, because the cement price is so high, because we have two companies that control the entire Mexican market, or 80% of the market. And when someone tries to import cement to the country, these companies pull out their lobbying and their connections with the government and stop those that try to do it.

Michelle Crowther: Carlos Slim's reach has spread. Telmex now offers fixed-line services and internet access in Brazil, Argentina, Chile, Colombia, Peru, and even the United States.

But with such a wide reach, generating an ever-increasing bulk of wealth, Carlos Slim has grown into a formidable force in the country where it all began. His would-be competitors generally lose out. Media criticism is affected by the advertising revenue he provides, and the government probably hasn't forgotten that he's the largest taxpayer.

Fernando Turner is a man with fingers in a few pies himself. He's started companies in automotive, food, rubber and real estate and as President of the Mexican Association of Independent Businessmen, he lobbies hard against the current climate.

Turner says unless the Mexican government can loosen the stranglehold of monopolists, which keeps competition down and prices high, the country will continue to lose position globally.

He spoke to Background Briefing from one of his business trips on the line from the United States.

Fernando Turner: Any economist will tell you I think, that lack of free competition in a country that on the other hand is totally open to international competition in the areas that don't belong to monopolies, affects profoundly the ability of Mexican companies to compete both abroad and domestically with foreign companies. So they reduce the incentive to invest. So I think that they are the main cause of the lacklustre growth of Mexican economy, and the lack of growth in employment.

Michelle Crowther: Can we quantify exactly what effect it has on economic growth?

Fernando Turner: Look, in Mexico, there are no studies, but you know Mexico. Mexico is a thriving, alive country, with a lot of resources, and simply you cannot explain why it has not been able to grow as fast as other nations that don't have the same endowments that we have.

Michelle Crowther: But, as Sentido Comun's Eduardo Garcia says, it's a bit of an art to stamp out monopolist behaviour.

Eduardo Garcia: As a government, you have to be very careful in not penalising those that generate wealth. At the same time I think for a country like Mexico with such wealth disparity, you do need to regulate this industry much more closely than it has been regulated up to now without killing the hen that produced the golden egg.

Michelle Crowther: The question of how Mexico got to this point, with a very small number of chickens sitting on very large golden eggs, has a fascinating answer, if you come at it from behind.

Dr Rolando Diaz-Loving researches and teaches social psychology in Mexico City, working out of a small office with paper-thin walls, at the National Autonomous University of Mexico. There's no small-talk with Dr Diaz-Loving, he cuts straight to the chase.

Rolando Diaz-Loving: In countries which are very individualistic, people find happiness in what they do. So they become somebody by doing, by working, by producing, and that's what defines them. While in other cultures there's more interest in interpersonal relationships, and being at ease with the group. In fact we find for example in Mexico that people tend to be self-modifying. When they interact with others, one of the things that they try to do is they try to make others happy. So if you want to go out to eat and somebody asks, 'Where are we going?' you will say, 'Wherever you want.' 'And what are we going to eat?' 'Whatever you like.' 'And what time are we leaving?' 'Whenever you're ready.' So there's a tendency to put other people in front of one, and that describes your happiness.

Now what happens in this type of country or culture, when all of a sudden you have to compete on a world market and most of the people are willing to co-operate, and you have somebody who's an entrepreneur, well it's fertile ground to become very, very, very rich.

Michelle Crowther: Because I was wondering where that fits in with something like the monopoly situation that we see in the business world in Mexico.

Rolando Diaz-Loving: Well what you have is a very small minority, a counter-cultural minority, which is getting ahead. And in fact if you look at many of these people and these monopolies, they're normally migrants.

Michelle Crowther: So what happens when you put an Australian into this environment?

Javier Mata is an Australian businessman who's been working in Mexico for 17 years, importing Australian livestock like dairy cattle, sheep and deer to Mexico for breeding programs.

Javier Mata: Well I was in South America at the time, in Uruguay specifically, putting together a shipment of livestock for Saudi Arabia, and the owner of the company called me and said, 'Would you go to Mexico?' and I said, 'Where is Mexico?' and the guy said, 'Don't worry about it, your travel agent knows where it is.'

Michelle Crowther: We're sitting in the living room of an immaculate house in the upscale suburb of Polanco, the aroma of cleaning products on polished floors mixes with the scent of top-shelf perfume on his polished skin.

Javier Mata: So I came over to do a market study, the result of that was that there was some business possibilities here, and so we opened an office, and it just took off from there.

Michelle Crowther: Some think-tanks say that Mexico's economic growth is not as good as it could be, because of the difficulties doing business in Mexico; to start up a business it takes twice as long as many other countries on the same footing.

Javier Mata: I think it's 100% true. Doing business in Mexico is complicated. I'll give you an example. We registered two companies for an Australian company here recently, and the process took about seven months. So I would imagine that same process in Australia would take two weeks, or a month. And that makes a bit difference. And it scares people away. Certainly the company that I was doing that work for recently, just could not believe they had to come back to the country three times, just simply to get the company started.

Michelle Crowther: Of course those rules and level of difficulty change, depending on who and where your friends are. Obstacles can be removed. For Javier Mata, it was a different cultural adjustment.

Javier Mata: We were invited here by the Minister for Agriculture to do a market study. He wanted the sheep population to be rebuilt in Mexico, and our company had the profile to do that. To make sure that we invested here, we were basically conned by the government, false statistics put together meetings with traders; the whole thing was just a complete con, including official government statistics, that were just prepared for our visit. On that basis, we incorrectly took the decision to invest. And by the time we found out the truth, it was too late, we'd committed, and that's how it started.

Michelle Crowther: It's interesting that you mention that story, because part of what fascinates Australians probably, in terms of Mexico, the way business is done, the truth or the correct ways of doing things are sometimes a little bit more malleable.

Javier Mata: Well certainly to start, we came in with a fairly naïve attitude that if government presented figures to us, then they had to be right. From there on, what you find is that sure enough, there's a lot more flexibility in the way people present the truth to you, and part of the ability of doing business in a market like this is being able to sort out what is real and what's not. There's no real school you can go to, all you can do is just knock your head against a brick wall a few times until you start to understand the body language and the language.

Michelle Crowther: But the cultural differences are not limited to always having to be on the lookout for slightly less than upfront behaviour. Javier Mata says the Mexican 'buena vivre', or good vibe, also filters through to business dealings.

Javier Mata: Not everything that you see when you come in is a negative. Doing business in Mexico is a far more personal process than it might be in Australia. You know, you do have to accept that the business that you expected to conclude today, will take three or four days to conclude and there'll be two or three lunches involved, and you might have to meet the family of your customer over the weekend, and have lunch with them, and after all of that, you're sitting down next Monday signing a contract. I would have expected that contract to be signed in the first couple of hours, in a meeting in Australia. So you have to be very patient, and in time, what you realise is that you actually enjoy the process. You expect it. And if somebody was going to a sign a contract with you without that process, then you'd be wondering what's wrong. At the same time, productivity is very low, because there's so much time spent getting to the point, I might conclude two deals this week, which in Australia would have been done by Monday night. And that was to me the biggest shock.

Michelle Crowther: Let's go back to Carlos Slim for a moment. There is a striking story that once on holiday in Venice, he spent hours haggling for a $10 discount on a tie. It's tempting to argue that the tie-seller needed the money more than he did, and to ask what is the point of having more money than anyone else in the world if you're going to waste hours on $10?

But rather than demonstrating him to be a mean-spirited person, Rolando Diaz-Loving argues that this is also cultural, and it's the key to his success.

Rolando Diaz-Loving: Basically it has to do with human interaction. There is a study with children from the US and Mexico, and basically all that they ask them is to close their eyes and say when a minute is up. And what you find is that the children from the United States say a minute is up about 55 seconds into the minute. And in Mexico children take about a minute and 30 seconds to say that the minute is up. So time is slower. And it has to do with sayings that say 'The wise wisdom of recognising time', which means you don't have to rush, you don't have to be anywhere, you take your time and you interact. One of the reasons he has so much money is because he interacts, and a lot of business is still done in meals, in having people who are loyal, and will help you, and people will work hard for you if they like you, so probably for him, this was not about the money, it was about the interaction with this person.

Michelle Crowther: So he was just doing on a micro level what he does every day with multi billion dollar companies?

Rolando Diaz-Loving: He was taking his time and interacting.

Michelle Crowther: Carlos Slim doesn't live extravagantly. Yes, his suburb of Las Lomas is probably the most expensive in Mexico City; it's characterised by high brick walls, topped by electric fences, you'll see maids in aprons walking dogs who most definitely live on more than $2 a day, and drivers ferrying their employers in luxury vehicles.

But Carlos Slim's home and office are simple, considering his worth. Slim boasts that he owns no overseas holiday villas, and wears ties from his own department store. He insists that labels like 'the richest in the world' are water off a duck's back. He says he doesn't care about the title.

Dr Rolando Diaz-Loving again.

Rolando Diaz-Loving: In the Mexican culture it's not good to say, 'I'm the best', or 'I'm the richest', because then you're putting everybody else down and you're not self-modifying. I always tell my students that we're never going to win a Soccer World Cup because we have very good goalies, because we resist, we have a good defence, and then we have the middle of the team which does things like pass the ball back and forth in the middle. But we're never aggressive, we never go for the goal because that would be kind of like insulting the other team. Most of the people who make goals in Mexico are people who come from other countries, and they hire them. So we're more of a resistance type of culture.

Michelle Crowther: Duck's back or otherwise, the fact remains that over the past two years, Carlos Slim has been making $27-million a day, while around half of Mexico's population has been making just $2.

Mexico's hacienda system was imported by the Spanish in the early days of colonisation. The system granted ownership of large estates to minor nobles, and the grant included all the indigenous people living on the land. That class system has survived in some form or other, to the here and now. Rich Mexicans still have drivers, maids, nannies, gardeners and errand boys.

This class separation is something that's felt keenly when coming from more egalitarian societies. Australian Georgia Melville again.

Georgia Melville: People who use terms such as 'muchacha' for the person who works in their house. Rather than referring to the person who works in the house with a name, because they're a person with a name, they just say 'Oh, no, that girl; this girl does that'. But another term that was used before that was 'gata', and so 'I see the gata is doing this or that', which means 'the cat'. So they weren't even referring to people who were working in their house as human.

Michelle Crowther: She says this was an adjustment particularly in the early days, when she was studying at university with Mexico's cashed-up elite.

Georgia Melville: Most people who tend to have money and tend to be wealthy are those who have got a lighter-coloured skin, and so all the people who were working in the university in more menial jobs, like gardening, they were darker people, whereas the people who were professors were always lighter. And one thing that really struck me as something that you would never get in Australia was I started dating a guy who was indigenous, in Puebla, and I remember one time I took him back to the dormitory to meet the other girls that I was living with, and I said to them, 'Hello, everyone, I want you to meet this guy, Allejandro, I've been dating him now ....' They all looked at him, didn't say anything, looked with almost their mouths open, just grunted something and then just went off. And later on they said to me, 'Georgia, I can't believe that you're going out with this guy.' And I said, 'Why?' They said, 'Look at him!' And so that was one of the first things that I realised obviously that the mixing of different classes doesn't happen so much yet.

Michelle Crowther: These days, Georgia Melville is an anthropologist, working with indigenous communities who moved through the United States and Mexico doing mainly low-paid farm work.

Georgia Melville: One particular woman who has migrated to different parts of Mexico and to the United States, pretty much moving from one third world place to another third world place. This woman I was sitting down talking to, in her kitchen in Huajaca, sitting there with the fire burning, the dirt floor and I was talking to her saying, 'You know, I just can't believe Katalina, how wealthy some Mexicans are, and how they are so different from what I've seen here in the Misteca. These people have private jets, they can fly to Acapulco for the weekend, they have three houses in different country areas.' She looked at me, and she said to me, 'Is that true, Georgia? Are you telling me the truth that these people are like that in Mexico?' She told me that she had only seen richness and different class systems in the telenovellas, in the Mexican soapies, which is just amazing.

Michelle Crowther: Without the mixing of classes, it seems that many of Mexico's poor are completely oblivious to the opulence of their countrymen.

Santa Julia is a poor neighbourhood not too far from the centre of Mexico City. Its market is a very cheerful zone of people selling music, vegetables, clothing, cooked food. The gutters are overflowing with rubbish, street corners are decorated with shrines to Mary and Jesus, and the buildings with graffiti.

If Carlos Slim's name has managed to filter to the other side of the world, Australia, how can Mexicans have never heard of the richest man their country has ever produced?

Man: Slim, I'm not sure who he is. Richest man? I'm rich too, in health.

Woman: In reality, I've never heard of him. I don't really know anything about him.

Man: Good on him. He won that capital with his work, for his intelligence. We've got a better phone service; before we had problems with lines, cutting off, crossed lines. He's a very smart man.

Man: Be careful with your microphone, you're going to get assaulted. Anyway, Carlos Slim is rich because of his famil connections.

Man: I'm not interested in his money, but he should be putting jobs back into Mexico.

Michelle Crowther: Dr Hector Zagal is a social commentator and philosophy professor at Mexico's PanAm and UnAm universities. He says this oblivion is manifested on both sides of the fence.

Hector Zagal: I taught in one of the best high schools in Mexico and one of my surprises was that my students didn't know the metro. Well they knew the metro of Paris and London, but not of Mexico. They had never been on it, they thought it had numbered seats. There are kids who don't know how much a kilo of tortillas costs. You can grow up without knowing the face of the poor. In Mexico City they live side by side, but the mechanisms allow them to block it out. If you don't know the metro, you don't know the price of tortillas, one doesn't have the idea that the poor are poor.

Michelle Crowther: It would be easy, but perhaps a little simplistic, to assume that there are no shades of grey in this story of black and white. Georgia Melville again.

Georgia Melville: One particular friend of mine comes from a family that is educated, in the sense that they've all gone to university, but they don't have money. She was born in Mexico but her mother is of English descent, and so she's very tall, very white. Without having the money to do what a lot of people who look like her usually do: that would mean having a car to drive to university, going to a private university instead of a public one, she was telling me how she used to take public transport to her university every day, which is a public university. And one day on the metro, this guy looked at her, said, 'You don't belong here with us' and spat at her. And from that day on, she never took the metro again.

Michelle Crowther: One of the most common sources of noise pollution in Mexico City is the sound of helicopters that pass overhead every ten minutes, taking businessmen who sail over the masses, to their destination.

Meanwhile under ground, for the princely sum of 20-cents, Mexico's less elite get around on a quite intricate metro system.

The metro is full of people singing for their supper, literally. In fact a trip on the metro, such a no-go zone for rich Mexicans, will bring you face to face with one of the most notable side effects and causes of Mexico's poverty problem: the informal economy.

Blind people walk through each carriage selling CDs, small stalls selling pretty much everything under the sun, line every entrance and exit to the metro.

Recent World Bank estimates suggest that more than half of Mexico's total employment is informal. It permeates everywhere, as a quick walk through the park to the market will demonstrate.

The men on the kerb waving people into car-parking spots for a tip, the nanny looking after a child whose mother is too dressed up to do so, the indigenous mother with a child strapped to her back selling handicrafts; the girl walking six dogs; the busker using an antiquated accordion to scrape together a living.

BUSKER SINGS AND PLAYS ACCORDION

Michelle Crowther: Then there's the maid buying tomatoes for her patron. The taco stall owner chopping up onion, they're all informal workers with no benefits, no insurance, and few legal rights.

Apart from the monopoly situation, the informal economy is blamed as another of the problems causing Mexico's economic disparity: the low-paid nature of work and the low tax take for government.

The major reason cited for so much illegal immigration to the United States is that Mexicans have 11 times the earning capacity if they cross the border. In Mexico, the minimum wage is $5 a day. In the United States it's $5.85 an hour. In Australia, it's $13.74 an hour.

For Australians, the experience of living in a country with such an enormous difference in the value of labour has both blessings and curses. Businessman Javier Mata again.

Javier Mata: Particularly coming here with a young family, the issue of having a maid is just like you can't believe that life can be so relaxing. I say to foreigners who come to Mexico, 'Don't doubt about it, just get yourself a maid. It's one of the great gifts that you can have in a country like this if you have a family.'

And I know people struggle after a few years of living in a country like Mexico, going back to the Australia and not having that kind of help. I was part of a young family in Australia raising two kids, both of us working. We came to Mexico and all of a sudden we had an enormous amount of freedom, as a couple, to be able to go on trips, go to the cinema, go to dinner, all those things that perhaps in Australia in your daily routine you don't do, because you've got to put the kids to bed and you've got to get school homework ready for the next day and so on. So that was a great plus.

Michelle Crowther: Every coin has two sides. Hand in hand with searing inequality and low wages for public service comes its own set of problems for the people who enjoy the conveniences it delivers.

Javier Mata: I came to Mexico and my wife and kids came about six months later. Two days after they arrived, walking down one of the nicer suburbs and one of the safest places in Mexico, a couple of guys got down from a taxi and attempted to steal her handbag. She wasn't sure what to do; she fought them, they hit her, the kids were watching this, screaming. The policeman across the road basically turned around until it was all over, and the guys ran away with her handbag, and then came over to see if she was all right.

Michelle Crowther: It's not just poverty that plays into this equation. The low cost of labour has a spillover effect on every level, particularly law enforcement, which itself spills over into the whole society.

Javier Mata: I think basically it's one of those issues of here's a policeman who earns $300 a month, who is perhaps not prepared to put his life on the line for some stranger who you just don't know if these guys just got out of the taxi and wanted to steal a handbag, or carried a gun, so just in case, don't get involved. And I remember quite clearly a few years later back in Perth, walking down the Hay Street mall and a policeman comes walking and my son just comes close to my leg and says, 'Daddy, a policeman's coming', and trying to explain to the kids that No, no, in Australia, policemen are good people. Not like Mexico, where you have to be careful.

Michelle Crowther: So if Mexico is a divided country, characterised by a gaping crevasse between rich and poor, we arrive at the question of what is being done about this, if anything? Sentido Comun's Eduardo Garcia again.

Eduardo Garcia: Mexico needs to look itself very deeply in the eyes, and decide what they want to do, what do we want to go ahead. And one element is probably to rein in these monopolies and if I think if the country does that and endorse it, I think the wealth would be more evenly distributed. It would generate many more jobs.

Michelle Crowther: Which brings us to a very interesting point, because if it's the flow-on effect, where the monopoly benefits the lives of half Mexico's population, which is living in poverty, which can't afford that extra cost, then you look at someone like Slim who's taken his philanthropic aims from $4-billion to $10-billion over four years, is it fair to say, Well that's all very well and good now, but you've gone on a back-breaking mission for half Mexico's population who couldn't afford to use the phone as much as they would like.

Eduardo Garcia: I think you could put it that way. Now I think my own personal view, giving back to the society who has given you so much, is not a bad thing on its own. If you asked me I think Slim is going to enter a third stage, where he will be more philanthropic, because of the social pressures.

Michelle Crowther: Carlos Slim's philanthropic work is nothing to be sniffed at: he's increased endowments to his charitable foundations from $4-billion to $10-billion over the next four years.

But unlike Bill Gates and Warren Buffett, Carlos Slim says his greatest legacy is his children.

In the opposite corner, Gates and Buffett have both largely bypassed their children in favour of pouring around $30-billion each into projects including elimination of disease in the developing world.

Social psychologist, Dr Rolando Diaz-Loving says the two very distinct views held by the American billionaires and their southern conquistador reflect a very significant cultural divide.

Rolando Diaz-Loving: Now what happens when all of a sudden, instead of having a small community of 300 or 400 people, you have a country with 110-million people. Very interested in the wellbeing of the family, and giving to that family, and all of a sudden you're one of the richest persons in the world. Who do you give to? Well you give to those who are close, you give to the family, because that's the tradition within the culture. But then that creates a great disparity because you have another 109-million people who do not have access to this person.

Michelle Crowther: But philosopher and social commentator, Dr Hector Zagal says two more factors play into the different approach to altruism in Mexico.

Hector Zagal: Mexico has the worst scenario, because our philanthropy has Christian roots, but since the 19th century the Christianity went culturally backwards. In reality it has very little presence. Here in Mexico it's got a picturesque ritual presence, but it doesn't have a structural presence. Compare that to Europe and the United States. If you count the number of Christian philanthropic institutions in proportion, Mexico should have much more presence in hospitals, and schools. We don't see our philanthropy as social justice. It's a Catholic country, there's practically no Protestantism, but Mexican Catholicism puts its emphasis on the following: to be Catholic is to be sexually moral and go to mass. It's never permeated to social aspects.

Remember that the PRI government stole money and the money didn't get to the poor. So as you said, a Mexican prefers to give to someone in the street, rather than to an institution, because we don't trust the institutions, there's no adequate feeling to build up the philanthropic organisations.

We've only got six years of democracy, we don't have that tradition of social democracy and point of reference for an egalitarian society.

Michelle Crowther: The last decade has been a big one for Mexico. It's recovered from an economic crisis, elected its first democratic government in a century, and produced the world's richest man. But as for the next decade, some say this country is far from out of the woods.

Fundacion Idea Executive Director, Alberto Saracho again.

Alberto Saracho: They say that the best of people comes out in hard times, and I expect hard times to come in the very near future, in the next six years. And let me explain why. First of all we are starting our demographic transition. When this Administration ends, that will be late 2012, there will be twice the number of young Mexicans trying to enter high school than there is right now. That's twice in six years. And that is not a forecast, that's a fact. Unless something happens to that generation, which hopefully nothing will happen.

And we're certainly not ready for that generation to start demanding education, we're certainly not capable of attending that demand of new jobs, new educational services, new medical services, and that will create a crisis in the fiscal system, in the pension system, and probably in the political system. But if Mexican history tells us anything, we have been able to do as a society, huge and very important changes during crisis.

Michelle Crowther: Everyone has their own spin on what happens next for Mexico. In the meantime, it remains a mess of contradictions and, at times, confusion. The country's two faces make for two very different possibilities for those who decide to build a life here.

Businessman Javier Mata again.

Javier Mata: So basically her attitude from day one was I cannot raise my kids in a country like this. It was her experience, and I'm almost sure if she hadn't had that initial experience, but had the first two or three or four months of the pleasant side of Mexico, the culture, the buildings, the architecture, the archaeology, all the things that attract you about Mexico, the food, which is amazing, then it would have been a different story. But particularly in her case, she found Mexico very difficult to take, to the point that after two years, she couldn't cope with so many things about Mexico, that she finally gave up and left. And that was one of those mysteries you know, people come to a place like Mexico for six months and stay for 30 years, and other people come on a three year plan and can't stand the place and leave in six months. And it's the same country, it's the same city. So it just operates differently for different people I guess.

Michelle Crowther: This is Michelle Crowther reporting for Background Briefing in Mexico City. The co-ordinating producer in Sydney has been Linda McGinness. Website, Anna Whitfeld, technical operator, Mark Don, and Executive Producer, Kirsten Garrett. You're listening to ABC Radio National.

THEME

Presenter

Michelle Crowther

Producer

Michelle Crowther