By Raffique Shah
Sunday, October 26th 2008
LAST week, when I suggested that the masses of poor and middle-income people across the world may yet have the last laugh in the midst of the global financial crisis, many readers laughed at me. “You can’t be serious?” several of my friends called to ask, exploding into loud guffaws. “Of course I am,” I responded. I proceeded to explain why I thought the super-wealthy would cry more tears than the wretched of the earth.
The latter have known only tough times. Hundreds of millions struggle to stay alive in countries where drought, floods or thieves disguised as political dictators reduce them to homelessness and starvation. Thousands die daily, mainly children and older people. The unemployed and working poor exist day-to-day, and this not only in developing countries. In the USA, for example, many Americans who have lost their homes in the sub-prime mess, and their jobs in the financial crisis that ensued, now live in shelters, caravans, cargo-containers, even in their cars!
Hunger pangs are not easy to cope with, especially when we hear children crying for food. Older folks, many of them suffering with debilitating diseases, quietly bear their multiple burdens until death relieves them from suffering. The working poor are forced into budgeting exercises that would make the Minister of Finance look dumb. At the middle-income level, except for those who want to live champagne lives on mauby pockets, we have mastered the art of survival. We may emerge from this crisis battered and bruised. But we’ll live to fight another day.
Not so, the super-rich. I shall not attempt to peer-beyond the fortress-like fences and walls of our local elite, many of whom must have fallen victims to their own wiles (and greed), as I suggested last week. It is in the stratosphere of global wealth that the fallout from the crisis has hit hardest. Take Indian steel magnate Lakshmi Mittal, listed fourth on the most recent Forbes magazine “rich list”. Mittal, whose net worth stood at US$45 billion in June, lost an estimated US$10 million an hour since then as share prices in Arcelor-Mittal tumbled on the stock market.
Put another way, the Mittal family shareholding in the company fell from US$51 billion to $18 billion. Of course, that would not badly affect his net worth or reduce him to a pauper. Far from it, the joint owner of English football club Queen’s Park Rangers, who also owns the most expensive mansion in Britain (valued at US$128 million), will ride out the global financial meltdown. In a worst-case scenario, should he lose 90 per cent of his wealth he would still have a few billion dollars to play with.
It seems that as Divali approaches, Maha Lakshmi has not been kind to India’s new “rajahs”. Companies owned by its five richest, India-based tycoons, lost around US$110 billion since the start of the year. The battling Ambani brothers, Mukesh and Anil, who are worth US$43 billion and $42 billion respectively, lost an estimated $60 billion as shares in their companies plummeted. Not escaping the run were K.P. Singh (net worth US$30 billion), as well as Sunil Mittaland Azim Premj. Interestingly, while Rattan Tata’s huge conglomerate encountered problems getting his US$2,500 “Nano” car plant established in West Bengal (the natives were restless they protested its planned location), his companies were not among the big losers in share prices.
Across in icy Russia, that country’s new oligarchs face a worrisome chill that could freeze them out of business. The top 25 post-communism overlords lost some $240 billion over the past five months. Aluminium tycoon Oleg Deripaska (net worth $28 billion), who invested heavily in Moscow’s properties market, has lost around $25 billion. The best known Russian here in Trinidad, Roman Abramovich, because he owns Chelsea FC, lost more than $20 billion as share prices in steel producer Evraz fell from a high of $131 to $14. Like their counterparts in the USA, many of whom lost even more than the Russians and Indians did, they are now turning towards the Kremlin to bail them out. Prime Minister Putin, who still wields influence there, is not impressed.
Meanwhile, the world’s richest man, American Warren Buffet, seems to have thrived in troubled times. Known for his generosity, some time last year Buffet pumped some $20 billion into Bill and Melinda Gates’ charitable foundation. He strongly condemned George Bush when the president imposed new taxation laws that favoured the rich and hurt the poor. He screamed loudly that his secretary was made to pay more tax (on a pro-rated basis) than her boss. “It’s not fair!” he shouted. You don’t need to guess how he will vote in next week’s presidential election.
I have delved into the affairs of men (oh, there are women among them, too) whose wealth elevates them to God-like status. Mostly, they are selfish, greedy, harsh towards their employees, care nothing about the poor. If anything, the global meltdown will humble them. The higher you climb, they will learn, the harder you fall. That adage applies to the wealthy as it does to politicians.