The libertarian writer Ayn Rand once wrote that wealth is the product of man’s capacity to think. We see no need to dispute that prescient comment, given the central role that human knowledge and innovation play in the economic growth process.
Rand’s statement also serves as a useful starting point to read the new listing by Forbes magazine of the world’s wealthiest individuals. Bill Gates and Warren Buffett head the rich-boy list (there are very few women in it). The two men, who happen to be friends, have amassed wealth in excess of $50 billion mainly thanks to their intellect. Many of the other plutocrats who come from the US and Europe have also made their billions from pure creations of the human mind, from software to consumer brands. There is Bernard Arnault of the French snob brand company, LVMH, at No 7. Or Sergei Brin and Larry Page, prophets of the Great God Google, who are at No 26 because of an algorithm they wrote.
But look at the rest of the world—scents and search engines make way for clunky stuff like oil-exploration rigs and metal smelters. As you move away from the US and Europe into countries such as India, Russia, Hong Kong and Mexico, mind gives way to matter. Natural resources and entitlements become suddenly much more important. The billionaires from these countries tend to be in industries that depend on natural wealth—where supply constraints are common. It could be land (which they stopped making a few million years ago), mining and metals (where fortunes are often built on government concessions) and telecom (where bandwidth is a slave to the laws of physics).
This shift can tell us how the very nature of wealth creation is different in the poorer nations of the world. The richest man from an emerging market is Mexico’s Carlos Slim Helu, a telecom tycoon. Nine of the 10 richest Indians have made much of their wealth from mining, metals, land or telecom. Azim Premji is the only exception.
Down the line, there are a few who have made fortunes in software, investments, consumer goods and pharmaceuticals, sectors where the role of human knowledge is more important. But let’s face it—these new-generation industries have not yet broken into the big league. Forget DLF’s K.P. Singh and his $10 billion. Even smaller land barons are richer than many of our most accomplished software entrepreneurs. It’s not as if there’s no role for human ingenuity in their success. These men have taken risks, used technology to convert raw materials for human use, brought managerial vision to run their business empires. Many others got telecom licences in India, but only a Sunil Mittal could use the bandwidth he has hired to create serious wealth.
In that sense, India’s business tycoons are of a different breed from Russia’s robber barons, a class that emerged victorious in the asset-grab in Russia in the mid-90s, as Boris Yeltsin dismantled the communist state in a bid to consolidate his rule. Many of the Russian billionaires operate on the cusp of business and crime—and face the ire of Vladmir Putin as he tries to reclaim the powers of the communist state (though in a new garb). But let’s leave the qualification aside for a moment. It says a lot about the nature of Indian business that, despite all the hype about the software industry and its successes, you are far more likely to be in the big-billion league by controlling traditional resources rather than by employing tens of thousands of bright engineers. This will undoubtedly change in the years ahead, but when? India still awaits its Bill Gates.
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