In our new and improved news tab, I saw a story posted by Chachaji about how Mukesh Ambani was now, at least temporarily, the richest man in the world!
Billionaire Mukesh Ambani today became the richest person in the world, surpassing American software czar Bill Gates, Mexican business tycoon Carlos Slim Helu and famous investment guru Warren Buffett, courtesy the bull run in the stock market.
Not actually the richest man in the world, but he is in the top five.
Following a strong share price rally today in his three group companies…the net worth of Mukesh Ambani rose to 63.2 billion dollars (Rs 2,49,108 crore). In comparison, the net worth of both Gates and Slim is estimated to be slightly lower at around 62.29 billion dollars each, with Slim leading among the two by a narrow margin. [Link]
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p>If this was true, I thought, it was a meteoric rise. In 2006 he was ranked 56th richest in the world according to Forbes, in March of 2007 he was still only number 14. That got Rajni the monkey fact checker curious, so she poked around further.
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p>It turns out that Ambani isn’t the really richest man in the world, although he may be in the top 5 along with Carlos Slim, Bill Gates, Warren Buffett and Lakshmi Mittal:
Reliance Industries moved swiftly on Tuesday to deny a report that company chief Mukesh Ambani has become the world’s richest man thanks to a surge in stock market. An agency report putting his wealth at $63.2 billion hailed his rise as another triumph for the nation’s booming economy. But Reliance said Ambani was not quite so rich after all, with a net worth of somewhere in the region of $50 billion. [Link]
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p>This is still a huge increase, seeing as he was worth only $20 billion in March, but it doesn’t put him at the top of the heap either.
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p>Honestly though, to me this is all arcane like counting angels on the head of a pin. Once you’re wealthier than Midas, it doesn’t matter to me how much you have. My question is, when will Ambani and Mittal become philanthropists at the level of Buffett and Gates?
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This is indeed one of the questions I had in mind – though I would also ask whether a financial architecture which permits such huge concentrations of wealth (5% of GDP or 6.3% of GDP or even 2%) begins to significantly undermine both the posited efficiency and the actual legitimacy of both the financial system and the associated political economy. A related question is what changes in tax law or inheritance law are needed in India to encourage philanthropy. When one looks at the philanthropy of the Gilded Age billionaires (the Rockefellers etc) – at least a strong motivator was the legitimacy issue and the ‘Robber Baron’ stereotype, the antitrust philosophy etc.
As a general point, I’m all for Rupee millionaires, even millions of rupee millionares, but once you have rupee trillionaires (a trillion being a million million) I begin to worry.
My question is, when will Ambani and Mittal become philanthropists at the level of Buffett and Gates?
Within India, Birlas and Tatas have for very long time quite a bit of philanthropy.
Wipro is involved in lot of educational initiatives.
Mrs. Nita Ambani is the philanthropy arm of Reliance Industries. When one looks at the philanthropy of the Gilded Age billionaires (the Rockefellers etc) – at least a strong motivator was the legitimacy issue and the ‘Robber Baron’ stereotype, the antitrust philosophy etc.
Nelson Rockefeller was the most ruthless businessman, they ever will be……he took mom and pops in Pennsylvania, Texas, and all, oil companies in Amreeka, Europe out of business as a matter of his will, by controlling the price structure of oil.
I brought this up a bit in a previous post. I’m not saying that wealthy Indians don’t engage in philanthropy, I’m saying that Indians in the same wealth range as Gates and Buffett aren’t giving away nearly as much as the American Billionaires are, but they’re consuming in the same range (Mittal owns one of the world’s most expensive houses, etc).
I think this notion of ‘when is he going to do philanthropy’ is a bit premature – let him be the world’s richest man for 10 yrs first 🙂
Seriously though I object to discussions about whether a rich individual should give, as if it would be unethical not to. Maybe I’m a minority amongst the less-than-a-million bunch, but I don’t think there is a obligation for rich people to give, nor should society assume they must. Larry Ellison of Oracle is rich but he doesn’t give much, and I think it’s his right to not give if he so chooses. In the same vein, I think the State is just trying to make off with some loot upon a person’s death, with all the focus on inheritance taxes. To my mind, it’s none of anyone’s business whether some person bequeaths his/her wealth to someone else. I certainly don’t think it’s ethical to mold tax laws so as to coax philanthropy.
All the result of the Indian stock market. IMO, the Indian stock market is fundamentally overvalued; that doesn’t mean the froth is going to dissipate any time soon but it eventually will. I was in Delhi for a few days and everyone and their massi was talking market. American financial folk wisdom indicates that that means it’s time to sell.
This reminds me of Japan in the 80s and their real estate asset bubble. There was one “billionaire” who was in jail, convicted for negligence in the burning down of his Tokyo hotel, but the land under which it once stood qualified him for inclusion.
Even before the most recent Sensex rally – back on October 10th, the Top 15 business families in India had a wealth of about 20% of India’s GDP.
So it’s not just about Mukesh Ambani or the latest stock rally. And by the way, Forbes ranks his dispute with his brother Anil, (whose wealth is about the same give or take a few billion) in the “Top 10 Billionaire Feuds”.
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chachaji– my thoughts exactly! There’s that set of concomitant arrangements that are needed to enable well managed good works to flow from a burgeoning private sector.
The “latest stock rally” has been going on for a long time 🙂 That would be 20% of India’s GDP for a single year. I think Reliance Industries actually contributes 3-4% of India’s actual output.
See, this is where we disagree. If somebody can save the lives of others, with virtually no inconvenience to themselves, I think it’s wrong not to.
Suppose I am catching fish off a pier and somebody falls in and is going to drown and I don’t throw the life preserver which is hanging off the piling next to me, is that ethical behavior? Can I respond that nobody should tell me how to spend my time? Or perhaps that people wouldn’t be drowning if they were more careful or if they knew how to swim or if they only came down near the water with friends?
People are dying. There are simple things that the very wealthy can do that make little or no impact on their personal enjoyment of their fortune that would save some lives or raise the quality of others. I’m not arguing that they should spend their fortune down to their last dollar. I am saying, however, that they do have a positive obligation to do something.
I think for Mittal philanthropy is far-fetched. The employee benefits are not even close to Microsoft or Ikea….
I visited a town in Orissa, India where pretty much everyone works at Mittal group owned factory. They have no roads, the plant has a pretty bad accidents rate and the slag is not disposed properly. The employees who live close to the plant have all kinds of respiratory problems.
I think LN Mittal himself does not have any Steel Plants in India but they are owned by Mittal group. Before his recent acquisitions in Europe and North America he made most of his money in countries with loose labor laws.
Clarification to the comment above. Lakshmi Mittal does not own any steel plants in India. The one in orissa you mention is that of his two younger brothers. He has seperated from them. The different between Mittal and Ambani is plain and simple. Ambani inherited an empire from his father and exploited it even further for his own extravagance. i mean lets be serious. Now L.N.Mittal, born in Indian village with no water, makes his empire on his own sweat and blood, educated in india.. is let loose outside the boundaries of the indian state and unleashes entrprenurship the world has not seen since andrew carnegie. He turns the tables on the white european wasps, the jews, the chinese, the japanese, the south africans. He is an example of what an indian businessman is capable of, if you allow an open free market to exist, unlike the license raj.. insanity.
Let LN Mittal show the world india is not just it techies, doctors and attorneys. He is the future.. and when he old and retiring then he can do his charity. Did any one ask Warren Buffet about charity when he as 56 ???
Why harp on an indian when he makes it to the top of the worlds forbes list.. on why he isnt doing enough charity.
JEEZ and on top of it.. u forget he is from the ruthless marwari community.. which scares even the jews.
Well, it took quite some time for Bill Gates to be interested in philanthropy, more so after he let go of the reins at MS. Probably Ambani has some more years to go before he reaches that stage and starts giving.
Mukesh Ambani’s smorgasbord of businesses provide direct and indirect employment to hundreds of thousands of needy Indians. In addition to that his companies greatly subsidize their employees’ ( all thousands of them ! ) housing, healthcare as well as the education of their employees’ offspring – perks that go a long way in uplifting the budgets of poor and lower middle class Indians and are usually unheard of among the rank and file in corporate America. Even if such perks can be interpreted as cost to business of retaining employees as opposed to the unambiguously selfless giving of Gates and Buffett, their charitable effect on the recipients can’t be denied.
Warren Buffett invests in businesses not unlike the ones built up by entrepreneurs like Ambani but doesn’t himself create countless livelihoods. Mircosoft employs mainly technology professionals who would hardly die of hunger were it not for Bill Gates corporate brainchild. Besides hiring professionals to run his processing and manufacturing businesses, Ambani provides for thousands of poor Indians with low skills who would otherwise be un-employed and thus destitute. Gates and Buffett don’t have such a direct opening to poor beneficiaries in first world America. Hence the predominant attention to the suffering poor overseas.
But yes, Buffett isn’t ever going to be rivaled by Ambani in his pledge to give away most of his fortune. Neither will the latter ever emulate Buffett’s famously spartan living. I am not sure though if it’s really an Indian vs American character thing. In the larger scheme of things the Indian is the parvenu whereas the American is all old money. Each will behave accordingly.
smorgasbord of businesses provides
I Personally like both Gates and Buffett very much.
I’m saying that Indians in the same wealth range as Gates and Buffett aren’t giving away nearly as much as the American Billionaires are, but they’re consuming in the same range
This guys just got at this position. Gates came at this position 14 years back and he became philanthropist just now. Wait for 15 years these guys will be bigger “philanthropist” then gates and buffet. Please stop comparing. Mittal has opened a sports foundation for improving Indian performance in Olympics. neither gates nor buffet has done that. You just cant compare few things like that.
How many childrens you/I or any other indians adopt. Compare it to same earning people in US. We dont follow what others do. Why do we expect Ambai/Mittal to follow. They have made their fortune by hook or crook let them decide what they want.
I don’t understand the need for people like Ambanis to donate any of their wealth to worthy causes. Mukesh Ambani employs thousands to people and that alone should be enough. This employment is akin to teaching people to fish, rather than giving them fish. Plus, all the taxes that his companies pay go a long way in helping the Indian government pay for hospitals, schools for the disadvantaged members of the society. And it is the government’s job to provide for affordable healthcare and education for people who cannot afford private hospitals/schools etc. We should not expect Ambani to pay for any of it.
And as for the rich families in India controlling a disportionate amount of wealth, it is becuase the government policies make is extremely dificult for entreprenuers, big and small, to open and run busineeses. The fault here lies with the inane laws/policies of the Indian government so I do not understand how it is the fault of the rich if they control 5% or 10% or whatever of the GDP?
I’m sorry, but the Indian government is so, so inefficient and corrupt. This is why India needs NGOs and private charities. And men less rich than Ambani have started their own charities, e.g. Telugu film actor Chiranjeevi.
My guess is that Ambani doesn’t care too much right now because he doesn’t want to get involved in politics…
this is funny, b/c America is really the nouveau riche to western Europe’s old money.
You’re right. Millions (possibly billions) of dollars channeled towards rural water sanitation, malaria vaccines, education and literacy, post-conflict rebuilding, childhood health interventions, sustainable agriculture, etc., just DO NOT COMPARE to improving a country’s sport performance at the Olympics. There’s a pretty strong argument that investments in human capital also “teach people to fish,” and oftentimes they aim to ensure that people live long enough to be able to fish.
I don’t think the affluent have a unique obligation to address wealth inequality, but I do think there’s a social value in everyone taking on these challenges.
Perhaps it’s not useful to project your experience to other desis? I don’t think there’s statistical data on this (razib?), but I have a feeling that you would find more diversity in giving patterns among desis of different socioeconomic backgrounds (relative to the rest of the U.S.) than your statement assumes, particularly if you incorporate charitable contributions abroad and religious contributions. I wish I could find the stats, but within the U.S. charitable giving is disproportionately concentrated among low-income earners (those within 200% of the poverty line). Food for thought.
The call to philanthropy is a bit mis-guided. Arguably, Messrs Ambanis do more good for the Indian (and world) public by being efficient competitors.
A related question is what changes in tax law or inheritance law are needed in India to encourage philanthropy.
You know, envy is a vice in pretty much all cultures.
Bill Gates is a real tight bast**d; I once wrote to him asking for some money and he never even wrote back. Philanthropist, my ass.
We know Ambani family on a personal level. Mukesh’s uncle (Ramniklal – Dhirubhai’s brother)who split with Dhirubhai few decades ago, and Dhirubhai himself, both were involved in lots of charity and other philantropic work which were not that widely publicized outside Gujarat. As someone suggested give enough time and Mukesh Ambani might outshine Gates and Buffets of the world soon!! It is amazing what destiny has in in store for one. Dhirubhai worked for my wife’s uncle in Aden and was renting one of his house – back in 40’s. In just one generation Ambani’s have done what Tatas and Birlas have not been able to do in several generations. I am just saying. So Ennis, the question is not “will they be like Gates and Buffets”, the question is “when”.
I absolutely agree with Yo dad, a lot of western charitable giving is combined with a lot of media circus, which is thankfully not happening in India yet. Tatas, Birlas, Ambanis and Narayan Murthy’s families have all be involved in major charitable programs. Tatas for instance have a big scholorship fund for students going to study abroad and their work in Jamshedpur for one is commendable. I feel there is no point being cynical, the wealth is just being created, the larger amounts of charity will soon follow. There are people in India who donate all they own to take sanyas so please lets not make it an “Indians are not charitable” pissing match.
On a separate note, the stock market in Bombay is up 67% in the last year.
It’s a misnomer to think that they cannot do both. By setting the two in opposition, you’re implying that philanthropists rob the company coffers to get money for charity, thus decreasing production.
When Bill Gates gives money to stop disease and build schools, he’s not reducing the capitalization of Microsoft to do so. He’s selling his own personal shares, and instead of consuming the income, he’s donating it. MS has just as much investment as before, since somebody else buys the shares. And by using the money to invest in health and education, he’s actually making a huge investment in economies around the world. The broader social returns to that sort of spending are quite high, most importantly to immunization and education of girls.
If you were right, then the government should stop spending on health and education and build a large company that would employ many people. However, if they did that, the ROI on their investment would be less not more.
I think the responsibility on them is higher because the marginal cost to them is less given the decreasing marginal utility for income. My lifestyle would not change between $55 billion and $56 billion, however I could help others a huge amount with that one billion.
Ennis, you are doing a good job of making your point. I agree with you completely.
Ennis,
You are assuming that they are not doing any charity, like others have mentioned, charity is being done not being publicized.
I think the charity that they do is not at the same scale as their consumption, nor is it at the same scale as peers with similar levels of wealth. In the earlier post, people were able to come up with some examples, but it soon became clear that we were talking a much smaller scale.
As for publicity, the wealthy in India are hardly shy about spending money in a lavish public fashion. Mittal spent over $50 million for a house and $30 million on a wedding (if I remember the numbers right). I haven’t even heard of a similar $10 million dollar gift to charity.
These guys have money and are not averse to spending it. I’m saying they could do other things too that would lead them to be remembered far longer.
there are detractors out there. This segment on the radio [scroll down and click on part 3] had a discussion on the power of philanthropy. The gates’ foundation in particular was discussed. One of the points – though these foundations try to run aid were it a business, complete with metrics , timelines etc. results do not necessarily show a net improvement. Another line of thinking goes that these gazillionaires have made their money off the back (directly or indiretly) of the people they’re trying to benefit.
On the flip side I’ve heard the upcoming malaria vaccine (x’ed fingers) was funded in a large part by the gates. my takeaway is that there are some charitable efforts that carry more punch than others.
listen to the segment. it’s a good hear.
Ennis, the five dollars in your wallet will help me maximize my utility for the day.
Gates and Buffetts’ charities of large magnitude are a recent phenomenon. You will be hard pressed to find examples similar to Gates and Buffett even in corporate America. You can’t talk about personal consumption without talking about the Trumps, Jeff Epsteins and Stephen Schwartmans of Corporate America. Do you know how much charity Roman Abhramovich does? Once again if you haven’t heard of it doesn’t mean it doesn’t happen. Charity is not publicized in India like America where Oprah’s, Gates and Buffett hold regular press conferences to trumpet their charitable causes.
This argument that they provide employment and therefore have no need to be charitable is irksome. I doubt they provide employment because the people will live better lives. They do it so they can make the next billion.
If the end result is personal wealth, then the money’s most efficient use would be to build another factory and employ more people. If, on the other hand, the end result is improving the human condition, I would argue that wiping out malaria would be the best use of money. If the end-goal was to improve India’s position in the world, then I would be spending my money to improve social mobility and entrepreneurship.
Doesn’t this statement mix dimensions? GDP is annual production. Net worth is a valuation based on the latest marginal transaction. In fact, I think Indian stocks are priced for an almost-perfect outcome. And having lived in India, that’s questionable.
As a Chelsea fan, traditional utility metrics won’t work to answer this question. A happiness indicator of sorts is a good start (“Are you happier in 2007 than you were in 2002?” Yes!)
Lets see if the Man U fans can say the same thing about Glazer and the relative happiness quotient:)
Rumor mills say Mittal gave away millions of dollars to the Hindu temple in Chicago right after his acquisition of the steel plant in Chicago
while i mostly agree with this post, i also think we’re all part of the problem and it’s too easy to put the burden of charitable giving on multi-millionaires and billionaires. imagine if all the time we spend on this blog, sometimes discussing fun but ultimately useless topics (including what most poor people would consider luxury consumer items that we all buy and which are not necessities of life by any definition) that have no effect on bettering this world, had been put towards something more productive. it’s easy to castigate, but not many of us are willing to give up our own cosy lives or the things in it to really be of more use to the common good. imagine if all the money spent on food and drinks at meet-ups/movies/restaurants/holidays/music albums had been diverted to charity instead? a poor, starving person doesn’t care if the $100 came from a billionaire or from one of us. the effect on his life is the same. most of us probably spend more on non-necessities as a percentage of our income than is warranted.
Of course it does! There’s a bit of the old stock/flow issue if you read too much into it. Wealth is “stock”, income is flow. In this case, wealth is also mostly in company stock valuation, so quite variable.
The point, however, is to drive home the scale of the wealth, and in this case also, how fast it has risen, even given that the Indian Economy itself has been growing at 8-9% p.a. The following numbers provide more context:
Carnegie and Rockefeller.
But even at a lower level, the very wealthy in America have always had a social obligation to give. Amongst old money charity events were an important part of the social circuit, giving was linked to reputation.
Chachaji,
I agree with you, the problem is imposing American sensibilities to an Indian context is that we are comparing apples to oranges, America is a $13 trillion economy where as India is under $700 billion. The top four by absolute numbers including Germany and Japan don’t have the same media fuelled circus, which doesn’t mean that the rich in those countries are not fulfilling their social responsibility. They are just not as vocal about it as their American counterparts. For me a good thing to explore would be the reasons why the larger American Philanthropists don’t believe in anonymous giving.
Ennis,
Exactly, that is the point I am trying to make, there is a peer pressure on giving, in the circles you talk about, that I have seen in my limited time here. I am sorry for repeating myself, I don’t think there is as much noise anywhere else in the world. I am not sure that the Carnegie and Rockafeller histories are as black and white as one would assume.
this is totally off topic, but this is what a friend who knows some folks who work for ambani mentioned once:
“a friend of a friend works for this guy and says he’s HUGE – whenever he gets on his corporate jet he eats an enormous meal of rotli, daal, baath, shack and then goes straight to bed – sleeping for up to 15 hrs at a time”
my buddy calls ambani the Notorious G-U-J-U- hahah!!
It’s a misnomer to think that they cannot do both. By setting the two in opposition, you’re implying that philanthropists rob the company coffers to get money for charity, thus decreasing production.
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I was thinking more about which is a better use of Mr. Ambani’s (or Mr. Gate’s) time. The time these gentlemen spend trying to earn honest money generates more public good than the time they spend working for charities. Childhood immunization etc. are worthy goals. Why not give the parents a lump sum money (in the form of a trust, if you so desire) to spend on their children as they see fit; of sufficient amount to cover immunization, some fixed number of years of elementary education (say five years) and some other sundry. THis is more efficient way to do good. The parents do know what is best for their children; more than Mr Gates, with all due respect to the gentleman; and their is less lossage in the form of the unscrupulous leaching off aid money. It will generate less headline space for Mr. Gates, though. Sounds far worse as well: “Gates solves malaris problem in Bihar” reads better than “Gates gives his money away to bozos”
Gates actually is congizant of donations being used wastefully. You cant go to Gates with any sob story and expect a donation. You have to prove that your idea to help people will work.
i don’t know about the ambanis/mittals, but i agree with those who say there is a lot more publicity attached to charitable giving in the west, especially if it’s done by a “celebrity.” for example, australian cricketer steve waugh has made a name for himself with his support for the charity udayan in kolkata. it/he receives a lot of media publicity. so you often read comments from indians like “look at steve waugh and what he does for charity. now look at selfish cricketers like tendulkar, dravid etc.” but the truth is that tendulkar and dravid do their charity in their own way in a much less publicized fashion because neither particularly likes a lot of publicity. tendulkar apparently invites terminally ill children with cancer visit him at his home, donates equipment to needy schools and does other things. dravid has his own charitable interests. but until the indian fan sees this written in a newspaper, he likes to think that the indian cricketers are all selfish guys compared to the australians who have the media in tow when they visit various orphanages/charities while on tour in india. this is not to say that the australian efforts aren’t genuine, they are, but media coverage certainly helps their image.
This was an interesting piece on charitable giving in the new york times: http://www.nytimes.com/2007/09/06/business/06giving.html?pagewanted=print
What people do with their money is their own business…
M. Nam
This means that Indian stock market has peaked. Follow the simple rule … “When stock page news becomes the headline of the main page … it is time to sell”
I agree with you, the problem is imposing American sensibilities to an Indian context is that we are comparing apples to oranges, America is a $13 trillion economy where as India is under $700 billion
India is over a trillion right now. Remember the dollar has been in a tailspin, so in exchange rate terms, India “grew” 25% last year. Actually the inflow of foreign money into India’s capital markets (which is a big reason for the current bull market), is sending the value of the rupee higher. Let’s blame whitey and his capital for making Mittal so bloody rich, lol.
no one he has mentioned an important moral argument which questions the very right of these industrialists to keep most of their profits (from this perspective, industrialists are not doing anyone any favors by engaging in philanthropy). this moral argument in based, to a large degree, on institutionalist (among other) theories of “value” (here i am discounting marxist labor theory, which is most probably wrong). essentially the argument contends that productivity of “capital” can never be traced to one or even several isolated factors. it is a product of hundreds of years of social evolution (think about social knowledge, for instance, as a pool from which industrialists and other business people draw to make profits; this incidentally is only one of innumerable uniquely “social” factors which businesses gain from). thus there is no automatic moral “right” to appropriation of “value”.
to add another thing, neo-classical economics does not yet have a theory of what makes capital “grow”; i am referring here to the famous “cambridge capital controversy” where sraffa basically showed that (neo classical) economics cannot explain the augmentation of capital (see his “production of commodities by means of commodities”).