BREAKINGVIEWS - Crony capitalism lives on for mega-rich
-- The author is a Reuters Breakingviews columnist. The opinions expressed are his own --
By Martin Hutchinson
WASHINGTON (Reuters Breakingviews) - It was a good year for billionaires. Rising markets helped create 200 more of them in 2010, bringing the tally to 1,210, according to the new Forbes rich list published on Wednesday. But when counting their fortunes against domestic economies, Russia and India rate among the highest. In some developing economies, connections are still the fastest track to wealth.
As ever, contemplating the figures boggles the mind. The bounty of Carlos Slim, the Mexican telecoms magnate who is the world's richest man, equates to about 8.5 percent of what his country produces. By contrast, the $1.5 trillion held by the 413 American hundred-millionaires, including stalwarts in the rankings like Warren Buffett and newbies like Facebook's Mark Zuckerberg, adds up to nearly 11 percent of Uncle Sam's GDP.
In other developed places where affluence is generated primarily by industry, pluck, inheritance and investment, the influence doesn't quite measure up. Billionaires in the more egalitarian societies of Western Europe generally account for no more than 4 percent of their respective economies. In Asia, the exceptionally opulent Japanese of the late 1980s are long gone, while South Korea's burst asset bubble has restrained the wealth of the ultra-rich.
Of course, it is in developing economies where fortunes are accumulating fastest. Crony capitalism, rather than entrepreneurism or family estates, is the engine for some. In Russia and India, which rank low on another more dubious list -- Transparency International's Corruption Perceptions Index -- billionaire fortunes represent about a third and almost a fifth of their respective GDPs. Indeed, Moscow now has more billionaires, 79, than any city in the world, according to Forbes. India, meanwhile, has fewer in the elite money club than fellow BRIC, China, but they are on average nearly twice as rich.
The Middle Kingdom boasted 115 billionaires, including 29-year-old real estate heiress Yang Huiyan. Their combined wealth corresponds to about 9 percent of the country's economy. But in this, as in other respects, China may simply be inscrutable. It quite likely has more and richer billionaires than the magazine's researchers have discovered.
-- The Forbes magazine ranking of the world's richest people contained 1,210 billionaires, 20 percent more than were on the 2010 list. Their total net worth was $4.5 trillion, a 25 percent increase from the previous year. Mexican telecoms magnate Carlos Slim was at the top again, adding $20.5 billion of personal wealth, to reach $74 billion, according to the analysis published on March 9.
-- Forbes 2011 list: www.forbes.com/billionaires
(Editing by Jeffrey Goldfarb and Martin Langfield)
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