Asian workers suffering from global labor arbitrage?

Eddie Lee has posted In Search of the Virtuous Cycle over at Global Economy Matters, which addresses the idea that, in Korea at least, "weak domestic spending has left the economy vulnerable to a downturn in its booming export sector." He mentions Taiwan, Japan, and Singapore as having domestic consumption issues as well. Lee states that "There is widespread agreement that the East Asian Tigers are feeling the weight of the global labour arbitrage– it is a reason why median real income growth is modest at best." So workers in these countries respond to reduced income growth by reducing their spending, whereas US workers respond by maintaining consumption through taking on increased debt. There is clearly a major cultural difference with respect to attitude towards personal debt at work here.

However, US consumers are benefiting from low interest rates due to the willingness of Asian countries to park their export earnings in US debt. Paradoxically, if Asian workers increased their spending, their countries would need to rely less on exports for GDP growth, which in turn would allow for repatriation of capital currently invested in the US which could be invested locally, which would generate increased productivity which would allow for increased domestic income growth. Whew! That's a long sentence, but it sounds like a virtuous cycle to me.

"Rigged: The Novel of Financial Deception" a must read

You can find this novel online at this link... it is a mystery novel where the plot revolves around a protagonist who finds himself assigned to a special project that leads him to power struggles at the highest levels of a corporation that curiously resembles General Electric. The author is Ross M. Miller, who just happened to have "founded General Electric's quantitative finance research group and led the quantitative risk management task force at GE Capital."

The novel is well-written and entertaining; once I started reading I couldn't put down the mouse:)...one could describe this book as "Primary Colors" for the business world.

Dr. Miller is the author of "Paving Wall Street : Experimental Economics and the Quest for the Perfect Market".

Inefficiency in hospital management a serious problem

An article from the October 2005 edition of Health Care Financial Management describes the state of one sector of hospital operations as follows: "

No matter the size of the organization, billing inconsistencies affect all healthcare facilities to some degree--even those that are on top of the problem. On average, providers lose 5 percent of gross revenues, and that can translate into millions of dollars for a single organization.

"There's no hospital in this country that is accurately charging for all the services it provides. There's none," says Joe Pajor, executive director of patient access and business services at Stamford Health System, Stamford, Conn.

Getting paid for all the services and supplies that a hospital provides would seem like an elemental strategy in order for any hospital to function, but many CFOs are not even aware of the scope of the billing mismanagement issue.

While those in finance positions may know that their hospitals cannot stamp "paid in full" on every claim, Pajor believes the industry in general is not being proactive in implementing measures that will ensure accurate charging and reduce the amount of denied claims.

"And I think that's because a lot of CFOs still say there's not that much money there," says Pajor, noting that some CFOs brush aside the issue, arguing that so many services these days are paid on a fixed rate case basis anyway.

That may be true, but Pajor still believes that many CF Os are missing the point, if not the dollar sign.

And, he should know. Pajor says that by better managing Stamford's billing processes, the hospital was able to recover approximately $750,000 in net revenue that otherwise would have been lost. He says total net revenues for Stamford are about $240 million.

"So, it's significant," he says. "In this day and age, you start looking at the nickels and dimes, they add up. They add up over time."

One study by America's Health Insurance Plans found that 14 percent of claims submitted to payers are denied and one out of every seven claims had to be resubmitted, appealed, or written off by providers. That represents millions of dollars in lost revenue that some CFOs aren't even looking for.

Aside from the direct impact from the loss of revenue, there's an additional impact on resources because of the expense associated with reprocessing denied claims."

I highlighted in bold several shocking statements. This type of inefficiency would result in failure of the business in most other industries.

Japan's Fiscal Conundrum

Edward Hugh has a well thought out post over at Japan Economy Watch which addresses the fiscal problems that Japan faces due to its combination of a large national debt and aging population. Edward raises the prospect of that combination resulting in a default scenario for the Japanese government sometime in the future. This is quite a radical viewpoint in light of the prevailing wisdom that Japan will be able to eventually return to its glory days of economic ascendancy.

Meaning of the trade deficit

An interesting discussion at The Trade Deficit....