According to an intrepid survey by Accountemps that investigated what stresses out CFOs, balancing work and life responsibilities was listed as the biggest drag. This beat out office politics, keeping up with accounting and finance regulations, higher workloads, and a "challenging commute." Maybe all these men and women wouldn't be so stressed if more of them had the chance to unwind at a nice country club. Just a suggestion. [Accountemps]
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How Huge Companies Are Dragging Down Our Economy
- GoingConcern
- March 4, 2010
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
There are three pieces in the blogosphere today that touch on the fundamental problem with our economic system and why it will remain in a ditch, or just lurch onward to the next crisis, if it isn’t addressed.
And that is monopoly. I’ll leave aside the politics of that, which is addressed well enough by Thomas Franks over at the Wall Street Journal. In a nutshell, he warns of a return to feudalism, which I’ve done as well before.
What struck me as new was this analysis, which made me realize that the macroeconomic problem with monopolies is that they discourage hiring and capital investment.
After all, if you have a market locked up, your profits are so high that it makes no sense to take any risk on new investment. You just keep doing what you’re doing with the resources you have, hoping to maintain your barrier to entry. Oh sure, you expand, but only by acquiring competitors so as to keep your monopoly intact and your margins high.
Capital investment? Hiring? Forget about it. There’s no need. In fact, you want to reduce those things. That’s called synergy.
So where does expansion in GDP come from in that case? It derives more and more from speculation about where your stock price will go. Multiply that to the nth degree, a process known as financialization that’s been taking place for decades, and everything ultimately becomes geared to asset prices, with the bubbles and busts that inevitably ensue.
Yes, this description is woefully simplistic and won’t pass muster in a traditional macroeconomics course. There’s also plenty of room for argument as to what degree monopolies currently dominate the economy.
But it seems to me that this is the sort of analysis that’s required to restore the economy’s health. How else, after all, can one explain the paltry amount of hiring and capital investment we’ve seen since the late 1990s?
The point of such a discussion, of course, would be to come up with a solution to the problem. As cogent but unfashionable as its description of the problem may be, the Marxist view expressed in the Monthly Review article cited above is that it cannot be solved because of the irreconcilable contradiction at the heart of capitalism, and that political instability of the highest order is thus inevitable. Sorry, but no thanks.
The alternative: Vigorous antitrust enforcement, which, as Simon Johnson of MIT points out, is what the progressive Republicans pursued a century ago when financial trusts threatened to put a stranglehold on the entire system.
Indeed, breaking up monopolies, in banking and elsewhere, strikes me as the only viable means of growing the economy without creating a more dangerous asset bubble in short order.
Yes, you could conceivably do it instead through better regulation, and I’m all for that, but the back and forth we’ve seen in Washington over financial reform shows that better regulation is impossible until the economic power of the banks, and the political influence that goes with it, is sharply curtailed. The Federal Reserve and other bank regulators had all the authority they needed to keep banks in check, but failed to do so. Why? It wasn’t because they were dumb.
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CFO May Have Considered Reenacting a Scene from The Untouchables
- Caleb Newquist
- May 17, 2012
Mark Oleksik, CFO of Talos Partners has enthusiams: On April 30, Oleksik was in a […]
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Will Self-insured Companies Bear the Brunt of Rising Healthcare Costs?
- GoingConcern
- June 1, 2010
This story is republished from CFOZone, where you’ll find news, analysis and professional networking tools for finance executives.
The employer-sponsored health care system provides health insurance to more than 60 million people–but it does not exist in a vacuum. Employers are often reminded of this fact when their health care costs go up each year. Factored into that cost increase are premiums employers pay to hospitals to help those institutions provide care to the uninsured.
Two years ago the actuarial firm Milliman put a price tag on this cost-shifting: employers pay an additional $1,115 more for a family of four’s health insurance to make up for this loss. That totals about $88 billion annually.
This cost-shifting is once again becoming an issue as the federal government looks to provide insurance to people who cannot otherwise get it because they are considered high-risk.
States have for years created high-risk pools to separate the people with especially high health care costs from the rest of the population. Normally these folks can’t get insurance. The high risk pool absorbs some of the cost to insurers.
Now the federal government is getting in on the action, in large part to address the issue that insurers regularly refuse to issue insurance to some people or they do so at rates that are prohibitively high.
A new analysis on so-called high risk insurance pools that the federal government will set up as soon as July as a result of health reform makes the point that the money allotted will run out much sooner than originally thought. Instead of covering as many as 7 million people who could qualify there will likely be enough money to cover about 200,000 annually. This is not surprising. The need is always greater; the funds always inadequate.
So what does this all mean for employers?
It appears one step removed. But, as employers know, the health care system is fragmented yet, in the end, someone – either the federal government or employers – ends up paying the cost. In the analysis, published by the Center for Studying Health System Change, the authors point out that states with high risk pools currently do not assess self-insured employer plans.
Under the federal law this will change. Employers will face an assessment. One possibility is that the assessment will have to go up in order to increase the amount of money in the pot. The other of course is to limit who can get access to the high risk pools.
It remains to be seen what kind of conflict this issue will provoke. Like many other aspects of the new health care reform, it has the potential to fade away or to metastasize into something problematic.
But one thing remains likely: costs will continue to go up. The question is who will pay for these costs? If these assessments are any sign, it will be insurers and self-insured employers.