Economy

Last night, Simon Rosenberg went onto Fox Business Channel to talk about a point we've been making at NDN for awhile: The Obama administration's plan for more stimulus is grounded in solid economics and is far more likely than a spending freeze to help the United States avoid a double-dip recession. Calls for sudden, total austerity are not only economically misguided, they misread the public mood: amid all the cable-news chatter about the deficit, it's surprising how few Americans actually list it as their primary concern in polls. The economy and joblessness remain Americans' top concern by a wide margin.

Here's Simon:

With President Obama set to give a major speech on comprehensive immigration reform, we'd like to present some key analysis and narrative on fixing our broken immigration system.

The pieces below represent important components of NDN's thinking and advocacy on immigration reform.

New Polling Data Shows Comprehensive Immigration Reform has Broad Support by Kristian Ramos 6/18/2010

Analysis and commentary on recent polling data on SB1070 and CIR. While polling shows support for the Arizona law, a deeper examination shows even more broad support for passing CIR.

New Policy Institute: The Impact of Immigration and Immigration Reform on the Wages of American Workers by Robert Shapiro 5/26/2010

An economic report written by NPI Fellow and Former Under Secretary of Commerce Dr. Robert J. Shapiro, presents an accurate portrait of America's immigrant population, dispels certain misconceptions about American Immigration and offers economic analysis regarding the impact of immigration, and proposed immigration reforms on wages and the economy.

The Economics of Immigration Are Not What you Think by Robert Shapiro 5/26/2010

NPI Fellow Robert Shapiro highlights some of the important facts featured in his economic report on immigrants and the wages of American Workers. An important primer for the economic realities of immigration reform.

Ambassador Arturo Sarukhan and Chairman Alan Bersin: A Conversation on a "21st Century Border" by Kristian Ramos 5/24/2010

NDN/NPI was proud to host Mexican Ambassador Arturo Sarukhan and Chairman of U.S. Customs and Border Protection Alan Bersin to discuss the first joint U.S.-Mexico vision for a "21st Century Border."

Transcript of US-Mexico Event with Saruhkan and Bersin

Immigration Reform Enters a New Phase by Simon Rosenberg, 4/30/10

With the passage of SB1070, the immigration debate has entered a new phase  NDN President Simon Rosenberg weighs in on this new dynamic by noting that federal lawmakers and the Obama Administration can no longer argue that reform can wait.  

NDN Statement on New Immigration Framework by Simon Rosenberg 4/29/2010

With the Republican party refusing to come to the table to work with Democrats on cir, Senate Majority Leader Reid joined Senators Charles Schumer and Robert Menendez to present a Democrats only immigration framework. NDN's statement on the notes that this middle of the road policy proposal provides an excellent opportunity for Republicans to join the immigration debate.

New Politics Insitute: Hispanic Rising 2010  by Andres Ramirez and Kristian Ramos 4/27/2010

This New Policy Institute Report examines the rapidly increasing Hispanic population in the United States and how it affects the politics and policy of our time.  The rapid increase in the Hispanic population in the U.S. is one of the most tangible demographic trends of the 21st century. This report delves deeply into the population and polling numbers to present a clear picture of the Hispanic populations growing economic and political power.

This past Thursday and Friday, NDN's own Alicia Menendez made the rounds on cable news to do battle on a number of important issues. Above all, she succeeded in reinforcing a message that has become abundantly clear after the Obama administration's successful last week: the administration has shown decisive leadership with its handling of Gen. Stanley McChrystal's comments in Rolling Stone. On the economic front, Alicia argued, the recent Republican filibuster of the Senate jobs bill shows which party actually has a concrete plan for mitigating the effects of the Great Recession (we'll leave you to guess which one).

As usual, she succeeded in moving beyond talking points and finding a nuanced, pragmatic common ground. Here she is on MSNBC's Dylan Ratigan Show on Friday:

With the economy at the center of national attention, we'd like to present some key analysis and narrative on creating jobs and growth and understanding America’s place in the 21st century global economy. These pieces represent components of NDN’s thinking on and advocacy for a new economic strategy for America.

Busting Washington Myth #1: Americans, Especially Moderates, Really Care About Budget Deficits by Jake Berliner, 6/18/10
Despite what one may hear from pundits, pushing for near-term austerity is neither good policy nor good politics.

The Fall Economic Narratives Begin To Take Shape by Simon Rosenberg, 6/15/10
The battle this fall will center on contrasting economic narratives, and the conservatives are making their argument about austerity clearly. The center-left must respond with an argument about a plan to create prosperity.

Memo to the President: Resist a Simpleminded Push to Cut Budget Deficits Now by Dr. Robert Shapiro, 6/10/10
While tightening budgets to control deficits may be politically opportune - the economics behind the decisions do not add up.

The Economics of Immigration Are Not What You Think by Dr. Robert Shapiro, 5/26/2010
Drawing on a major report on immigration and reform proposals, Shapiro corrects much of the misinformation about the economics of immigration.

Rediscovering the Obama Narrative by Dan Carol, 4/21/10
Carol lays out an Obama-esque vision for public-private, bottom-up economic development and innovation.

Keeping the Focus on the Struggle of Everyday People: 2010 Edition by Simon Rosenberg 1/26/2010
More than ever, we need to recognize that the lack of income growth for average families is the greatest domestic challenge facing America today, and lead a national conversation about how we can create a plan that addresses the struggle of everyday people.

Crafting An American Response to the Rise of the Rest by Simon Rosenberg, 1/21/2010
In this new essay written for Salon, Simon lays out three strategies for the Obama Administration to craft a comprehensive response to the new politics of the 21st Century.

A Lost Decade for Everyday Americans by Jake Berliner, 12/17/2009
In this white paper, we argue that everyday Americans are at the end of a “lost decade” and explain the still misunderstood causes of the virulence of the recession.

The New Landscape of Globalization: The Real Foundations of American Prosperity in the 21st Century by Dr. Robert Shapiro, 6/20/2007
Shapiro offers this forward-looking paper on the state of globalization, the structural problems facing the American economy, and a road map to prosperity in this new economic era.

Here is your end of the week news round up.

ASSOCIATED PRESS - Media Mogul Rupert Murdoch and New York Mayor Michael Bloomberg have joined several leading businessman to push for comprehensive immigration reform with a pathway to citizenship.  Read it here. Excerpts Below:

Chief executives of several major corporations, including Hewlett-Packard, Boeing, Disney and News Corp., are joining Mayor Michael Bloomberg to form a coalition advocating for immigration reform – including a path to legal status for all undocumented immigrants now in the United States.

The group includes several other big-city mayors and calls itself the Partnership for a New American Economy. It seeks to reframe immigration reform as the solution to repairing and stimulating the economy.

Bloomberg and Rupert Murdoch, chairman and CEO of News Corp., appeared together Thursday on Fox News to discuss the effort.

GANNETT - NDN President Simon Rosenberg is quoted here on the changing demographics of party politics in Chuck Raasch 's piece Minority Gains in South Carolina offer hope to Republicans. Simons quote below:

It reflected what Simon Rosenberg, the head of the left-leaning New Democratic Network, says are lingering tensions even in a party of diversity.

"With the Republicans (changing demographics) is an evolving story," Rosenberg said. "And I think the Obama team clearly understood this more than the older parts of the Democratic Party.

"There are a lot of Democratic politicians who grew up in 20th Century America and are at the end of their careers and look around and see kids with I-Pads and all these people of color (and say), 'That is not the world that I understand, that is not the world I grew up in.' "

 

HUFFINGTON POST - Robert Creamer wrote a great op-ed on how  increasingly nativist view of immigration coupled with SB1070 create potentially fatal mistakes for the GOP. Read Evidence that Arizona Immigration Law may be Fatal Mistakes for the GOP ASAP.

ASSOCIATED PRESS - Stephen Colbert has started a tongue in cheek campaign to have unemployed American Workers take farm working jobs. Read Immigration Farm Workers Challenge: Take Our Jobs.

BOOMBOX - I think Chuck D Pens new Anti-Arizona Immigration Law Anthem, says it all...

THE HILL - Rep. Trent Franks AZ (R) penned an op-ed on SB1070, Obama Administration has Disastrously Mis-handled Arizona Immigration Situation.

CNN INTERNATIONAL - Clock is ticking on Immigration Reform Legislation

ASSOCIATED PRESS - Liz Sidoti gives a great summary of what is going on in Arizona in her article Immigration back on Front Burner due to Az. Law.

If you have not yet read NDN Globalization Initiative Chair Dr. Robert Shapiro's report on how immigrants affect the economy of the United States, I suggest you do so here immiediately.

The report entitled The Impact of Immigration and Immigration Reform on the Wages of American Workers is a must read primer on the economics of immigration.

Dr. Shapiro recently sat down with the Economist magazine to discuss his paper. The full audio of the interview is below. I highly recommend you listen.

The right national policy isn’t always hard to figure out. Take broadband. As broadband becomes increasingly important for most Americans seeking access to economic opportunities and public information, it’s obvious that universal broadband service is an appropriate goal for public policy. Not only are most job openings today posted only online, so is most information about health care, government services, education, and most personal services. Perhaps more important, the ability to do most jobs depends increasingly on a person’s knowledge and capacity to perform well in workplaces dense with broadband and information technologies, which in turn people can greatly facilitate when using broadband is part of their daily lives.

So, it matters that last year, for example, only 46 percent of African-American and 48 percent of Hispanic households had broadband service, compared to two-thirds of white households.  

It’s also not hard to figure out how to close those gaps and achieve universal broadband service by the end of the decade, the stated goal of President Obama and nearly everyone else. Start with what we know about how personal computers and dial-up Internet became ubiquitous. The key lay in two singular forces: Scientific advances increased the usefulness of these technologies, and those advances and market competition helped drive down their prices. These same forces already have driven the spread of broadband, in less than a decade, from essentially zero to nearly two-thirds of all American households.   

There’s often a hitch, of course, and this time it comes from recent technological advances which could sharply drive up broadband prices, especially the wild popularity of video applications which gobble up bandwidth at 100 to 1,000 times the rate of text applications such as email. Facing a quantum jump in demand for bandwidth, the nation’s Internet Service Providers (ISPs) find themselves with two choices: Increase their long-term investments in broadband infrastructure by huge amounts, which someone will have to pay for – $300 billion to $350 billion over 20 years, by the FCC’s reckoning – or let Internet congestion slow down everything in their customers’ online lives. Since the second option isn’t acceptable to almost anyone, the new public policy question at the heart of the drive to achieve universal broadband has become, how can the ISPs pay for the additional investments without hiking broadband prices so much that digital divides become permanent?

This problem is further complicated by outside efforts to convince the FCC and the Congress to set new rules directing how the ISPs should charge for broadband. Such rules could effectively require that the additional costs be added to the flat monthly fees everyone now pays for broadband service. But a new study out this week shows that the outcome of the fight over these rules will likely determine whether we achieve universal broadband anytime soon or, in the alternative, find ourselves stuck for a long time with digital divides that leave millions of lower-income Americans offline. The study, issued Monday by the Georgetown University Center for Public Policy and Business – and written by Kevin Hassett and myself – simulates a number of ways to pay for the additional investments and measures the impact of each on the path to universal broadband.

First, we asked what happens if the additional costs are passed through in the monthly flat fees that everyone currently pays.  Since broadband is already a nearly “mature market,” with new users joining at a slower pace than before, this approach would translate into monthly fees in the range of $70 per-month. While a number of factors affect whether people adopt broadband service, cost is the largest – and especially for lower-income people who unsurprisingly are most sensitive to cost increases. So, we can expect that a pricing system which forces ISPs to pass along their additional investment costs in higher fees for everyone would push universal broadband far into the future – and that’s just what our simulations found. By 2020, nearly one-fifth of African–American and Hispanic households would still be without broadband service. In fact, broadband fees would likely be so high that 15 percent of white households also would be offline at the end of the decade.

The alternative approach comes from another striking phenomenon seen here and around the world: A relatively small share of all broadband users – 10 to 20 percent, tops – account for the vast majority of the new pressures on bandwidth.  These are people who watch scores of videos online every day, spend hours in multi-player online game worlds, or use broadband to watch HD television shows and movies. This fact can shape a new pricing strategy: Pass along most of the additional costs to those who consume vast amounts of bandwidth or the content providers transmitting extremely high bandwidth offerings. There is no reason why broadband should remain an “all-you-can-eat for one price” facility, especially if it means raising prices so much that millions of people have to give it up.

We simulated what would happen if broadband providers passed along 80 percent of their additional investment costs in higher prices to the 20 percent high-bandwidth users and their content providers, with the remaining 20 percent of those costs borne by the rest of us. This approach puts the United States back on a rapid path to universal broadband: By 2019, all racial, ethnic and income groups should find themselves within one or two percentage points of universal adoption.

A word to the wise at the FCC:  Do not consider any rules which, however inadvertently, might force the nation’s broadband providers to stick to their current, “one-price (or two) fits-all” pricing approach. When it comes to promoting universal broadband and regulation, it turns out that less truly is more.

Laura is the summer Globalization Initiative Intern at NDN and a Summer Academy Fellow with the Roosevelt Institute. She is a Political Economy and Mathematical Economics double major at Tulane University in New Orleans, Louisiana.

NDN has long argued that the state of the economy is the most important driver of instability in the American electorate. Unsurprisingly, the same tends to be the case globally. The Pew Global Attitudes Project released a survey June 17th that included information on public perception of the economy in different countries (see graph).

Interestingly, no countries in the survey where 50% or less of the population felt that the economy was in trouble were experiencing significant political instability. Conversely, only 5 out of 17 countries surveyed where 55% or more of the population felt that the economy was in trouble were experiencing relative political stability. The other twelve countries exhibited signs of political instability, such as governing party changes and declining approval ratings for elected officials. Below are some comparisons between the economy and the political climate in each country:

Japan: In Japan 88% of the public feels that the economy is doing poorly. This has been reflected strongly in Japanese politics: Prime Minister Yukio Hatoyama stepped down June 2nd in part due to his inability to fulfill economic improvement promises made during his campaign. The Finance Minister from his cabinet, Naoto Kan, was voted to replace Hatoyama 291 to 129.

Spain: Eighty eight percent of the Spanish public thinks that the economy is doing poorly. This has been strongly reflected in Spanish politics as well - Prime Minister Jose Luis Rodriguez’s proposals to bring down the deficit have only been seen as desperate acts to remain in office. The Prime minister, whose economic policies have been called inconsistent at best, might have to call early elections due to looming budgetary disagreements. 

France: Eighty seven percent of the French people feel that the economy is doing poorly. This has strongly affected French politics – due to the deficit fears, the French government proposed a series of austerity measures, including raising the retirement age by two years and increasing income taxes on the rich. Nicholas Sarkozy, whose ratings in opinion polls have been tumbling, has spread these reforms out over the course of several years to ease the pain, but still show that he is taking measures to reduce France’s budget deficit.

Lebanon: The economic situation in Lebanon has had less of an impact on politics, perhaps due to the strong growth prospects. The IMF predicts that Lebanon’s GDP growth could top 8% in 2010 thanks to improved domestic stability and prudent policies. Yet, serious structural problems remain, including a debt-to-GDP ratio higher than that of Greece, gaps in infrastructure (particularly electricity), and weak domestic production, which contribute to the weak opinion on the economy.

 South Korea: The economy has had a relatively weak effect on South Korean politics. South Korea recovered relatively quickly from the global economic recession and before President Lee shifted the focus of mid term elections to the sinking of the Cheonan, his public approval rating hovered around 50%.

Pakistan: Pakistan is plagued with several economic problems, including severe energy deficits, water shortages, and rampant corruption across most of the government. These problems have resulted in a very unstable political environment. In 2008, The Eurasia Group’s Global Political Risk Index found Pakistan to be the most unstable emerging market in the world, with a score of only 41, citing events like the assassination attempt on Prime Minister Yousuf Raza Gilani. 

Egypt: The improving economic outlook in Egypt is keeping the political environment relatively stable. Although surging inflation and food shortages last year led to vast public unrest, President Mubarak was able to maintain control. Now Egypt is experiencing significant growth, though markets are somewhat rattled by the lack of a clear successor to Mubarak.

Britain: The poor economic situation in Britain did in part lead to a change in party control. Britain recently underwent a change in Prime Ministers. Gordon Brown, who presided over one of the worst periods in recent economic history, was ousted for David Cameron, who pledged fiscal austerity while reviving the economy.

Mexico: Politics in Mexico were strongly affected by the economic downturn. Mexico’s economy took a hit in 2009 due to its ties to the U.S. economy, the decline in tourism due to violence and the threat of H1N1, and declining crude oil prices. President Calderon’s PAN political party took a hit in the midterm elections, losing control of Congress.

Argentina: The economy played a big role in political change in Argentina. President Fernandez lost control of Congress in the mid term elections in part due to a slowing economy. However, the recovery that Argentina is now experiencing is boosting President Fernandez’s ratings.

Jordan: The economic downturn has played a significant role in Jordan’s politics. King Abdullah II dissolved parliament in late November 2009, a move seen as an attempt to clear the way for new elections and speed up economic reforms.

Russia: Despite recent economic troubles, the political climate in Russia is stable. The Kremlin’s $200 billion stimulus package and the recovery in oil prices led to an improved economic situation, and the country has seen increased political stability.

Nigeria: Although there is a positive growth outlook for Nigeria, corruption and undisciplined fiscal policy prove problematic for the country and could threaten political stability. Elections are set for 2011, and the incumbent government is increasing spending and holding the interest rate at 6%, producing possible inflation problems.

Turkey: Though Turkey was somewhat affected by the global recession in 2009, its economic prospects are largely positive moving forward. According to Goldman Sachs, Turkey has the 17th top economy in the world and political stability is on the rise.

Kenya: Political stability is a huge problem in Kenya, though political stability threatens the economy more than the other way around. The perceived instability largely results from deep divisions in government, which have kept the Cabinet from meeting for a long time.

Germany: The current economic climate is having a significant impact on German politics. Two recent polls found that a majority of Germans believe the government won’t serve out its four-year term. Current events in Europe have created an overriding emphasis on fiscal austerity, which Chancellor Merkel has taken to heart with her own $97 billion austerity package, but this threatens to alienate some in her governing coalition.

Indonesia: Indonesia, the largest economy in Southeast Asia, is enjoying a period of relative economic and political stability. On June 21, 2010, Moody’s raised the outlook on Indonesia’s local and foreign debt to positive from stable, underlining the country’s ability to sustain strong economic growth and praising the stability and effectiveness of its fiscal and monetary policies.

Poland: Following a steep depreciation due to the global recession, the zloty stabilized in early 2009 and has recovered since, contributing to Poland's role as an anchor of stability in the region despite the dismal economic climate. Poland’s economic and political stability remain strong despite the plane crash killing a large swath of Poland’s top government officials.

India: Indian GDP has increased 7.9% over the last four quarters, and there is high political stability. The Reserve Bank of India has increased interest rates in an attempt to tighten monetary policy, though there is fear that this may squeeze credit.

Brazil: Since curbing inflation and instituting market reforms in the 1990s, Brazil has shown an impressive rate of economic growth in the range of five per cent. Also, unlike most other BRICs, Brazil is a democracy, allowing it to enjoy political stability and economic growth.

China: China is experiencing massive economic growth, and despite recent labor protests, China’s government remains very stable.

If you spend enough time here in Washington, watching cable news, or reading the opinion (and sometimes the news) pages of major newspapers, you’re likely to be told that budget deficits are a top tier or even number one concern to the American people. Furthermore, moderates (the people, who, according to conventional mythology, decide all elections – more on that here) REALLY care about these budget deficits. Therefore, it’s good politics to be a deficit hawk.

Unfortunately for those who ascribe to this way of thinking, this way of thinking is nothing but a myth. Let’s take a look at the results of an Economist/YouGov Poll that came out of the field ten days ago. Responses to “Which of these is the most important issue for you?” - 

The economy is by far the most important issue, double in importance the next closest (healthcare!), and is incredibly important to moderates. Americans also view the budget deficit as less important than social security, (which, incidentally, is an entitlement we’re going to have to look at to deal with deficits down the line) and moderates rank immigration and education above the budget deficit in importance.

This poll does not exist in a vacuum. The New York Times/CBS News Polls for the last year have put economy/jobs well over 50 percent and the budget deficit down at or below 4.

So who does care about budget deficits? From both polling and anecdotal evidence, it’s clear that it is conservatives who see deficits as a core issue, with nearly 20 percent ranking it as their most important issue. It’s fairly obvious that tea partiers have identified the budget deficit as their number one issue, and they are anything but moderate.

Over the next few months, an argument will be waged about how to best pull America out of the worst economic downturn since the Great Depression and create path to a truly 21st century economy. As in all things Washington, the arguments will be based a bit in policy and a lot of politics. In this case, economists tell us that pursuing austerity in the near term ranges from silly to having the potential to cause a double dip recession. What politicians need to understand is that, in addition to being bad policy right now, austerity isn’t good politics either. 

Of course, a cursory examination of those pushing the austerity meme should be a signal to the center-left (and many in the media, who’ve bought the deficit argument). Just because Joe Scarborough, David Brooks, Peggy Noonan, etc sound reasonable does not mean we should take their advice. (Would you let an opposing team’s coach tell you what plays to call?) And even though it sounds like they’re giving advice, they’re not. They’re making an argument about the way the economy and our politics work. The worst thing the center-left can do is buy the right’s talking points about budget deficits. Instead, we have to have and sell our own about creating broad-based prosperity. 

Fortunately for the center-left, the correct policy is also the correct politics. The opposite side of that coin is that buying the conservative meme about deficits, and therefore cutting when we need to be growing, is both bad politics and bad policy. And it’s bad policy that will make the economy worse, which is the worst politics of all. The center-left would do well to not suffer that ironic fate.

For more, read:

The Fall Economic Narratives Begin To Take Shape by Simon Rosenberg, June 15

Memo to the President: Resist the Simpleminded Push to Cut Budget Deficits Now by Dr. Rob Shapiro, June 10

This year’s notorious Supreme Court decision on campaign finance found that corporations have the full rights of individuals, at least in that area. The truth is, most of us do approach big companies as if they were people – and then, when those companies wreak havoc on the country, no one can be found to hold accountable. Congress can pass new regulations, but that’s little consolation to the victims. Anyway, both the Wall Street meltdown and the Gulf spill unfolded not only because regulation was lacking, but because enforcement was lax where regulations did exist. In both cases, we see signs of “regulatory capture,” with the SEC and the Minerals Management Service applying existing regulations in ways which, at a minimum, permitted the persistent risks that eventually led to disaster. In the quest for accountability, there also inevitably will be lawsuits. But that may not produce real accountability either. The companies may not survive to pay any judgments; and when they do, the costs fall to shareholders. The executives whose decisions brought on the crisis are left unaccountable – a moral hazard of the first degree – and the rest of us are left unsatisfied. 

Some of the public’s outrage about both crises probably stems from people’s assumption that large companies do operate like people, at least in respecting broad social norms. So, we expect our bank to be concerned about our personal finances, a view implicitly encouraged by the sketchy form of the neoclassical economics that dominates public discourse. In an abstract world of the perfectly efficient market, that market constrains banks to offer us goods and services that serve our interest; in the real world, our banker’s retail job is simply to sell us his bank’s products based on how profitable they are to that bank. And even when we recognize the difference, we assume our bank won’t abuse our trust, because the law will prevent it and, anyway, educated people just don’t act that way.

Similarly, whether or not Gulf residents expected oil companies to share their concerns about their regional environment – and many certainly did have those expectations – the market was supposed to ensure that the risk of incurring $20 billion or more in liability costs would prevent reckless operations of deep-water rigs. For how this works in the real world, think of Toyota: Like Toyota, BP adopted a calculus in which cost-saving measures outweighed those risks; and in deep-water drilling, that often involves less stringent safety systems and standards. So, even as BP was fined much more often than its rivals for deep-water rig safety violations, BP shareholders enjoyed years of higher returns.

If we can’t depend on regulation or potential liability to stop reckless corporate decisions, it’s time to focus less on the corporate “person” and more on the actual people who make those reckless decisions. The laws of corporations have long shielded a company’s decision makers from personal liability for corporate decisions, based once again on the idealized view that market competition will reliably drive executives to make decisions based on their shareholders’ best interest. But economists have long recognized – it’s called the “agent-principal problem” – that the interests of executive decision makers (the agents) can diverge sharply from those of the shareholders (the principals). And how those executives are rewarded for their decisions can make that divergence very wide and deep if, as with both Wall Street and BP, they can earn huge bonuses for steps that boost short-term earnings even when the decisions that generate those earnings eventually bring down the company. While Paul Volcker and a few others have called for a ban on such compensation schemes, Congress has bowed to Wall Street protests, in a form of “legislative capture” as dangerous as its regulatory counterpart.  

The result are nearly perfect conditions of moral hazard for America’s top executives, especially in critical areas like finance and energy, where their moral hazard can be most dangerous to the rest of us. Since moral hazard affects the top decision makers, perhaps more than their institutions more generally, the Wall Street and Gulf disasters suggest that it’s time to revise the limited personal liability provisions of the corporate form: The government should be able to sue executives personally for decisions that turn very bad for the rest of us – involving costs of, say, at least $25 billion – when those decisions entail risks that rise to a standard of negligence. This change could even be part of broader tort liability reform. But whether it is or not, it’s time to pierce the veil of the corporate “person” and get to the real people whose personal interests repeatedly lead them to embrace risks that end up harming tens of millions of others.