The key challenge that healthcare enterprise leaders face is determining how to drive innovation while addressing problems of affordability, inefficiency and gaps in quality. This task is now complicated by strong economic headwinds that limit the resources available to attack these problems. Industry executives are also dealing with new sets of competitive and regulatory pressures on their efforts to drive business growth.

At Columbia Business School’s 5th Annual Healthcare Conference held in New York City on November 21, over 500 students, alumni and other professionals heard more than 40 speakers and panelists discuss these issues.

The featured healthcare leaders said they are embracing change to develop creative solutions to the industry’s growing problems and to provide attractive investment opportunities on a global basis. A career strategies panel of executive and corporate recruiters also presented their views on the skills and talents necessary for healthcare professionals to succeed in this dynamic environment. This was followed by a concluding career fair and networking reception with the conference’s 17 corporate sponsors.

Ed Ludwig ’75, chairman and CEO of BD (Becton, Dickinson), gave the opening keynote address. Ludwig said that a successful global healthcare company must use technology, scale, global reach and operational excellence to offer value-added products. These products should reduce costs, enhance the quality of patient care and generate sustainable earnings growth.

Following his remarks, four concurrent panels took place in the morning session on the topics of pharma and biotech, medical devices, diagnostics and payor/provider issues.

The pharma and biotech panel discussed the trend among companies to narrow their therapeutic priorities, focus on biologics, pursue licensing and target acquisitions and seek enhanced productivity and cost savings. Numerous early-stage biotechnology companies are turning to larger pharma and biotechnology firms to survive as they are unable to secure capital from the public market. Global medical device companies are seeking to introduce innovative and cost-effective products in a challenging regulatory and pricing/reimbursement environment and pursuing acquisitions and new markets to meet growth objectives. The consensus of the payor/ provider panel was that any healthcare reform in 2009 would likely be incremental due largely to economic and political headwinds, and that a key focus would be on information technology and expanding access to those without insurance coverage.

Robert Essner, former Chairman and CEO of Wyeth Pharmaceuticals and now executive-in-residence at Columbia Business School, provided the lunchtime keynote speech. He suggested that although the pharma industry faces significant challenges, the combination of new drugs, biologics and vaccines in key areas of unmet need (e.g. Alzheimer’s, cancer, congestive heart failure) and the massive influx of informed baby boomers, who are demanding health solutions, provides favorable long-term growth prospects for innovative global pharmaceutical companies.

Three afternoon panels covered M&A, life science investments and emerging markets. It is anticipated that healthcare M&A will remain active across all sectors and that consolidation among Big Pharma companies appears inevitable. Early-stage life science companies and investors face a capital squeeze, which is threatening the viability of existing companies with lower levels of funds available for new investment. Emerging markets are an increasing focus for global pharmaceutical and medical device companies that are seeking new markets for their products.

The final panel of the day focused on the changing talent acquisition and development strategies of major healthcare enterprises. Panelists commented that successful leaders will need to have global and cross-functional experiences; that employees should be open to lateral moves that broaden their skills and experiences; and that healthcare companies considering new hires are seeking a broader “toolkit” of skills that reach beyond the traditional focus on healthcare backgrounds.

For more information about the conference and sponsors visit www.cbshealthcareconference.com.

In his address last night President Barack Obama tried to rally support for his health care reform agenda, and announced for the first time that he would consider raising taxes on families earning more than $1 million a year, which is a scaled-back version of an earlier proposal that would have imposed a surcharge on households earning $350,000 or more.

Rita McGrath, associate professor of management and author of Discovery-Driven Growth, worries that the cost of health care reform could still take an overwhelming toll on small businesses.

“I’m concerned with the plans for funding it,” says McGrath. “It seems disproportionately aimed at smaller businesses and small business owners.”

McGrath argues that the taxes hikes needed to underwrite the reform program will fundamentally alter the “structure of incentives” (a term borrowed from William J. Baumol’s “Entrepreneurship: Productive, Unproductive and Destructive”), for small business owners.

She points to several ways that could happen: high taxes will diminish the amount of working capital companies have available; the tax structure places artificial constraints for the number of employees (fewer than 25) for small businesses to remain in a lower tax bracket; and small business owners’ energy will be diverted from innovating products to innovating ways to not pay more taxes. Ultimately, she argues higher taxes will diminish a strong spirit of entrepreneurialism in the United States. She writes in her blog:

With the small business growth having led us out of most recessions in the past, get ready for this sector to add jobs far more slowly and with far greater caution than it had previously — a big blow to an economy that desperately needs a vibrant and growing small business sector.

At the macro level, the effects of higher individual taxes on rates of entrepreneurship are without an exception, negative. It is well accepted, and has been for decades, that the desire to have a vibrant entrepreneurial economy is at odds with the desire to operate a welfare state, due in large part to the way in which welfare states allocate resources. When the upside to undertaking the risks of entrepreneurship decrease, and the downside of not doing much at all are limited, it becomes hard to justify making the effort. If it is possible to live quite a comfortable life without too much bother, why take on the long hours, the worry and the headaches of small business ownership?

Photo: apoxapox / BY-NC

“Asia is leading the way in the recovery of the world economy,” Professor Shang-Jin Wei said in his introduction of Jong-Wha Lee, chief economist of the Asian Development Bank. Lee spoke at the School on April 20, 2010, in an event sponsored by the Center on Japanese Economy and Business and the Jerome A. Chazen Institute of International Business. Wei, director of the Chazen Institute, is coeditor of the recently published book, China’s Growing Role in World Trade (University of Chicago Press, 2010).

Lee outlined several key messages in his presentation, saying that Asian recovery was taking “firm hold.” He predicted 1.7 percent growth in GDP for major industrial economies in 2010 and the number moving to 2.0 percent for 2011. In contrast, the figures for GDP growth in Asia are 7.5 percent in 2010 and 7.3 percent in 2011, he said. Drivers for Asia’s strong recovery included growth in private consumption and investment.

Lee also discussed inflation — on the rise but manageable — and the risks stemming from uncertain global recovery and volatile capital flows. He said Asian economies will gradually unwind stimulus support and shift to private demand in the future.

The oil spill disaster in the Gulf of Mexico has placed renewed focus on clean energy, writes adjunct professor Bruce Usher, a carbon finance leader and executive in residence at the School.

In an op-ed in the New York Times (“Red China, Green China” May 6, 2010), Usher says that the United States lacks the political will to become a world leader in clean energy while China has been moving ahead with creating jobs and policies in the sector. Last year, China spent a total of $35 billion — double the amount of the United States — on projects related to renewable energy. In 2008, China held 84 percent of global market share for clean-development projects. Usher called for aggressive action by the United States to compete with China in the clean-tech race, outlining three actions to develop new technologies:

First, institute national feed-in tariffs or a renewable portfolio standard — two ways to require that utilities buy clean energy in a minimum amount or at a certain price. Such standards have been effectively put into practice in several states, most notably in Texas with wind power, but only a federal program will provide the scale necessary to compete with China, which has a national feed-in tariff program of its own.

Second, establish a price on carbon via either a tax or a cap-and-trade program to encourage low-carbon technologies. The Clean Development Mechanism placed a price on carbon in developing countries, initiating thousands of emissions-reduction projects in China. Putting a price on carbon in the United States would provide an incentive for domestic developers to build similar projects here.

Finally, get serious about supporting the research and development of carbon capture and storage, and maintain America’s lead in a field that offers enormous opportunity but is too large for any one company to finance. Coal is the No. 1 source of greenhouse gas emissions, and the first country to develop economically viable capture-and-storage technology will dictate the terms for reducing carbon dioxide emissions from coal-fired utilities globally.

Peter Peterson, cofounder and chairman emeritus of the Blackstone Group and former CEO of Lehman Brothers, spoke with students on January 21 as part of the Silfen Leadership Series. He served as the U.S. Secretary of Commerce under President Richard Nixon from 1972 to 1973. The event was co-sponsored by the Sanford C. Bernstein & Co. Center for Leadership and Ethics.

Peterson is a vocal advocate of deficit reduction and founded the Peter G. Peterson Foundation to promote non-partisan education and research for economic issues. In his presentation at Columbia Business School, he elaborated on his views of the long-term fiscal challenges ahead for the United States, which he said included entitlement spending, current accounts and savings deficits, and healthcare costs.

“We need to get rid of the notion that we will grow out of these problems,” he warned. “If we don’t demonstrate to foreign lenders that we’re going to take significant action [on our debt], they will be forced to raise interest rates.” Peterson also strongly advocated for education and the mobilization of younger generations to play a bigger role in economic decision making.

Peterson answered questions from the audience, including one on the future of private equity. “They desperately need for credit to open up,” Peterson said. “Otherwise it’s not much of a leverage business.”

Photo courtesy of the Peter G. Peterson Foundation

Professor Bruce Greenwald and top value investors took part in a panel discussion at Columbia Business School on April 16, 2010. The program was hosted and televised by Bloomberg (watch video online).

In the discussion, Greenwald said the financial crisis validated the principles of sound value investing. “Thank God for the last year. … Value investors stayed the course,” he said. “We did not have a Great Depression, which I don’t think was ever the cards.” Greenwald went on to elaborate about the fundamentals of value investing, saying:

You are always buying future returns when you are buying a stock. The question is how you measure them. When you see a return today that you think you want to buy, the fundamental question is how long is going to last? You can see the birds in the bush, but the question is how many are going to die before you get to eat them? … Value investors have always focused on the permanence of the return. To Ben Graham that was asset production. For a business to be viable, if it needed assets, it had to earn a return on those assets or nobody was going to invest. … That’s why [Graham] focused on assets. But what Buffett taught people is that beyond assets, earnings are sustainable if you have barriers to competition.

Last year, some economists expressed concern that the American consumer was in retreat. It would be a year of second-hand clothes and used cars, they predicted, and the lack of consumer spending would cause the economy to sputter and choke. At the same time, President Obama outlined ways that Americans should save more, advocating for retirement plans to be “opt out” instead of “opt in,” for example. Spend more or save more? That kind of mixed message, says Lauren Weber, has been par for the course. She completed the School’s Knight-Bagehot Fellowship in Economics and Business Journalism in 2007.

In her new book, In Cheap We Trust: The Story of a Misunderstood American Virtue (Little, Brown and Company, 2009), Weber examines the history of thrift in the United States. Drawing from her coursework and conversations with professors Ray Horton and Morris Holbrook, among others, Weber has compiled an elegant history of Americans’ confused relationship with saving and spending — and the moral paradoxes of financial policy.

“We’ve always gotten mixed messages about this issue, especially lately,” Weber says. “The idea of saving is pretty muddled because it is economic and impacted by policy issues, and yet it also has a moral cast to it, partly because of our Puritan history. Appeals for people to either save or spend have often been a confusing blend of pragmatism and moralism.”

Weber will be signing and discussing her book at the Columbia Journalism School Alumni Book Fair on Friday, April 23, from 7:30-9:00 p.m. at Low Library.

The biggest threat to international security is not terrorism but illicit trade, Moisés Naím, editor in chief of Foreign Policy, told students at the KPMG Peat Marwick/Stanley R. Klion Forum on Ethics on March 31, 2010. Technological innovation coupled with cultural and demographic shifts are changing the ways illicit trade is conducted and perceived, he said. Professor Bruce Kogut introduced the speaker and the event was hosted by the Sanford C. Bernstein & Co. Center for Leadership and Ethics.

Underground economies have become a central part of globalization and are increasingly pervasive as the lines between legal and illegal business activities blur. Naím cited several drivers that are blurring the lines, including the diversification of business and the need for factions to influence regulators. “Some places call this corruption,” he said. “Others call it lobbying.” Philanthropy is another possible grey area for corruption and Naím suggested that criminal elements give away money, much like businesses do, as a way to build feel-good awareness for their “brand.”

The recent Rio Tinto case, which Professor Ray Fisman examined in Foreign Policy, highlighted the challenges multinational companies face in diverse business environments where they are subject to different standards and laws.

Additional reporting provided by the Sanford C. Bernstein & Co. Center for Leadership and Ethics.

Frank Byrd ’00 discussed U.S. inflation from an historic perspective and the future prospect of inflation in light of current monetary policies with Professor Emi Nakamura on March 25, 2010. Their presentation was part of Columbia Business School’s ongoing series of community forums on business and the economy.

“Is inflation in our future? I believe being on the right side of the inflation/deflation question could be the single most important investment decision of the coming decade,” Byrd said. “Although many people fear inflation may arise in the future, no one seems to believe it is a problem today. I challenge this belief. It’s not in the future. It is in the present. It’s been with us since at least the late 90s, we just can’t see it — yet. So where is it hidden? How is it hidden?”

Watch the complete video to hear Byrd and Nakamura discuss this issue.

Greece is likely to leave the Eurozone in the next few years unless it can achieve major fiscal reform, Professor Charles Calomiris says. In his article “The Painful Arithmetic of Greek Debt Default” (March 18, 2010) from e21, an online economics journal, Calomiris maps out the difficult road ahead for the country’s economy.

At the heart of Greece’s fiscal problems is a toxic combination of outstanding sovereign debt (which exceeds 123 percent of the GDP), poor confidence in the legal and political systems, institutionalized corruption and huge amounts of social-welfare spending. Calomiris says that spending cuts are likely to be the most successful tool the government can use, however, without reform that addresses the country’s chronic corruption, the prognosis for sustainable recovery remains dim. Calomiris writes:

The top priority for Greece right now is to make the immediate and massive cuts in public expenditure that are necessary to restore fiscal balance. Cutting expenditures by a total of, say, 14 percent and promising tax and corruption reforms that would increase taxes by 14 percent would buy Greece time to make the deep reforms necessary to restore its tax base. Failing those tax reforms, additional expenditure cuts would be needed quickly. Following that path not only would resolve the Greek debt problem, it would help restore Greece’s productive competitiveness, increase labor participation and increase savings, all of which would boost growth and reduce the Greek current account deficit. … In the medium term, even if Greece restores fiscal sustainability through expenditure cuts alone, it must address the deeper problems that plague its economy, its taxation system and its society more broadly, all of which revolve around the problem of endemic corruption.

Photo credit: Flickr/lpinseel

What can Japanese businesses learn from the unprecedented crisis engulfing Toyota, Japan’s flagship automaker?

It’s a question that was raised over spring break as the Japan Business Association and the Jerome A. Chazen Institute of International Business launched the 21st annual Japan Study Tour. Forty students, one faculty member and a Chazen representative spent nine days in Kyoto, Hakone and Tokyo. The tour, which was impeccably organized, included site visits to Nomura Holdings, Sony, the Mori Building, Gekkeikan’s sake-brewing facility and, of course, Toyota.

The revered automaker is probably the most powerful symbol of Japan’s rise to manufacturing excellence over the half-century since World War II, and a symbol of Japan’s self-confidence on the world stage in the 1980s. With the perceived safety and reliability of its vehicles providing a key competitive advantage, Toyota has grown in stature over the last two decades, recently eclipsing General Motors to claim the title of the world’s number one automaker.

Then came the recall. Over the past six months, Toyota’s reputation has been severely tarnished by a worldwide vehicle safety recall in which more than eight million vehicles, including the cutting-edge Prius sedan, have now been called back. The carmaker’s recent troubles are also damaging the excellent standing of other Japanese businesses according to some analysts, which comes at a time when the nation is set to be overtaken by China as the world’s second-largest economy. The crisis at Toyota is raising questions about the viability of Japan’s economy, beset by deflation, and its major corporations. With this in mind, our trip to Toyota City — a municipality that revolves around the automaker and houses its corporate headquarters, main research facilities and manufacturing plants — was perhaps the most anticipated company visit of the 2010 tour.

	Japan’s auto industry can still make a comeback, panelists said.

We toured the corporate museum, a welding facility and an assembly plant, but, not surprisingly, had no meetings with top Toyota executives. However, Toyota’s troubles and their broader implications for Japanese companies was the topic of a lively debate when Columbia Business School’s Alumni Club of Japan hosted us at the Josui Kaikan building in the center of Tokyo.

In a discussion moderated by Japan expert and Michigan’s Ross School of Business Professor Schon Beechler (also a former Columbia Business School professor), alumni and current students talked about the competitive outlook for Japanese businesses and what the future may hold for Asia’s most developed economy. Beechler critiqued the recent Newsweek article “Toyota and the End of Japan” (March 5, 2010) as being too pessimistic. Rather than facing a precipitous decline, she said, Japan is instead at “an exciting inflection point.”

For other panelists — Japanese nationals educated at American business schools — Toyota’s problems are key to understanding Japan’s zeitgeist and are symptomatic of a nation withdrawing from the world. A case in point: While Sony and Nissan both have non-Japanese CEOs, signifying their global outlook, Toyota remains a “homespun” company with its Japanese president, Akio Toyoda, grandson of company founder Kiichiro Toyoda. A company like Toyota needs a leader with a more global mindset, the panelists said.

When it comes to the competiveness of another of Japan’s core industries — electronics — Japanese manufacturers are slipping behind major new rivals like Korea’s Samsung. Panelists agreed that Japanese companies now need to imbue their corporate cultures with a “sense of urgency.” Korea, India and China are nearby nations that are growing quickly and represent a significant threat, they said. The discussion ended on a hopeful note, however. Despite its current troubles, Japan has a lot to offer. The automotive and electronics sectors can come back, the panelists said, and Japan has expertise in healthcare, robotics and tourism that can make it very competitive in the modern global economy. The future of Japan lies in closer integration and cooperation with its neighbors, such as Korea and China.

“There’s a pressure on this country to open up, but there’s also a deep pride in the Japanese culture,” Beechler said. “This is the issue that will determine the future of business in Japan; it will determine whether the nation succeeds or fails.”

Photo credits: Junichiro Mimaki; Guzel Chechenova

Under the new healthcare reform bill, 32 million uninsured people, many in the lowest-income brackets, stand to gain access to coverage. Simultaneously, taxes may increase for higher-income citizens. The near-term ramifications of this reform are still being loudly deliberated on both sides of the aisle, but the long-term outcome of increased insurance coverage is a key consideration as well.

Medical insurance is a kind of investment, says Professor Frank Lichtenberg, who studies healthcare economics. While the 20- or 30-year returns on that investment — better health outcomes and lower costs — are challenging to assess, he says, many study results are consistent with the investment premise. For example, studies have shown that people who have healthcare coverage before age 65 have lower Medicare costs.

“There is a sense that wider health insurance coverage will ultimately benefit Americans as a whole by decreasing expenditure in the long run,” he says, “but it is challenging to quantify that.”

Lichtenberg’s research has shown that states with expanding health insurance coverage experienced slower growth in health expenditures in comparison to states with contracting health coverage.

“It sounds paradoxical,” says Lichtenberg. “Insurance increases the propensity of people to seek and receive medical care. The direct effect is that people will use more medical care, and that should raise costs in the short term. However, in the long run people start to receive preventative care in a timely way that will obviate more serious medical conditions down the road. Lower costs of medicine might also increase compliance and reduce hospital or emergency room visits.”

Photo credit: Flickr/O’Connor College of Law

As the debate over the revamped health care system intensifies this week, one of the central arguments on both sides of the aisle is about cost. New research from Professor Frank Lichtenberg suggests that increasing health insurance coverage could be key in lowering rates of health spending. That underscores a central premise of Obama’s healthcare plan to expand coverage while reducing costs.

“It is almost a presumption in the debate that uninsured Americans are not getting medical care and therefore their health outcomes are compromised,” says Lichtenberg.

“But there is a lot of evidence that people who lack health insurance still get medical care, albeit in a costly and inefficient matter. They go to the emergency room instead of seeing a doctor on a regular basis,” he says. “Therefore, it is more costly for people to be uninsured.”

Data from Lichtenberg’s research, published by the National Bureau of Economic Research, focused on the reasons Americans are living longer. Using state-level data, he found that higher quality of medical care, newer drugs and better diagnostics are the principal factors for increased life expectancy. However, he also found a correlation between increased health insurance coverage and a slower growth in per capita health spending.

“States where health coverage is expanding faster actually have lower rates of growth for health expenditure,” he says.

“I think that is part of the reform pitch Obama is making, that we can’t afford not to have a much higher rate of coverage and my results are consistent with that,” says Lichtenberg. “It’s not that people are going to live longer, but they won’t live any less long, and it will actually save the system money.”

Photo credit: Tim Hoffman

Last Thursday, February 25, Howard Schweitzer and Jim Lambright entered Uris Hall serenely, shook off the snow and immediately began their discussion with a crowd of students and faculty members. While most people would have been dismayed by the travails of taking a train through a blizzard from Washington DC to New York — and just to visit Columbia Business School students! — Schweitzer and Lambright viewed the task as trifling.

Not surprising, given that until recently Schweitzer ran TARP (the Troubled Asset Relief Program) and Lambright, who had been the president of the Ex-Im Bank, served as TARP’s chief investment officer. When Schweitzer took the job in the fall of 2008, Lehman and WaMu had disintegrated, Wachovia had been acquired to stave off a panic and Goldman Sachs and Morgan Stanley, the last two major investment banks, had converted themselves into commercial banks. Running TARP, Lambright said, was like working in the emergency ward of a wartime hospital: lots of blunt instruments and patients enduring a great deal of pain. After that experience, a three-hour journey through a snowstorm was barely worth noticing.

Schweitzer and Lambright spoke to a lively and elite audience as part of the School’s Community Forum on Business and the Economy organized by Dean Glenn Hubbard. They gave an inside account of the beginning of TARP from the day Neel Kashkari first called Schweitzer to start up the program. With no clear mandate and makeshift offices hidden in crevices of the Treasury’s buildings, Schweitzer was given the task of managing the list of firms that the Treasury handed over.

Schweitzer recalled the first days of the program: Another $40 billion for AIG, ok, we’ll work that one out, we’ll do non-voting equity. CITI needs an injection of finance, ok, we’ll work out the warrants and take board seats. The public is in an uproar over compensation packages already in contract. Nothing much can be done; the rule of law prevails but let’s put in place a pay czar to make sure that the public money is spent wisely. Over here, the auto industry is bleeding cash, no credit is forthcoming and the repercussions on the financial system are massive. We’ll work something out, but there is an election happening too and a new guy is taking over January 20. Do I show up for work? Does TARP carry over and do we keep on working? What do I do January 21? Oh, it is business as usual. By the way, will TARP ever fully repay the taxpayer? The estimate is that it will be $120 billion short, but that’s the official estimate. It’s likely to pay back except for autos … and AIG?

Schweitzer and Lambright answered every question. While they were both very modest, there was still a sense that these two men knew how to get a job done. At one point during the heated events in 2009, the Wall Street Journal quoted former Treasury Secretary Henry Paulson, who hired Lambright. Paulson said about Lambright, “He’s unbelievably tough, and … the job is to save the financial system.”

Leaving aside whether one thinks TARP was a good idea (I do) or a bad one, the impression left by these two very amiable and frank government servants was that they took the entrepreneurial challenge and ran with it, steering carefully within the confines of the law that sets out hiring practices (they needed to hire fast) and transparency. Now after stepping down from TARP, Schweitzer has joined the big law firm Cozens O’Connor; Lambright is pursuing green energy at Sapphire Energy.

No revolving door into Wall Street for them. One had to leave the room very impressed.

Photo credit: Flickr/onecle

After last month’s proposal of the Volcker Rule from President Obama — an idea crafted by former Fed chairman Paul Volcker that would limit banks’ investing in speculations with subsidized capital — industry chatter likened the move to a return of the Glass-Steagall era. In the new issue of Ideas at Work, Professor David Beim examines the assumptions of the new rule and suggests a modern adaptation for the Depression-era regulation.

Volcker Rule Assumption 1: Only institutions that take insured deposits need to limit risk. Beim argues that all major financial institutions — not only the ones that take insured deposits — are liable for enormous risk. “We are now living in a world of massive moral hazard in which the government has shown it will bail out systemically important financial institutions whether they take deposits or not,” he writes. “Deposits are not the issue. We are far past that point.”

Volcker Rule Assumption 2: Banking activities must be segregated in order to prevent risk. Beim says, “It’s not the nature of the activity, but the extent of the risk.” He argues that while the rule’s goal of controlling for excessive risk is important, the focus of the rule — and of related regulatory efforts — should shift from activities to asset quality:

An effective modern adaptation of the spirit of Glass-Steagall would place substantive limits not on activities such as trading versus holding but on asset quality — what gets traded or held. Regulators are very cautious about this. It runs counter to modern regulatory thinking to impose such limits.

But some such limits may be appropriate. To adhere to Volcker’s proposal, all private equity investments and many hedge fund investments are both illiquid and themselves highly leveraged. Volcker suggests — and is correct — that such investments are not appropriate for the balance sheet of any financial institution that might have to be bailed out by the government. This idea can be pushed even further. …

Does government have the will to restrain this kind of risky lending, reversing its earlier posture? Time will tell. The current proposal, said to be reviving the spirit of Glass-Steagall, appears to have no political cost. There is no constituency for proprietary trading by banks except the discredited banks themselves. Unfortunately, as it stands, a ban on proprietary trading does little to make banks safer. Substantive restrictions on financial asset quality would go much further, giving the spirit of Glass-Steagall some modern substance.

Read the complete article in Ideas at Work.

Photo credit: Flickr/epicharmus