One part of the problem is the structural weakness of our economy and declining business investments and further declining productivity growth due outsourcing of many of our jobs.  We must have rapid productivity growth to deal with:  low & negative income growth, huge trade deficits, and generating payroll tax income to cover Social Security payments for our aging population.

What connects business investment to productivity growth? If an architectural firm spends money on technology upgrades, for example, it can generate blueprints and related specifications more quickly and thus generate more finished jobs with the same number of workers in the less time than before—which defines an increase of productivity. These kinds of business investments related to productivity will ultimately improve the economy’s performance. The more busi­ness invest in modernizing their infrastructures and technology, the larger their future productivity will be via while making more money.

Gains from faster productivity growth should be shared with employees so that the growth builds more jobs and more income for more workers to spend on consumer goods.  More money will provide businesses with an incentive to increase their investments again in their buildings and equipment, thereby laying the foundation for an ever higher productivity in the future, while staying ahead of other countries and providing a foundation for increased trade.

During the 90's higher investments, rising productivity and growing income improved the economy through the end of the 90's, but since then little investment has been made in growth, productivity has dropped and incomes have declined.   Slow growth does not provide businesses an incentive to invest in their businesses' expansion.  That reduces the chances of increased productivity and reduces future growth income.

This economic crisis gives us time to consider failed past policies that led to this crisis and to redesign our economic policies to help return the US economy into success once again.

The issues that need to be considered to make decisions about how we progress include:

Since the beginning of 2000:

• Productivity growth has declined this year.
• Business investment has decreased since March 2001 to less than 10%.
• Investment in since 2000 has rested largely on commercial construction and not infrastructure.
• Businesses struggle to replace obsolete capital - information technology assets depreciate more rapidly than other investments made in the past.
• Declining investment in our knowledge-based economy - very apparent in both businesses and the government, i.e. out of date technology in the FAA (e.g. recent flight plan delays all over the country due to a computer failure) and FDA and businesses all over the country.
• Capital Expenditures by businesses have been used to repurchase shares and to pay dividends instead of investing in infrastructure.
• Consumption growth has decreased so businesses did not invest - at its lowest point since WW II.
• In the past, Investment and Productivity growth have been linked.
• Business investment growth could replace consumers as the driver of the economy.
• Faster investment growth alone won't fix all of the nation’s problems, but it would be a step in the right direction, moving the economy into a more sustainable direction, and provide a stronger foundation for change and innovation, improvement of declining incomes, decreasing trade deficits, and more.

1. Businesses will not invest unless incomes rise faster than they have recently.
2. Policies need to insure that incomes rise faster than they have recently, e.g. instead of huge bonuses for corporate moguls, distribution of an equal percentage to all workers.
3. Policies need to insure job growth occurs, e.g. investment in alternative energies.
4. Policies need to also include incentives for companies investing in new technologies that will insure the growth of a cutting edge global innovations to improve the US economy, reduce balance of trade deficits, keep jobs in the US, and more.

Businesses will not invest unless Americans’ incomes rise faster than they have recently.