[HM2Viking]

How can the economy's dual problems, slowing productivity growth and weak income growth, be addressed?
First, we need more investment in productive capital. Despite massive tax cuts, investment has remained low. The tax code should reward work and risk-taking through more progressive taxation, the closure of loopholes, and incentives for research and development.
Additionally, sharp profit increases may be a result of corporate governance changes that allowed shareholders to shift risk onto workers. A more balanced approach to corporate governance--with increased transparency, more shareholder democracy, and possible regulatory and legislative changes--could help to balance the allocation of corporate resources.
Also, business investment requires sustainable consumption growth via stronger income gains. While increases in income inequality have been well documented, observers such as Jacob Hacker, Elizabeth Warren, and Jeff Madrick have also highlighted the growing inequality of opportunity that has resulted largely from increased household debt, slow income growth, and declining insurance coverage. For instance, the share of families that could sustain an economic emergency equal to three months' income gradually rose throughout the 1990s but fell sharply after 2000, so that by 2003 all gains of the 1990s had been erased. This likely contributed to the sense of financial uncertainty that is evident in polls and may leave fewer families willing to take risks, e.g. start a business or pursue more education. Policies that could help raise middle-class security and create new opportunities include more portable health and pension benefits, more equitably distributed incentives for personal saving, and more support for training in addition to a higher minimum wage, more opportunities to join unions, and more progressive taxes.

http://www.americanprogress.org/issu..._dialogue.html