Growing inequality and a falling sense of economic opportunity has emerged as perhaps the central challenge of our time. The American Dream, a bedrock of America's uniqueness is under threat.
Why is this? The U.S. economy has registered disturbing performance since well before the Great Recession.

Since 2011, the U.S. Competitiveness Project at Harvard Business School, co-chaired by Michael E. Porter and Jan W. Rivkin, has studied the root causes and conducted annual surveys of business leaders (HBS alumni) and periodic surveys of the general public. The most recent survey on the strengths and weaknesses is shown in Figure 2 in Part I. As we have noted, both HBS alumni and the general public identified our political system as a major weakness and deteriorating.

Based on the survey findings in 2011 and discussions with business leaders and policymakers, the Project created an “eight-point plan” for Washington that identified the eight most critical policy areas to restore U.S. competitiveness and economic growth (see Figure 1).1 These were policies in key areas of weakness, where the federal government led policy (unlike, for example, public education where policy is set by the states). The areas identified were also chosen because there was wide consensus among experts on what needed to be done.*

The latest survey (2016) found overwhelming, bipartisan consensus among HBS alumni on seven of the eight points, and majority support for the eighth (see Figure 2).2 Despite a highly partisan and often misleading political dialog around these areas (we discuss how this occurs in Part IV), the general public supported four of the eight areas, and support was close to 50% on two others.

Despite wide consensus, however, the stunning reality is that Washington has made zero meaningful progress on any of the eight areas in decades. Project leaders made multiple trips to Washington to meet with senators and members of Congress to discuss the eight-point plan. Legislators from both parties all agreed that the steps were necessary, but cautioned that making progress would be challenging.

The lack of progress on these eight policy areas reflects a political system incapable of addressing America’s essential economic challenge. This is why business leaders and the general public, in our most recent (2016) survey, identified the U.S. political system as among the nation’s greatest weaknesses.* By a huge margin, business leaders believed that the political system was obstructing U.S. growth and competitiveness versus supporting it.

This extreme degree of gridlock is not inevitable in politics, but the result of an American political system misaligned with the public interest.

*Healthcare policy was not included in the eight-point plan because in 2012, as in 2017, there was no clear consensus on what needed to be done.

*Michael E. Porter, Jan W. Rivkin, and Mihir A. Desai, with Manjari Raman, “Problems Unsolved and A Nation Divided,” September 2016. The report is available on the Harvard Business School’s U.S.
Competitiveness Project website at http://www.hbs.edu/competitiveness.

AppendixB-Fig1
appendixb-fig2