But as vociferously argued as these analyses may be, they don’t get to the root cause. Why did the Fed keep interest rates so low for so long? Why did Wall Street buy risky mortgage-backed bonds? Why did America spend so much on housing? And why did so many people have a hard time paying their mortgage?

The answer to all of these questions is that after the late 1990s the United States began to fall behind in the race for global innovation advantage and as it did, the real engine of growth sputtered and when the, and later housing bubbles burst, there was no “there” there. We can see this in the numbers. The demand on Wall Street for capital to power real wealth-creating investments shrank dramatically as U.S. corporate investment grew just 17 percent in the first half of the 2000s, down from 73 percent in the last half of the 1990s. Venture capital investments and IPOs fell almost 80 percent. 

Inward foreign direct investment fell. It wasn’t that U.S. companies were no longer investing; they were, but increasingly overseas. In 2000, for every dollar invested domestically, U.S.-headquartered manufacturing multinationals invested 33 cents overseas.  By 2009, that increased to 71 cents. This lack of investment opportunities is one reason why the ratio of undistributed U.S. corporate profits to GDP has doubled since the 1990s.  U.S. companies had the money to invest in America but not the motive or opportunity. And the results were stark. America lost almost 20 percent of its manufacturing jobs in just four years following 2000.  When measured properly, GDP growth was the slowest in the post-war era. And median household incomes fell 7 percent since 2000.

But rather than downsize as demand for their services fell, Wall Street doubled down on risky mortgages. And rather than downsize as their incomes fell, consumers used their homes as ATM machines. Rather than support a national competitiveness policy to restore the demand for real investment and jobs, the Fed did the only thing it could: keep the monetary accelerator to the floor, but to little effect.

The only solution then as well as now is to address America’s real problem: its structural competitiveness crisis. Low interest rates can’t spur spending and investment when wages are stagnant and investment opportunities much richer outside the United States. This is why corporate investment in machinery and equipment has been stagnant over the last five years.  And more stimulus would be like an adrenaline shot to a heart plagued with chronic disease. It might get the heart pumping stronger for a while, but without a competitive heart, health can’t be restored. 

The only real answer is to rebuild the American economic engine—which is the one-third of the U.S. economy that competes in global markets and that shrinks if it loses that competition. If Boeing loses to Airbus, America loses jobs. If Safeway loses to Walmart, we don’t. 

Washington needs to do three key things to get under the hood and rebuild the engine.

First, it needs to make the corporate tax code competitive. One study found that U.S. multinationals are among the highest taxed and U.S. manufacturers the third-highest taxed, paying 37 percent higher taxes than Asian manufacturers. We need to reduce the corporate tax rate from 35 percent to no higher than in the mid-20s, while also putting in place robust tax incentives for investments in America in R&D, skills training and new equipment and software.

Second, if the United States is to win in race, it will be through innovation and productivity. The federal government needs to be a partner with industry and provide significantly more funding for R&D, commercialization and workforce training.

Finally, it will be difficult to win if we don’t aggressively prosecute rampant foreign mercantilist policies that distort the spirit, if not the letter, of the WTO agreement. That’s why Washington needs to step up the fight against growing trade mercantilism from other nations, like China, India and Brazil. 

Turning around the U.S. economy won’t be easy or quick, but effective treatment requires the right diagnosis: turning the economy around requires America winning the race for global innovation advantage.

Atkinson is president of the Information Technology and Innovation Foundation, a non-partisan economic policy think tank. Ezell is senior policy analyst at ITIF. Their book, Innovation Economics: The Race for Global Advantage is published by Yale University Press.