“Problems Unsolved & A Nation Divided” is a new report from Harvard Business School on U.S. competitiveness.

The title kind of says it all, but it is worth a deeper dive for the way it frames our current economic woes through the lens of our political system.

“The U.S. economy is in an era of political paralysis” is the headline supported by these key findings:

• We lack an understanding of competitiveness and true prosperity
• U.S. competitiveness has been eroding long before the Great Recession
• Our problems are structural, not cyclical (e.g. time alone will not heal the wounds)
• Businesses have failed to do their part to make things better (e.g. spending money on investments instead of buybacks, refusing to hire or raise wages)

Normally reports like this (authored by academics) don’t get much attention in the business world. But the findings were widely reported on CNBC, The Wall Street Journal, and in other business pubs. Michael Porter, one of the authors, has spent the last five years on a crusade to convince businesses that short-term thinking would imperil the economy in the long-run. This report is his prediction come to fruition.

It echoes the sentiments of other leading business thinkers like Bill Gross or Rick Santelli who are in no way opposed to free market capitalism, but who fear that what we have right now is anything but capitalism e.g. a distortion of markets by free money Fed policy, an addiction by companies to stock buybacks at the expense of long-term profitability, growing inequality.

Mohammed El-Arian, Chief Economic Adviser at Allianz, has been one of the most outspoken business leaders on what growing inequality means from a generational standpoint. He knows there is something inherently immoral about indebting younger generations to pay for the mistakes of the old. “I am in my late fifties, and I worry that our generation in the advanced world will be remembered – to our shame and chagrin – as the one that lost the economic plot,” he writes on Project Syndicate.

Mitch Daniels, former Governor of Indiana, puts the debt issue more starkly; “Our national debt has reached a peacetime record, and is heading for territory where other nations have spiraled into default, or into the loss of sovereignty as creditors use their leverage to dictate terms,” he writes in The Wall Street Journal.

Where does this leave us? Not surprisingly, Pollyanna’s are in short supply. Polls by Rasmussen find 48% of voters say America’s best days are in the past. It leaves us susceptible to desperate acts.

FDR, who is credited with saving capitalism in the 1930’s, did something we rarely see politicians do today; he courted those who opposed his ideas and sought to provide people with a basic safety net, to prevent them from acting in the extreme. We could use some of his common sense and leadership today.