We're facing the point where monetary has basically done everything it can do. Helicopter money hasn't been very effective, we can't really get beyond the zero lower bound, so the conclusion is we need fiscal policy to do something since our economy is still relatively stagnant in terms of wage increases. Sadly enough, I think it's going to be in the form of military expenditures rather than the infrastructure improvements we need.
What reason is there to seek intervention to raise wages if inflation remains low?
The key is to encourage long term focused corporate management, reducing incentives to eschew investment in favor of short term value maximization, and more direct pressures in the form of buybacks and dividends. Policy approaches to this end would involve restructuring the capital gains tax to favor real long term ownership (1 year is not long term) and corporate governance to favor more long term interests.
Underutilized capital could be mobilised by the National Infrastructure Bank we've long talked about, with its bonds carrying highly advantageous tax incentives. (A deduction on purchases and exemption on interest, perhaps). The point of the Bank would not be Keynesian stimulus but rather infrastructural investment to boost competitiveness. A national broadband network as in Australia, port expansion, railway electrification, high speed rail, smart grid, etc.
