Our primary system is broken.”

“Congress is dysfunctional.”

“The financial system is not working.”

“The government’s oversight of financial institutions is nonfunctioning.”

“We are not doing the right things to sustain our economic health.”

I hear these comments more and more often from more and more people. It is obvious that many well-informed people are frustrated, confused, and angry—and I share those feelings, particularly since many of our country’s problems and its recent decline in influence are self-imposed.

Despite the modest progress our economy has achieved as we slowly recover from the 2008 economic crisis; despite the fact that America’s corporate earnings get stronger; despite the fact that we have extraordinary liquidity; despite the near-term prospect of energy independence; and despite so many other favorable economic developments, America still has approximately 20 million men and women unemployed or underemployed, with little prospect of finding suitable work. Earnings have stagnated for all but 1 percent of our population. Graduates emerge from college burdened with debt and facing dismal job prospects.

These problems are not fundamental or endemic to our system; they are the result of a misallocation of resources. When we review the weaknesses and excesses of our banking system in America, we find that the problems that caused the crisis of 2008 have, in large measure, remained unaddressed, defying regulatory solutions that are easily achievable. “Too big to fail” investment firms or banks not only continue to do business, they continue to grow. Toxic assets are still on the balance sheets of our largest companies. A proactive administrative policy could fix these problems, and that is why I describe our national economic difficulties as self-imposed.

Laugh if you want, and I know some people will, but when I was running Loral Corp. and other companies, I thought of bankers as though they were family, at least some of the time. In this I was different from my brother Harold, who also started a Fortune 500 company; if Harold could borrow money for an eighth of a point less from a bank he’d never dealt with before, he would do it. Sure, that’s a legitimate method of operating, and some banks respected him for it. But it wasn’t my way. I believed that a long and steady relationship with one dependable bank was worth far more than an eighth of a point. Often, Loral dealt with three or four banks and had a strong relationship with each. It was all about maintaining relationships, not just doing transactions.

A lot of people used to treat their business relationships as something precious. There was a time in this country’s history that when a bank loaned you money, it was because the officers believed in you, and if times got tough and you couldn’t make the payments, they might extend the loan because they knew you personally and believed you’d navigate the rough stretches and eventually be good for it. Now, when a homeowner falls behind on his or her payments, foreclosure becomes more or less automatic.

Once, Wall Street was all about relationships. If you were taking your company public, the most important thing was that the potential underwriter believed in your story: what you were saying about your prospects of growth, of repaying debt, and of paying dividends. Indeed, an investment banker often wanted to be part of your story, to strengthen the connection between you and the bank by having a seat on your board. If things didn’t go as well as you had projected, the underwriter felt it had failed its customers, and you as CEO felt that you’d failed the bank and the shareholders. But if things did click and the value of investments in your firm grew, the bankers were proud of their involvement with you. They would take out one of those classy-looking “tombstone” ads in The Wall Street Journal, proclaiming to the world that they had worked on your deal, and then they would have these ads framed and hung on their office walls.

Then, sadly, the era of relationships devolved into the transactional time in which we now live. This happened gradually at first, as federal regulators allowed commercial banks to engage in a growing number of securities activities. Then in 1999, the Gramm-Leach-Bliley Act repealed the Glass-Steagall Act—all but meaningless by then, anyway—and officially gave banks free rein to play with deposits at their discretion. To the bankers involved, the extent of the risk didn’t matter, because now that they were employees of public corporations (formerly, investment banks were partnerships or sole proprietorships), they were absolved of any personal responsibility.

A sea change had occurred. Now, the business of America seemed to be all about completing a transaction and getting your commission. Your responsibility ended when you got paid. Instead of building badly needed roads and bridges or running manufacturing plants that created goods and provided jobs, businesspeople became fixated on complicated debt swaps and other abstract “products” that made money only for the broker. Some of these were so complicated and arcane, we now know, that they were beyond the comprehension of the executives running the investment houses.

Among U.S. firms, the lion’s share of the business is conducted by just five big banks: Goldman Sachs, Morgan Stanley, JPMorgan Chase, Citigroup, and Bank of America Merrill Lynch. When subprime loans started going bad by the thousands in 2007 and 2008, some of those once-respected investment banks collapsed, nearly taking down the U.S. economy with them. No one deserves more blame for what happened than the overseers—the Securities and Exchange Commission (SEC), the insurance companies, and the ratings agencies that allowed the poisonous conditions to develop in the first place. Some people today talk about creating a system of oversight to prevent such a collapse from ever happening again—but a system was already in place. It wasn’t our system that failed; it was the people running the system. The regulators failed to regulate, the banks made loans to people who shouldn’t have been borrowing, and the credit-rating agencies acted in their own self-interest—everyone in charge knowing that it didn’t matter, because even if things went wrong, they wouldn’t get hurt personally.

When the government stepped in to bail out a bank, an insurance company, or any organization considered “too big to fail,” it was you and I, the American taxpayers, who paid the bill. Millions of people lost their jobs, and millions more endured the foreclosure of their mortgages. Meanwhile, the egregious behavior on the part of government overseers and executives from private-sector banking, rating agencies, and insurance companies did not result in a significant number of convictions or terminations. For all practical purposes, no one has been held accountable.

How could we go through the debacle of 2008 and not make fundamental changes to the way we enforce the rules? We still read media stories about JP Morgan Chase and its failing hedging investment strategy. Deals like Facebook are promoted at IPO prices twice their assumed values. In another example of the laxity in following up on the irresponsibility of our top financial executives, the Justice Department ended its investigation of Goldman Sachs and its top executives.

The financial collapse of 2007 and 2008 did not come as a surprise to anyone who had been paying attention to what was happening on Wall Street. Many people I knew could see that the investment banks were ridiculously overleveraged, that the weird new world of derivatives was based on loans that should never have been made, and that a corrupt bond-rating system and a lax SEC had perpetuated the insanity.

The history of American economic progress shows that our success has not been linear. We’ve faced and overcome many challenges that restrained our economic growth in the past. But our political leadership has always summoned sufficient will and determination to overcome these challenges and continue growing. In recent years, America’s naysayers have wrongly predicted that the dollar would be replaced by the euro as the international currency, or that China would become the global economic powerhouse, or that the oil cartel countries or the strength of the Japanese economy would overcome America’s leadership. These predictions of our failure have gone silent.

America’s supremacy is intact, and I foresee only continued growth and strength in the American system. This nation still makes up 25 percent of the world’s economy. We maintain the strongest and best-equipped military in the world. America has recently become the safe haven for investment and savings. America’s corporations are demonstrating sustained earnings power that continues to gain momentum. And, if we do things right, America’s economic superiority and leadership will continue to grow.

The frustration, of course, lies in the cautionary phrase in the last sentence: If we do things right.

Our political system is so broken it is incapable of addressing these problems. Congress in particular is wasting opportunities on endless investigations and committee hearings, and recent administrations have been incapable of pressing a growth agenda.

Part of this failure is attributable to the way our government functions. Is it possible for us to have a truly competitive electoral process when 91 percent of our 2012 congressional and senatorial elections were won by incumbents, despite their abysmal approval ratings? Can we say that our system is a representative democracy when money flowing from super PACs (including the President’s recently formed $50 million slush fund) corrupts the process by putting the decision-making in the hands of a wealthy few? And can anyone say that our Supreme Court works independently when five of the nine justices elected George W. Bush President of the United States in 2000?

And speaking of elections, I don’t believe that the Democratic candidate won the last two presidential elections. In fact, he was elected by the failure of the Republican Party to promote any adequate candidates for the job. This Administration’s victories were merely success over incompetent adversaries.

One of the other concerns I have about the state of our union is the unchecked influence of two sectors of our society: the financial community and the military. Since the middle of the Clinton Administration, the reins of governmental power have been held by men like Robert Rubin, Hank Paulson, Larry Summers, Alan Greenspan, Timothy Geithner, and Ben Bernanke. Not all of these gentlemen are equally responsible for the 2008 crisis or its potential repetition in the future, but there has been a pervasive conceptual thesis advanced by this group that heavily favors Wall Street over Main Street. And so, over the last three administrations, government policy has leaned heavily toward the interests of large banks. And unfortunately, President Obama’s immediate political advisors were not experienced enough to offset this imbalance of influence.

Another issue about which I have increased concern is the extraordinary influence that our military establishment has on the formulation of national policy. This is not a new development, but the disproportionate influence of the armed services within our society has been growing. I have considerable respect for our U.S. military establishment, particularly its culture of reward based on performance. In general, men and women enter the service on an equal basis and advance in rank on merit. It is a huge proving ground based on dedication, integrity, courage, intelligence, and hard work. But even in peacetime, the service employs huge resources; currently the military budget exceeds $500 billion, not including expenditures for Afghanistan and Iraq. I believe that the armed services can assume budgetary reductions without the deterioration of its military efficiency. [See “The New Mandate on Defense,” Issue #27.] Of even greater significance is the influence that the military high command has on national policy.

Most disquieting of all is that neither political party has a growth agenda. With much help from other concerned citizens, along with elected and appointed officials, I have spent at least 20 years developing a job-creation program based on infrastructure investment that is urgently needed by our country. And while every political authority I meet understands the need to tackle our infrastructure deficit and put people back to work in the process, and despite this being the only project of scale that can put seven to ten million people to work in the near term, neither party has summoned the will to authorize the creation of an infrastructure bank along the lines of the BUILD Act proposed by then-Senator John Kerry.

Last year, Paul Krugman wrote in The New York Times, “Inveighing against the risks of government borrowing, by undercutting political support for public investment and job creation, has done far more to cheat our children than deficits ever did….Our sin involves investing too little, not borrowing too much.”

Indeed, the real sin is the lack of political will to dispense with “politics as usual” and respond to the demands of the American citizenry for real leadership and real fixes for what’s broken in our country.

I have been lucky to be engaged in life, to have prospered, and to have obtained the economic security that allows me to pay back. The level of personal growth I attained is a reflection of our country’s bountiful system and the contributions of so many mentors, friends, partners, and colleagues along the way. I hope that we all accept the challenge of ensuring that these benefits are preserved for our children and grandchildren.