You could say the wheels of capitalism has run out of lubrication, or you could say that the creeping growth of regulation and governemnt spending has thrown sand into wheels. See this graph of spending as a percent of GDP:
You may want a lot of government spending but you have to acknowledge there is a cost. You may think we need a lot of the regulations, but there are plenty that are a drag on the economy (see patents).
Agreed, though I don't believe the two are mutually exclusive. In fact, we suffer from both maladies at present.
Government can spend, but that spending should be as investment, not overhead. Current government spending is akin to charities which have 90% overhead per dollar donated.
I'm not opposed to government spending or large investments in infrastructure, but it should happen when spending is at 15% of GDP, not 25%. The problem today is we are spending so much, and seemingly getting so little for it. The spending now is just political payoff to big corporations, unions, and thousands of various interest groups. Government is getting less and less efficient as it gets bigger and spends more.
http://www.ritholtz.com/blog/wp-content/uploads/2011/07/outl...
You may want a lot of government spending but you have to acknowledge there is a cost. You may think we need a lot of the regulations, but there are plenty that are a drag on the economy (see patents).