A clue as to the nature of a possible solution may come from the fact that quasars also reveal luminosity downsizing. This translates into downsizing of central SMBH mass. One might be able to connect the two phenomena if feedback from AGN was initially positive and also a strongly nonlinear function of SMBH mass. Predictions of positive feedback include circumnuclear rings on 10-100 pc scales in star-forming AGN. These should be resolvable with ALMA, via both molecular lines that probe pressurized molecular gas and FIR fine-structure lines that probe the interplay of intense FUV radiation fields with photodissociation regions (PDRs and XDRs).
More conventionally, the evidence for AGN quenching of star formation seems strong. Superwinds driven by AGN are capable of depleting the reservoir of star-forming gas over relatively short time-scales. However, questions remain as to the relative roles of AGN winds, jet-driven bubbles, SNe, and radiation pressure especially from OB star clusters. No doubt, JWST, as well as 30+meter telescopes such as ELT will complement HST by producing spectacular IR images of star formation, AGN and outflows at work. Accretion of neutral gas will be studied at high sensitivity by SKA. Ultimately one needs a spectroscopic survey akin to SDSS at z = 1-2 and this will be provided by the Subaru Prime Focus Spectrograph with optical and NIR capability. The next decade should bring a vast increase in our phenomenological understanding of the basic processes at play in galaxy formation and evolution.