The Long Boom

When Ronald Reagan came to office, he had a strong faith that high taxes and heavy regulation discouraged entrepreneurial activity and slowed economic growth. At the time, Reaganomics was viewed as heresy by establishment economists, so much so that even members of his own administration publicly distanced themselves from their boss.

While much has been learned over the years about how tax rates and regulation affect the economy, much is still unknown. Since 1980, gross domestic product has more than doubled—and the stock market has increased tenfold. Why?