THE FINANCIAL CRISIS of 2008 shook the faith of many people in free markets. It marked the end of a political consensus in favor of limited regulation and low taxes that began in the late 1970s. In that decade, an influential group of commentators blamed economic stagnation on strict regulation, high taxes, and lax monetary policy, arguing that these policies undermined incentives to invest and hence suppressed economic growth. Although their major policy proposals—deregulation of industry, low taxes, and control of inflation—are frequently identified with the Republican Party, deregulation began in the Carter administration, and this free-market agenda was advanced during the Clinton administration.
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