In these circumstances, Reagan introduced his economic policy, which became known as Reaganomics. More growth translated into new jobs, products and factories, which, in turn, led to a better redistribution of wealth, as well as an increase in the standard of living of most citizens. All of these goals were achieved in the Reagan years. Americans used the tax cuts to invest in the economy and the decreased interest rates boosted housing sales and renewed economic activity. As prosperity increased, the profits at the top trickled down to both middle class and underclass citizens.
Taxation slows the economy, precisely because it hurts incentives to work, save and invest.
It is this reality, after all, that has forced economists to create a paradigm they call the Economics Approach. This approach takes into account that society has a limited amount of resources to effectively handle all problems. It recognizes that some problems cannot be fixed and that, more importantly, the effort to fix them will create other, and perhaps bigger, problems. This is precisely the concept that most progressives fail to grasp, since their efforts are based on the flawed assumption that the perfectibility of human institutions, and of the human race, is possible. The Economics Approach argues that the government must meticulously evaluate what it can do about certain problems and what it cannot, and also should not, do.