Family Feud And Economic Data

Family FeudI was watching Family Feud and during the “fast money” sequence, one of the questions was “Name something that goes up every year in America.” The contestant said, “Inflation.” Steve Harvey commented something along the lines of, “You’ve got that right.” The survey said “0”! That didn’t surprise me. Most people don’t think about inflation unless it is out of control. And it isn’t out of control. In fact, it has been decades since it’s been out of control. Inflation is only something that the rich care about now. Harvey is worth an estimated $100 million, so I can see where he might be concerned about inflation.

Of course, inflation does not go up every year. In fact, it has been going down for years. This is one of the many examples of things that everyone knows that just isn’t true. Here is the FRED data since 1980:

Inflation - 1980-2015

The second contestant answered “taxes.” As I discussed about the legacy of Ronald Reagan, it is true that we at the bottom of the income scale have seen our taxes go up even while those at the top go down. But in general, taxes have not gone up as you can see in the following graph. Although there is one thing worth noting: individual taxes have gone up while corporate taxes have done down.

Total Federal Taxes as Percent GDP

The survey said “33”! So that probably makes taxes the number one answer. Family Feud is a game of perceptions, of course — not reality. There are a lot of things that do go up every year. Population goes up every year. In general, GDP goes up. But there is one thing that definitely goes up each year that I’m sure was not reflected in the survey: inequality. Here is the Gini Coefficient:

Gini Coefficient

A big part of the problem in the United States is that as a people, we don’t really know what’s on. Our taxes stay the same, but we think they are constantly going up because a bunch of rich people — whose taxes are going down — say very loudly that taxes are sky high. Meanwhile, more and more money gets funneled to those at the top and few people engage with this, and most of those who do claim that it doesn’t matter.

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