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A Decade of Unevenly Rising Inflation – Is Government Involvement the Problem?

Is government intervention responsible for rising inflation?

by Countable | Updated on 3.15.19

Economy-wide inflation in the U.S. increased by 56 percent from January 1998 to December 2018.

The effect on individual products and services was dramatically uneven, however, with TVs becoming significantly cheaper while the cost of hospital services soared.

The American Enterprise Institute (AEI) produced the following chart using data from the Bureau of Labor Statistics.

Source: AEI

Inflation has been vastly disparate among different categories of goods and services. Seven have increased more than average inflation, led by hospital services (up 211 percent), college tuition (up 183.8 percent) and college textbooks (up 183.6 percent).

At the same time, seven other products have become cheaper over the same period, led by TVs (down 97 percent), toys (down 74 percent), software (down 68 percent) and cell phone service (down 53 percent). 

This has all taken place in the context of relatively low average annual inflation rates, compared to what we saw in the 1980s. Our partners at USAFacts, a non-partisan, not-for-profit civic initiative aimed at making government data accessible and understandable, created the following chart showing the yearly average inflation rate from 1980 to 2017.

Inflation Rate (yearly average) 1980-2017

Source: USAFacts

The AEI made two overarching observations about the differences between the goods and services that had become relatively more expensive or cheaper:

  • The greater the degree of international competition for tradeable goods, the greater the decline in prices, suggesting the folly of trade wars.
  • The greater the degree of government involvement in the provision of a good or service, the greater the price increase over time, suggesting the folly of socialism.

Commenters offered their own observations, suggesting that these issues are more complex:

  • Other countries with significantly greater governmental control over health care have not experienced similar price inflation.
  • Tuition price increases have been driven at least in part by a reduction in state education subsidies.
  • The manufacture of many goods characterized by falling prices has been increasingly outsourced to cheaper overseas markets, an option that’s not similarly available to health care and education.
  • There is almost perfect price transparency for TVs, whereas nobody has any idea what health care costs until they get a bill in the mail.

What do you think?

Is government intervention responsible for rising inflation? Tell your reps what you think, then share your thoughts below.

—Sara E. Murphy

(Image Credit: iStock.com / alexsl)

Countable

Written by Countable

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(129)
  • BDWH
    Voted No
    03/15/2019
    ···

    Govt regulation didnt raise the cost of the EpiPen, greedy industry did because they have exclusivity on the product that is a must have for a ton of people. Housing is up because that's how real estate works. We have more people to house every single day and limited space. I couod go on but you get the point. This chart is stupid and misleading at best.

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  • RAN
    Voted Yes
    03/15/2019
    ···

    Government is at fault for everything

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  • wildprogressive
    03/15/2019
    ···

    This is all BS. Look at all the "less expensive" items... Technology and consumer goods. Look at all the "more expensive" items... All services and housing and healthcare. There are much bigger reasons than government involvement to cause this. Besides, most people have no idea how bad our economy would look like if the government didn't get involved propping up industry with much needed help like in 20008!

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  • Nick-Papagiorgio
    Voted Maybe
    03/15/2019
    ···

    My response to this topic, like so many being floated lately is “who gives a fuck”? Inflation is at such a historic low, and has been for ~30 years. What is being discussed is noise in the signal. It’s irrelevant. Let’s keep the political conversation focused on important things. There are a LOT of them.

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  • operaman
    Voted Yes
    03/15/2019
    ···

    The national debt of $22 trillion. Someone seems to be late on the credit card. However, who can we blame? The taxpayers who supported big government? Let me count the ways! And what if we taxpayers had that $22 Trillion in our pocket all these years ago to invest in our capitalist system of government and economy?

    Like (13)
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  • John
    Voted No
    03/15/2019
    ···

    This is bullcrap propaganda being fed from right wing sources for years that has convinced people that business should be unregulated and not taxed. If you think the economy is bad now, wait until you see the results of an unregulated economy with no safety nets in this cut throat world today. The billionaires will like it but there will be no small business and most people will not benefit nor enjoy it. Be careful what you wish for, you might get it. Don’t confuse “socialism” like Stalin’s USSR or Mao’s China with simply controlling excessive speculation, exploitation, and non-competitive control of production and distribution by the few, as well as ensuring that inevitable downturns are survivable. Capitalism works very well when the playing field is level. Doesn’t when one side has all the big players. You want an example - the pharmaceutical industry is largely unregulated. You like that?

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  • Sean
    03/15/2019
    ···

    And what do you think will happen to inflation when minimum wage goes to $15/hr? The government as a whole isn’t responsible, just the ones that try and pass stupid laws to gain votes.

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  • Kari
    Voted Maybe
    03/16/2019
    ···

    It seems not enough intervention, to me. Force employers to pay their employees enough that we no longer need to rely on Great Depression programs like welfare. Force pharmaceutical companies to lower their prices. Big Pharma rakes it in on the backs of sick Americans, leaving millions without simple life-saving drugs. Poor people shouldn’t have to die because healthcare is unaffordable. Put the money in the hands of the workforce, and our economic troubles will end.

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  • Dave
    Voted Yes
    03/15/2019
    ···

    Economy-wide inflation in the U.S. increased by 56 percent, gee, you think. This is a Ratio of cost of living to wages! Between corporations low pay, the suppression of unions, the race to cheep labor, automation of companies, the Burden of tax cut pushed on the middle class, what do you think? It’s a race to the bottom, produce by the wealthy and corporations policy they push on to government!

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  • Matthew
    Voted Yes
    03/15/2019
    ···

    Government involvement? Government is the problem! You can’t just print money and expect it to maintain its value of which there isn’t any anyway. How many In owe you’s can you give out before it comes back to night you. This wasn’t an issue when we were using the gold standard, but like everything else it touches, government tends to screw it up.

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  • Tinee
    Voted Yes
    03/16/2019
    ···

    The GOP tax scam caused this. Obama handed Trump a healthy growing economy. I swear Trump has done everything possible to undo everything that saved the economy from a collapse. Trump wanted to unpardon the Thanksgiving Turkeys Obama pardoned. What does that tell you about Trump?

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  • Emmett
    Voted Yes
    03/15/2019
    ···

    When the government backs loans or services the entity offering the service or product is going to jack up the price because they know the government will pay off. Let the market decide what wins and loses. People defaulting on loans pissed me off to no end, if you can't afford something don't get it.

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  • Susan
    Voted Yes
    03/15/2019
    ···

    I am old enough to remember when insurance premiums and health care were affordable. I grew up poor. My father did not have to file an income tax return until I was old enough that he asked me to check his math. My mother was a stay at home housewife. Yet, we always had insurance and good health care. Then, the federal government started making rules and today, no one can truly afford healthcare. This is something else that Congress decided to get involved in that the Constitution left to the States and to the People. Congress should stick to the enumerated powers in the Constitution and NOTHING else. By the way, "regulate" meant to keep in good working order in the late 18th century. Current definitions should not be applied to words in the Constitution. Get an 18th century dictionary to help you understand the intent of the Founders.

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  • Jesse
    Voted Yes
    03/15/2019
    ···

    The results of massive Quantative Easing.. Print money to pay for things. Free Socialist policies on the way! And their solution to pay for it will be to print more money...

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  • Miles
    Voted Yes
    03/15/2019
    ···

    Government involvement is at the root of all financial & social problems. Rough quote by the great Thomas Sowell: “Blacks survived slavery, wars, Jim Crow, & segregation just fine. But the second that the welfare programs went into effect to replace the black father, the black community collapsed.”

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  • eliyak
    Voted Yes
    03/15/2019
    ···

    Our patent laws allow pharmacuetical companies to maintain market exclusivity by extending patents via various loopholes ("evergreening.") The FDA also delays approvals of generics, such as an EpiPen generic which was in regulatory limbo for years, until there was a public outcry.

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  • William
    Voted No
    03/15/2019
    ···

    The point is well made that health care hasn’t risen like it has here in socialistic countries. This suggests that socialism isn’t the root cause. Look elsewhere. Perhaps a system as it is here heavily influenced both politically and monopolistically is a better place to look. Create a truly competitive healthcare system and maybe what happened in the airline and telephone industries will happen.

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  • Raymond
    Voted Yes
    03/15/2019
    ···

    The rising inflation is all caused by the Republicans because they want more money than anybody else.

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  • BeHelpfulNotHur
    Voted Yes
    03/15/2019
    ···

    Intervention and lack there of. The government has had a hand in allowing this further divide. Just look at the recent tax breaks for the rich, that total exceeds the total of fraudulent student debt. But instead of removing the boot from our necks, our taxes were increased so we the people could pay for the 1%! Our millionaire legislators don't understand or care about our struggles, they only seem to care about fattening their own portfolios and their donor's. My fraudulent case was settled. Unfortunately even though many forms of fraud were proved and they were found guilty, the courts decided that only those who have been burdened with this faux debt for 10 years or less. Why because the government couldn't afford to relieve all the debt and it would ruin the governments credit rating...what!?!? What about US we can't afford it our credit is shit. I can't buy a home or even save more than $2000 without the bank taking every dime I have. So I will be forever a renter never able to build up equity just make others rich always paying rent. Hell only being able to afford living with roommates. The government would've received so much more in taxes from me had they not accredited this fraudulent school or had they listened to US sooner and closed the school. No those in charge at the time are working at the highest levels of government doing the same thing for profit driven fraudulent schools. Those with free education are surpassing and our average workers will soon not be able to compete in the global market. Your greed is making the rest of the country broke! Short sighted people and short term budgets are eroding away our future.

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  • David
    Voted Yes
    03/15/2019
    ···

    All inputs to a system affects that system. Combined, federal politicians, state politicians, and their bureaucrats spend an annual total over $7 trillion. I rest my case.

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  • Craig
    Voted Yes
    03/15/2019
    ···

    Limit government cut taxes.Support President Trump

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  • Tooluser1
    Voted Yes
    03/15/2019
    ···

    Audit and disband the Fed!

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