Why do I drone on and on about reporters who don’t adjust for inflation when they show dollar figures over time? Well, consider the following sentence from the first op-ed that hack economist Stephen Moore wrote as a member of the Wall Street Journal editorial board:
In the 1980s, President Ronald Reagan chopped the highest personal income tax rate from the confiscatory 70% rate that he inherited when he entered office to 28% when he left office and the resulting economic burst caused federal tax receipts to almost precisely double: from $517 billion to $1,032 billion.
This is wrong. Partly that’s because Moore didn’t even use figures from Reagan’s first and last years in office. But mainly it’s because he didn’t account for inflation or population growth. Once you do that, it turns out that federal tax receipts actually went up 14 percent on Reagan’s watch, or 1.7 percent per year:
Moore’s statement isn’t just wrong. It’s a lie because he knew perfectly well it was wrong and said it anyway—and I savaged him for it at the time. But if it’s wrong for Stephen Moore, it’s wrong for everyone else too. And just like Moore, if you know better, it’s a lie. My goal is to make sure that everyone knows better so that we’ll all stop lying, either deliberately or otherwise.
Unless you have a very specific, technical reason for using nominal dollars—and they exist!—always adjust for inflation. Generally speaking, you should usually adjust for population growth too. Stop lying!