#186 God Made Us Rich

"The Christian Economist" with logo and a closeup of a dollar bill in the background

Our creativity comes from being made in the image of God. That creative innovation is best expressed in time-price, defined as how many hours we work to buy something.  We’re rich.

Would you like to pay for your breakfast and get eight free?  Wanna pay only 2% of your air conditioning bill?  How about paying less than 5% of the marked price for a bicycle?  God has made us rich by making us creative, in His image, and according to time price, you are getting those discounts on just about everything you buy.  But first: How did we get here?


Made in God’s Image

Where does creativity come from?  Well, for the Christian, the answer is pretty simple: We were made in God’s image.  Another way of saying it is, we were created by the creator to be creative.  That explanation is well-received by my students at Dallas Baptist University.  I often wonder how creative innovation is explained at secular universities.  It’s the first part of what’s sometimes called the three-chapter gospel: Creation, Fall, and Redemption.  We were created in the Imago Dei, or in God’s image.  We are NOT gods, we’re not even little gods, but we are made in His image, and we believe that’s the source of our creativity.


The Hockey Stick of Prosperity

Humans were poor in the Old Testament and the New Testament.  Very few people were rich, and those are the ones we read about Abraham, Solomon, etc.  However, a substantial percentage of the population was poor.  By some estimates 25% of the first century population were slaves.  We used to ask “Why are people rich?”  And now we ask “Why are people poor?”  Because such a small percentage of the world’s population is poor.  People living in abject poverty has been reduced from 44% to just over 8% in MY lifetime.  That’s one of the most astounding economic statistics you will ever hear.

What changed?  How did we accomplish The Great Escape, as 2013 Nobel Prize-winning economist Angus Deaton called it, in his book by that name?

Jonathan Heidt has called it “The most important diagram in human history.”  Don Boudreaux at George Mason explains it as the Hockey Stick of Human Prosperity in a very convincing YouTube video.  Where does the hockey stick turn up?  1776.  Three things happened in the same year.  There was a political revolution, a technological revolution, and an economic revolution.   First, political:  Americans remember it was the year of arguably the greatest political revolution in history when the United States declared its independence from Britain.  Scotsman James Wilson signed both the Declaration and the Constitution.  Second, the technological revolution occurred when James Watt perfected the steam engine.  It was the first form of non-muscle power that could be moved to any location.  Third was the economic revolution instigated by the writing of The Wealth of Nations by Adam Smith.  How about this: All three of these Scotsmen: James Wilson, James Watt, and Adam Smith were at Glasgow University from 1859-1762.  Think about walking into a pub and asking, “Who are those three guys?”  Would you arrive late for a lecture, when it featured a panel of futurists that included James Wilson, James Watt, and Adam Smith?

Honestly, I just stumbled onto this amazing providence, and I’m not sure what to do with the information.  I read a book titled How the Scots Invented the Modern World.  However, it concentrated too much on the military battles and not enough on the three revolutions I was interested in.

I think there was something going on in their religion, but I don’t have the details yet.  I know they had been pretty strict Calvinists, who believed that their lives were predetermined for them.  But somehow, the spirit of creative innovation was alive in the mid-18th century in Scotland, and the world is richer today because of it.


Time Price

How do we measure our wealth?  Sometimes in my DBU class, I have claimed that gas is cheaper for my freshmen this year, than what I paid when I was a freshman in 1973.  Until the Biden administration declared war on oil, I was right, but not so much anymore.  When adjusted for inflation, the 44 cents that I paid for gas in 1973, should cost about $2.75 today.  When President Trump was allowing freedom for the oil industry, that was correct.  Now, it’s averaging about $4.00 a gallon.

So, inflation-adjusting is one way to measure wealth across generations.   But a better technique is time price.  That means, how many hours of work must a person do, to buy a similar product or service, in different generations?  The most complete answer is provided in the book titled Superabundance by Marian Tupy and Gale Pooley.

One of my favorite authors, George Gilder, included a chapter on the topic in his latest book titled Life After Capitalism.  Here are a few examples:

When you use the World Bank’s prices, and the Conference Board’s GDP and total hours worked, you can compare the time price of fifty commodities from the years 1980 to 2020.   The nominal price is up almost 52%, but the global average nominal wage is up more than 400%, so the average price of the fifty commodities FELL by over 75% in those forty years.  Wow, we’re rich.

A few other examples: In 1902 a hammer cost only 53 cents.  But blue-collar compensation was 15 cents an hour.  When you do the math, on a time-price scale, hammers today cost 18 times less than in 1902.  Are you getting this: Today, you can buy 18 hammers for the same time price that your great-grandfather paid in 1902.

Corn derivatives are in many different food items, and this one is personal to me because I had a nice visit about corn production and prices with a high-school classmate at my 50-year HS reunion last weekend.  I guessed – correctly – that when we were in High School, 120 bushels of corn per acre was a good year.  They now make 220 bushels OR MORE per acre.  He humbly explained, “That’s only a few percent increase every year.”  For the Malthusians who claim population will out-strip the earth’s ability to support us, listen to this data point: Over the last 85 years, every one percent increase in population has corresponded to a 3.3 percent increase in per-person corn production.  So, eat your vegetables!

How about breakfast: In the 100 years from 1919 to 2019, we have experienced an 854% increase in breakfast abundance, based on the 11 items that make up a typical meal.  Is population destroying the earth?  Well, for every 1% increase in population, we got a 4% increase in breakfast abundance, when measured by time price.

Bicycles: You can buy 21 more bicycles today at the same time price your great-grandpa did in 1910.  Said the other way: A bike bought today costs less than 5% of what it cost just over a hundred years ago.

My college students eat a lot of pizza.  Maybe because, just since 1997, the time price has been cut in half.

Wanna keep cool? For what cost an equivalent of $100 when Willis Carrier made the first commercially available air conditioner in 1902, today in time price, you pay $3.  That’s a 97% DECREASE in the price of cooling, in just over 100 years.

Airfare: Don’t want to go all the way back to 1902?  For airfare, let’s drop a plumbline at 2016.  Only five years later, in 2021, you paid 38% less in time price.  Flying abundance has been growing at a compound annual rate of over 10% a year.  At this rate, we get twice as many flights every 7.22 years.


The Future is Rich

When I was a guest on the Fireside Chat with Dennis Prager, his closing question was whether I was an optimist or a pessimist.  I answered, “I’m the Christian Economist.  The economist in me is a pessimist.  The Christian in me is an optimist.”  When we understand the robust nature of our aggregated creativity that we inherited by being created in God’s image, it gives us hope.

This week, the students in my Econ class at Dallas Baptist University were working in small groups.  I wondered aloud if there was the equivalent of James Wilson, James Watt, and Adam Smith in one of those groups.  Only God knows.  But ALL of them were made in the image of God, just like those Three Scots.

Fear God
Tell the Truth
Earn a Profit