Thank God for the Industrial Revolution

Tesla vehicles are being assembled by robots at Tesla Motors' factory in Fremont, California, July 25, 2016. | REUTERS/Joseph White

Are you looking for something beyond Mom, apple pie and football to be thankful for this holiday? Let’s thank God for the Industrial Revolution. 

Sure, it’s one of the most maligned periods in human history. Socialists claim it trapped workers in wage slavery. Marx asserted it alienated laborers from the product of their labor, to which he attributes all the evils of mankind from flat tires to broken bed springs, and business owners stole the wealth that workers created by keeping the profits. 

Others portrayed pre-Industrial Revolution Europe as idyllic with plump farmers happily raising families in the clean air of the countryside. The Industrial Revolution destroyed that paradise. Today, environmentalists complain that industrialization is destroying the climate, depleting resources and killing off animal species. That’s all fake history. 

The truth is that before the Revolution, Europe was as poor as Haiti is today and people lived no better than the average person 10,000 years earlier. Life was short and brutal. Most children died before reaching adulthood. According to Nobel Prize winner Robert Fogel in his classic book The Escape from Hunger and Premature Death, 1700-2100: Europe, the continent grew enough food to provide calories for only 80% of workers. The other 20% consumed only enough calories to walk a short distance where they could beg for more. 

Check out the hockey stick graphs of per capita GDP (a measure of living standards) available on the internet. Here is one. Most graphs begin in the year 1000 AD, but the best economic historians, such as Angus Maddison, demonstrate that little improvement in living standards took place between prehistory and the Industrial Revolution. 

It doesn’t take a great deal of thought to understand why living standards didn’t improve. Farming determines how many people live in cities because city dwellers can eat only the surplus that farming families grow and don’t eat. Cutting edge farming technology in early human history was a team of oxen. In 1800, it was still a team of oxen, although horsepower was being introduced. Did you play the video game The Oregon Trail? What dragged the covered wagons over the plains? Oxen!

Life changed abruptly in the 17th century Dutch Republic. Dutch Protestants implemented the economic principles that Catholic scholars from the University of Salamanca, Spain, had distilled from the Bible. They did so because they had recently won independence from Spain after an 80-year war and saw their nation as the new Israel. So they wanted to establish a government based on Biblical principles. They sought to keep the seventh commandment, “Thou shalt not steal,” by limiting government power and establishing free markets. 

The Dutch didn’t anticipate that the change would make them richer. No one at that time thought it was possible to improve living standards. After all, they hadn’t changed in over 5,000 years. But they did. The Dutch launched the Industrial Revolution. For the first time in human history, standards of living began to grow rapidly as the graphs show, first in the Dutch Republic, then England, the US and Western Europe. 

The West left behind millennia of cycles of famine and mass starvation that the rest of the world continued to suffer from for centuries longer. Westerners today are 30 times wealthier than our ancestors in the 17th century. That’s close to a 3,000% increase. Greater wealth bought better health and longer lives. The planet could support more people, too. In 1900, the planet could feed a mere one billion people. Today, we feed almost eight billion so well that obesity is a problem.

Adam Smith praised the Dutch government in his classic The Wealth of Nations as having most fully implemented the system of natural liberty. That system became known as capitalism. Critics point out that capitalism hasn’t solved all problems in the world today. We still suffer from war, crime, violence, poverty, and racism. Wealth is not evenly distributed. 

But the Dutch never intended their system to solve all of humanity’s problems, nor did they think humans could. God could, but not humans. They had one object in mind, to establish a government on Biblical principles and so please God. 

Atheists fabricated the nonsense that the state can perfect human nature because people are born good and turn bad only because of oppression. Atheists set up the state as an idol in place of the Christian God and attributed to the state all of God’s power to recreate paradise on earth. History for the past 150 years has proven them wrong. 

So, if you enjoy central heat and air conditioning, the high-definition smart TV on which you will watch the University of Oklahoma football team play against Oklahoma State, or the Ford F-150 in your driveway, or any of the many material blessings of living in the richest nation on the planet and in the history of humanity, you must thank God for the Industrial Revolution.

Christian economics explains current shortages

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Whole Foods grocery store worker Adam Pacheco (L) stacks vegetables while customers shop in the produce section at the Whole Foods grocery story in Ann Arbor, Michigan, March 8, 2012. | REUTERS/Rebecca Cook

Some children will not get the Christmas presents they wanted this year because trucking companies can’t find drivers to deliver them from the ports on the coasts. A lack of people willing to work has forced restaurants to cut hours or close. The labor force participation rate for men has fallen to 89% prior to the pandemic from more than 97% in 1955. What’s going on?

Democrats claim that wages are so low that people would rather stay home, but that doesn’t explain how the unemployed make enough money to live. Who is paying for their food, clothing, and rent? A new report from the Social Capital Project, Reconnecting Americans to the Benefits of Work explains:

“Why are fewer prime-age Americans in the workforce? Many popular explanations attribute Americans’ declining labor force participation to declining wages, technological change, and international trade. A new report from Joint Economic Committee Republicans’ Social Capital Project finds that these forces cannot fully explain increasing inactivity among able-bodied prime-age Americans.

“Instead, many would-be workers are voluntarily disconnected from work, and government programs and policies have likely made work less attractive for these Americans. Beyond a paycheck, employment is also an important source of social capital that provides material and immaterial benefits to personal well-being. By evaluating the incentives workers face, the report recommends a number of policy reforms to lift barriers, remove disincentives, and increase the attractiveness of work.”

Christians saw this coming centuries ago. The great French economist Frederick Bastiat wrote in the 1850s, “The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.”

Marvin Olasky gives the history of Christian charity in the U.S. from the early 1800s to the present in his classic The Tragedy of American Compassion. Olasky shows that for most of that history Christians worried about giving the poor too much, rather than too little, because they witnessed many men who happily lived in poverty from the generosity of others rather than work, even when they had wives and children to support. So churches provided food and cloth to the wives of such men for them to make clothes for the children. They offered the men work, usually chopping firewood. 

Horace Greeley, who wrote “Go West, young man!” was the first to promote indiscriminate giving to the poor in his newspapers. Greeley had imbibed socialism from the French and wanted all Americans to swallow their bad wine. Socialists taught that society makes people poor through no fault of their own and so society owes them a living. But most Americans valued self-reliance and often refused to take handouts, which kept the poverty rate low. FDR created the Works Progress Administration to provide jobs instead of handouts because most Americans were too proud to take charity from the government. 

But Christianity had been declining in the U.S. and by 1968 when Johnson launched his Great Society war on poverty, many Americans had adopted the socialist view of poverty. In 1959, the U.S. poverty rate was 22.4% according to the Census Bureau. It fell to 12.1% in 1969 then rose to 15% in the years 2010 – 2012 in spite of greater spending on the poor than any other time in human history. Johnson claimed his policies would eliminate poverty. Instead, poverty increased. 

Socialists teach that people are born good and turn bad only because of oppression. No one would rather live from handouts than work. However, Christianity explains that people are born with a tendency to evil that only God can change, and many people will mooch off others rather than work if they can. The Apostle Paul addressed that problem in the early church: 

“In the name of the Lord Jesus Christ, we command you, brothers and sisters, to keep away from every believer who is idle and disruptive and does not live according to the teaching you received from us. For you yourselves know how you ought to follow our example. We were not idle when we were with you, nor did we eat anyone’s food without paying for it. On the contrary, we worked night and day, laboring and toiling so that we would not be a burden to any of you. We did this, not because we do not have the right to such help, but in order to offer ourselves as a model for you to imitate. For even when we were with you, we gave you this rule: ‘The one who is unwilling to work shall not eat.'"

Follow the science. It proves Paul was right. 

The Pope's economics would move the world back to medieval mass starvation

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Pope Francis as he leads the Christmas night Mass in Saint Peter's Basilica in 2017. | Reuters/ Tony Gentile

Many people are confused about how the West can be so rich and much of the rest of the world so poor. On World Food Day, Pope Francis blamed markets and capitalism. 

“The fight against hunger demands we overcome the cold logic of the market, which is greedily focused on mere economic profit and the reduction of food to a commodity, and strengthening the logic of solidarity.

We must adapt our socio-economic models so they have a human face, because many models have lost it. Thinking about these situations, in God’s name I want to ask… The big food corporations to stop imposing monopolistic production and distribution structures that inflate prices and end up withholding bread from the hungry.”

Dr. Thomas Woods, also a Catholic, argues in his book The Church and the Market: A Catholic Defense of the Free Economy that the Pope enjoys infallibility in matters of theology and morality, but not science, according to Catholic doctrine. If he did, we wouldn’t need scientists. We could just ask the Pope to solve all scientific problems. Since economics is a science, the Pope has no more insight into it than does any layman. Catholics still must study economics in order to understand how the world works, just like Protestants.

If the Pope understood economic history, he would know that the world was poorer than Haiti from prehistory until the advent of capitalism in the 17th century when standards of living began to rise for the first time in human history, but only in the Dutch Republic, a Protestant country. Later, England and its colonies followed. 

How did the Dutch break the Malthusian cycles of famine and mass starvation that had plagued mankind for millennia? They implemented the economic doctrines distilled from the Bible by the Catholic theologians at the University of Salamanca, Spain, in the 16th century. As a result, the Dutch outlawed the former “honorable” ways to gain wealth through looting in war and kidnapping for ransom. They prevented the nobility from using the courts to steal from the common people. And they created free markets and limited government. In other words, they instantiated capitalism. 

The Pope should know that the Catholic church at the time of the Industrial Revolution owned a third of all land in Europe, because wealthy people had given land to the church to help the poor for centuries. Yet, the charity of the Catholic church did not lift people out of poverty. Europeans were as poor at the launch of the Industrial Revolution as they had been 10,000 years earlier. 

The Dutch launched the Industrial Revolution by using peat and wind power to mass manufacture goods for the masses. They became rich and powerful because they produced more of the things that people wanted to buy at cheaper prices.

People are poor because they produce very little of what anyone wants to buy. They produce so little because they have poor tools, knowledge and skills. For example, women farm most of the land in the world using a short-handled hoe. They can farm at most an acre or two and will use most of the produce to feed their families and have nothing left over to sell in the market for other goods. 

Advancing to the cutting-edge technology of 5000 B.C., a team of oxen, would allow farmers to work 20 acres of land and produce far more food with a surplus to sell in the market so they can buy other necessities, such as clothing. Deploying mules would empower farmers to work 40 acres. Small tractors would enable them to farm 100 acres with less effort than is required for a team of oxen. So why don’t they? 

Envy is the main problem. Around the turn of the century, the United Nations tried to give oxen to farmers in Uganda to improve their productivity, but the farmers refused. The farmers said that others in the community would envy them for having oxen and would steal, butcher and eat them. Also, many Africans fear that envious people will use magic to cast spells on them and possibly kill them. 

Before 1900, this planet could not feed more than one billion people. Starvation from famines was common and kept the world population below that level. Today, the earth’s population is almost eight billion and famines are rare. How can we feed eight times as many people as we did a little more than a century ago? Capitalism and markets, the things Pope Francis despises, are the reason. 

So clearly, the poor need more charity, right? They do, but it will not lift them out of poverty as the Catholic Church proved throughout its history. Also, the poorest nations on the planet, such as Haiti and Tanzania, have received enough charity in the past 50 years to make every citizen a millionaire. Yet they’re still poor. 

The Pope needs to learn from the many nations that leaped from starvation to wealth since World War II, such as Taiwan, South Korea, Hong Kong, Singapore, Chile and most recently, China and India. According to the World Bank, China and India have lifted over 500 million people from starvation to relative riches in the past generation, not through charity, but through freer markets. 

Freer markets encourage businesspeople to invest in new and better ways of making things that others want to buy and enrich the sellers and the buyers. In that way, they serve their neighbors. And doesn’t the Pope want to encourage serving others, which lifts people out of poverty?

$1T platinum coin proposal is more of an abomination than a gimmick

 

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In this undated photo released by Professional Coin Grading Service, a George Washington dollar coin missing the edge inscription is shown. An unknown number of new George Washington dollar coins were struck without their edge inscriptions, including 'In God We Trust,' and made it past inspectors and into circulation, the U.S. Mint said Wednesday, March 7, 2007. | (Photo: AP / Professional Coin Grading Service)

Congress is debating the federal government debt limit again, which it has done regularly since it created the legislation. Congress first limited debt in 1917 to $15 billion to blunt opposition to World War I, then raised in the next year to $20 billion to finance U.S. involvement in that war. It raised the limit again to accommodate FDR’s massive spending during the Great Depression and for World War II. Since 1962, Congress has hiked the limit 78 times. 

Democrats hate the debt limit when they hold power because it can theoretically dampen their lust to spend taxpayer money as fast as they would like. Republicans tend to quickly elevate the limit when in power, which Democrats rarely oppose, but use it to embarrass Democrats when not. 

Rather than do the honest thing this time and repeal the debt limit legislation, Democrats want to perpetrate a greater hoax, one worse than Ponzi’s scheme or Bernie Madoff’s fraud.  They want the US Treasury to use its Constitutional powers to mint money to make a one-ounce platinum coin and stamp it with the value of $1 Trillion. The Treasury would deposit the coin with the Fed and draw on it to pay for spending. The point of the hoax is to avoid having the federal government borrow more money and instigate another fight in Congress over debt limits. Nobel Prize winning economist Paul Krugman has endorsed the fake coin scheme. 

The platinum coin idea popped up in 2013, but the idea has been around at least 2,500 years. In 594 B.C., little more than a century after the invention of coins, Greece conducted one of the first coin hoaxes known in history. Solon, a politician in Athens, figured out that he could reduce the content of the precious metal in each coin by adding base metals to the silver then stamping the coins with the same weight as if they contained the original amount of silver. In other words, he committed fraud by stamping a false weight on the coins. 

Solon reduced the silver content of Athenian coins by 25%. Then he forced merchants to accept the coin at face value instead of the real weight of the silver in the coins. The state had expanded the money supply and was able to pay off its debts without having gathered any more gold or silver through taxes. Many philosophers at the time considered Solon a genius, but he was nothing more than a gangster and fraud.

Producers and retailers caught on very quickly to the fraud and raised their prices enough to ensure they received the same weight of silver for their goods as they had before the debasement. Since the coins had been debased by adding 25% base metals, merchants raised prices by at least 25%. Price inflation tended to anger citizens and spark riots, but the rioters rarely connected higher prices with the monarch’s fraud and, instead, blamed businessmen for their greed.

That the coin hoax fools so many intelligent people reveals how ignorant Americans have become about money. Through the last quarter of the 19th century, Americans continually fought over money. The U.S. had chosen to mint only gold money in 1873 after having produced silver and gold coins for almost a century. Gold as the only money causes the money supply to grow slowly, around the rate of population increases, and keeps prices from rising rapidly. Some politicians claimed it favored banks at the expense of farmers and working men because they couldn’t rely on the price inflation of the Civil War to wash away their debts. They wanted treasury to resume minting silver coins because the supply of silver grew more rapidly than gold and the rapid increases in the money supply would cause prices to rise. In other words, the “silverites” didn’t want to pay their debts. 

The trillion-dollar coin hoax is not different from Solon’s fraud or that of the silverites. Democrats could commit the same crime with gold, silver or copper coins. Platinum merely makes the hoax more mysterious and more credible for the gullible. And it is a crime. One ounce of platinum is worth around $1,000 and people can buy one ounce platinum coins for $1,200. Stamping such platinum coins with a value of $1 trillion is pure fraud and violates the Bible’s prohibition of false measures:  

“You shall do no wrong in judgment, in measures of length or weight or quantity.”

Leviticus 19:35

“A false balance is an abomination to the Lord, but a just weight is his delight."

Proverbs 11:1

 

“You shall not have in your bag two kinds of weights, a large and a small. You shall not have in your house two kinds of measures, a large and a small."

Deuteronomy 25:13-14

People who get the new money first are privileged to buy stock and bond assets or real estate before prices rise and thus become richer. New money trickles down to the working poor last, after prices have risen, leaving the final recipients of the money worse off. In other words, it increases inequality and steals from the poor, one of the worst crimes in the Bible. 

Christian economics places inflation blame where it belongs, on government

 

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2020 Democrat presidential candidate, Sen. Elizabeth Warren of Massachusetts at CNN town hall in Jackson, Mississippi on March 18, 2019. | Screenshot: CNN

Consumers have always complained about prices. The classic Christmas movie, It’s a Wonderful Life, portrays Potter the banker as greedy because he wants the Bailey Savings and Loan to operate like a business and charge market rates for mortgages. Recently, the financial adviser Dave Ramsey was crucified on Twitter for suggesting that landlords should charge market rates for rent.

Consumer prices rose recently 7% over last year and with inflation setting records, President Biden joined the choir singing against the greed of businesses:

“Prices have climbed 16% at the meat counter in the last year, and so President Biden is rounding up the usual scapegoats: Big meat producers.

’While their profits go up, the prices you see at the grocery stores go up commensurate and the prices farmers receive for the products they are bringing to market go down,’ Mr. Biden said Monday. ‘This reflects the market being distorted by a lack of competition,’ adding that ‘capitalism without competition isn’t capitalism; it’s exploitation.’”

And Elizabeth Warren carries a lifetime membership card to the choir:

“’Prices at the pump have gone up,’ she told an MSNBC interviewer last month. ‘Why? Because giant oil companies like Chevron and ExxonMobil enjoy doubling their profits. This isn’t about inflation. This is about price gouging.’

Warren had the same explanation for why turkey has become so expensive: ‘plain old corporate greed.’ She demanded a Justice Department investigation, accusing poultry companies on Nov. 23 of ‘abusing their market power’ by ‘giving CEOs raises & earning huge profits.’”

Consumers have always thought the price of everything was too high. Farmers have always thought they were too low and convinced the federal government through most of the 20th century to prop up farm prices through subsidies or price controls. If only we knew what the right price for everything was. 

For most of Christian history, theologians had embraced the economics of Aristotle and Cicero and viewed commerce as beneath contempt and more immoral than prostitution because merchants didn’t charge a just price. Theologians told merchants their profession would send them to hell. Merchants asked how they could avoid hell. Theologians told them to charge a just price. Merchants asked, what is a just price? Theologians said, we’ll get back to you. 

Aristotle had written that values in a market exchange must be equal. But that wasn’t much help, because how do merchants and consumers determine value? For much of church history theologians arranged products in hierarchies of nobility. Wheat is more noble than mice because people eat wheat and mice destroy it, so wheat should cost more than mice. That satisfied few people. Meanwhile, successful merchants used part of their profits to buy titles of nobility so they could protect their earnings from others in the nobility and gave part to the Church to buy their way into heaven. 

1,500 years later, theologians got back to the merchants with an answer after a lot of debate. The answer will shock some and anger others but consider that the debate over just prices was one of the major issues for theologians for over a millennium. How many readers have put even five minutes into thinking about what constitutes a just price? 

Theologians during the Reformation realized that defining a just price is so complex that only God knows what it is. It requires understanding the scarcity of supply, the amount of demand, the supply chain, quality and many other factors. So, the best humans could do is to rely on the common price arrived at in a free market, that is, one in which neither party can compel the other to meet his terms. 

Today, prices rise for the most part because the Fed pumped up the money supply by almost 40% in 2020 and 2021 compared to the year before by one measure. The money supply had grown around an average of 10% in the previous decades. The Fed goosed the money supply so much to counter the COVID recession of 2020 because when it does, people have more cash than they want to save and spend the excess on cars and washing machines, which boosts the economy for a short while. Eventually, the artificial boom busts and people lose their jobs. 

Higher prices merely reflect greater demand for a limited supply. When more people bid on the same goods, prices naturally rise because some consumers value those goods more than others. Still, markets in the U.S. for consumer goods such as food and gasoline are relatively free. So according to the theologians who debated a just price for over a thousand years, the higher prices are moral and not a sign of greed. Few theologians today know enough about markets to discuss prices. 

Biden and Warren should blame record setting inflation today on the Fed’s monetary policies and supply chain disruptions from COVID. The Fed’s policies are immoral, but the prices in the market place are just prices.

Biden’s Build Back Better boondoggle advertises the evils of the love of money

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Johnson & Johnson CEO Alex Gorsky looks on as President Joe Biden delivers remarks on COVID-19 vaccine production Wednesday, March 10, 2021, in the South Court Auditorium in the Eisenhower Executive Office Building at the White House. | White House/Adam Schultz

President Biden’s Build Back Better boondoggle is on life support in the Senate and should die, but it’s still worth considering one thing it reveals about its supporters - their love of money. Paul wrote this in I Timothy 6:9,10: 

“Those who want to be rich, however, fall into temptation and become ensnared by many foolish and harmful desires that plunge them into ruin and destruction. For the love of money is the root of all kinds of evil. By craving it, some have wandered away from the faith and pierced themselves with many sorrows (NIV).”

It’s natural for people to want money for the things it can buy, such as food, clothing, politicians, etc. Honest people provide a service that others value in exchange for money. Evil ones commit a crime or immoral act to get it. Some people love money so much they are willing to counterfeit it. In Biblical days, only the government could counterfeit money. They did so by melting down gold and silver coins, adding copper and making new coins stamped with a false weight of the precious metal. I have written before that the practice is the sin of false measures mentioned in the Bible. 

Debasing coins in that way didn’t fool merchants, who merely raised prices to account for the smaller amount of precious metal in the money. But the people blamed the merchants for rising prices and not the dishonesty of the government. Politicians responded by setting prices for most goods and punishing merchants who raised prices above the limit. That caused merchants to quit selling their goods at a loss and led to shortages of food and clothing. 

Why would governments resort to such destructive behavior? Because they had taxed the people into poverty and could squeeze no more money out of them. But to stay in power, the governments needed to continue their reckless spending on the military and free food to the poor. So they destroyed their coins. 

Eventually, debasing coins became ineffective, but then governments discovered the convenience of printing paper money as a substitute for gold and silver money. They were supposed to limit the amount of paper money in circulation to the value of the gold on deposit in banks, but as usual they succumbed to the love of money and printed far more paper money than the value of gold deposits to pay their armies. Again, prices soared. 

Today, governments have sophisticated methods of counterfeiting that few people know about or can understand. Most economists refer to them as “printing” money because they have the same effect, price increases. Central banks, like the Federal Reserve, can increase the supply of money by reducing the interest rate they charge banks to borrow money. Banks borrow more and lend it at lower rates, thereby increasing the supply of money. 

Central banks can also “buy” bonds from banks. Banks invest excess reserves in government bonds and can’t loan that money to customers. When the Fed buys those bonds, the banks have extra cash to lend and increase the supply of money. But the Fed has no money of its own to use to buy the bonds. It creates the money out of thin air. 

What does money creation have to do with Biden’s boondoggle? The President knows that raising taxes to pay the $2 trillion cost will be unpopular, won’t bring in enough revenue, and will euthanize an already ailing economy. So he will rely on the Fed to “print” more money for him. The result will be the same as in Biblical days, rising prices, or at best, prices that remain the same when they should have fallen. 

Politicians persist with the dishonesty of printing money because they know most people don’t understand what’s happening to them and gullible politicians like Elizabeth Warren will blame greedy businessmen.