A Word About Economics For Christians And Cranberry Sauce

I am persuaded that Cranberry sauce must have been discovered by accident. Somewhere a JELL-O factory exploded next to a fruit stand. The spiderman story is better, but so far as I know, there is nothing radioactive about cranberry sauce. You will have noticed that it shimmers in a dullish-red (and quite "unnatural" hue). I have yet to discern its exact purpose, but I think it has something to do with food fights.

It bounces around alot when you try to move it, and doesn't have either a particularly attractive or else unsightly appearance. So it isn't decorative. Also, I have noticed that it looks suspiciously like the main character of that one-time scary movie called "The Blob." I suspect the inventor probably intended it as a food fight starter-kit in a can. Whatever the reason, people buy and sell this stuff. This brings me to today's topic of choice -- economics.

What is economics? Well, first it might help to take a look at its root, which is in Greek "oikonomia." This means something very much like "household." This field of inquiry therefore attempts to study the causes, effects and flow of money in a given geographical area. Economics is, in brief, a study of the way people manage money and other assets -- or may best manage money and assets -- within a particular sphere: the home, the state, the nation, or even the world (the global economy).

Big-picture -- national or international -- economics carries the label MACRO-economics, since "Makros" is Greek for "Big" or "large". The smaller scale version is called -- you guessed it -- microeconomics (since mikros means "small" or "little" in Greek). If you are going to track the money flow of any person or group, you will need a way to measure what is important about making and exchanging it. Now to do this, you must -- MUST -- know something about cranberry sauce. And I'll tell you what it is.

Cranberry sauce is one of the many basic products of what makes up the "gross national product" of the economy in which you work and live. The "GNP" as they call it -- one of the most basic indicators of the health of an economy -- has nothing to do with whether the things made in your country look like cranberry sauce. Here, "gross" means total or the "whole" of the money earned from the goods and services within a given economy. Somewhat oddly, this even includes all the illegal (called "Black Market") stuff that crosses your borders. If it brings money or income to the national economy, its part of the GNP. This means that it also includes the income that derives from the international buying and selling of a country's residents (as when a U.S. citizen buys stock on the Mexican exchange).

Please note a simple exception to the rule not mentioned in economic textbooks: barter. Items exchanged for something other than money -- say a swap of cake for ice cream (smart move, I would maneuver for the cherry garcia ice cream, and talk them down) -- cannot be measured if there are no receipts or other reports of the exchange. Economists have no way of reporting these. So bartering creates a margin for error in the numbers given as both the GNP and GDP of any given economy. This is also true for some gifts originating outside the economy presented to someone within it (long-distance gifts), and conversely, could be the case also with anything found (one might discover gold on his property) or made which makes it's way out of the economy (unreported exports), exports with no record of trade or bill of sale.

Suppose a man buys land in the U.S. and finds valuable semi-precious stones on it. He might then simply take this on a plane and sell it to buyers in Malaysia "under-the-table." This money would return with the seller on the plane and go unreported if the owner chooses to do this -- or he may simply set up an offshore account with the money outside the U.S. This is not a recommendation for anyone to do anything illegal or unethical, but merely highlights gaps in economic assessments, of which the reader has the right to know.

The bottom line is that not all transactions -- monied or bartered -- can be tracked. Such transactions will not be represented in an economy's GNP or GDP -- or in any other statistical guide. This also applies (one last example) to people who simply do not pay any taxes or misrepresent their incomes in ways not detected by governmental agencies (pay less taxes than the government indicates they should).

Some estimates indicate that a large percent of Americans, for instance, simply do not pay (and do not bother to report) taxes or taxable incomes. The reasons for this dissension vary from matters of principle -- some feel that taxation should be voluntary (income tax was voluntary in the U.S. prior to 1918), to simple laziness or the mere desire to retain earned profits. Still others do not mind paying taxes ("underpayers"), but feel paying more than they do at present would amount to excessive taxation. Some affirm that certain kinds of taxes are lawful, but not others (selective taxpayers). In an unfair tax system, generally, the poor don't pay; the middle classes underpay; and the wealthy end up paying more than their fair share, since they are the only ones who can afford to pay such taxes. The rich can counteract this by paying to find tax loopholes others cannot afford.

So what? Good question, I thought of this one too. Well, economists use the as a number to measure how well your country's economy is getting on, for a similar reason a doctor might take your pulse. When the economy grows, the number representing its GNP goes up. More money from (and for) your economy is good. This means more people do business and work here.

The Bible actually uses the idea of the GNP on a personal level when discussing the tithe. In commanding the giving of a tenth of what one earns, the Bible specifies that one should give a tenth of the INCREASE of the harvest in any given year. This would amount to 10 percent of the difference between the total market value of the assets you owned LAST YEAR and the total market value of your present assets (one year from the last time you paid the tithe).

Of course, you don't have to pay the tithe only annually, but back in the day that was the best way to do it. If you had to run your caravans of camels back and forth to bring tons of grapes and grain from, say, Galilee to Jerusalem every month, you'd have your camel veteranarian staff working time and a half.

Your "increase" is thus everything you (meaning you are your household) made THIS YEAR -- your household's "GNP," as it were.

The next indicator that needs a little shop talk is the gross DOMESTIC product. This number is a bit simpler, including the total amount of goods and services produced IN AND BY your national economy. One can measure this number in any number of ways, in terms of U.S. Dollars or in the currency of any other economy. For instance, the U.S. GDP right now is around nine trillion dollars. A trillion is one thousand billion (where "billion" is a thousand million, and a million is one thousand thousands). These numbers run large, and at first one might find them just a tad intimidating. After a while of trafficking in them however, they seem more commonplace and manageable.

Today's final part of the introdcution to economics for christians considers the question, "What is money?" And "Why do we even need money?" We'll take these in reverse order. First, we need money so we can swap goods and services more efficiently. Think about asking the question, "How many carrots is a slice of cheese worth?" This is the problem people face when bartering -- which is often a great idea by the way. But it is not always easy to specify these relative prices in ways customers will find acceptable. Haggling is hard work, and most people in western countries simply want to be told the price in dollars (not carrots or wheat). If you don't give customers what they want or expect, they will tend to buy from someone else.

So money helps "standardize" a way of measuring how much one thing is worth (say in dollars) to compare its economic value against what another thing is worth (in dollars as well). If a piece of cheese is worth .60 and a carrot is worth .30, then a piece of cheese is worth exactly two carrots (unless they go on sale that week).

Ultimately, any one item is worth what someone in that market is willing to pay for it, but this economic value the customer places on the item still has to be measured in something -- dollars or carrots, etc. So money -- here in dollars -- renders the idea of comparing "values" much easier. It does this by converting the economic values of each good into the same economic "yardstick," or currency.

In the Bible, money is to be made of gold or silver, or at the very least, it must be "backed by" (redeemable for) gold or silver. Paper money 0f the kind familiar to us is actually a fairly recent invention. It was at one time very controversial. But we can talk of this later.

If you didn't know much economics before today, you now have a good idea of what "money" is, what the GNP of an economy is, and what its GDP is -- and why people care. Think of it as your "economics birthday." Happy birthday.

Today's project. Pull out a one dollar bill and ask them (hold it high in front of them):

1. What happens when we use this to buy groceries? (what does money DO?)
2. Why will people give us so many groceries for just paper (cool green looking paper?)
3. What is a nation's "Gross National Product" and can you think of instances where the Bible reports on the income or wealth of a nation?

(Notes for teachers: The Bible tells exactly the income from gold that Solomon earned each year; it also discusses principles of buying and selling (just weights and measures) in its laws, and God even mentions exactly how much cattle (120,000) belonged to the capital of the Assyrian empire -- Nineveh (see Jonah). Ancient empires and nations of the Bible -- except for Israel -- did not have coinage for the most part (none had minted coins like we do, until Greece and Rome. These were later empires in the Bible). So the Book of Jonah reports on the "money" most commonly used -- just say "Mooo" to bovine currency.

4. Why do economists care how much a nation produces or receives in income? What do they use this information for?

(Answer: they use this information to try to: 1. evaluate a nation's TOTAL economy 2. find ways to make an economy more efficient and productive. They are looking for ways to make better use of the assets of an economy (or state, or household or what have you).

5. How is a Gross Domestic Product different than a Gross National Product? Answer: The GDP considers only how much the economy produces (in goods and services) in a given year. The GNP adds to this number (sometimes it actually deletes the GDP from its calculations -- but it says so when it does) the international trading -- buying and selling -- activities of a given nation's residents. This means what they produce or earn abroad gets added to the GNP in most cases.

6. Extra Credit. This part will require some real thinking. Since the value of a U.S. dollar changes from day to day (when compared to other currencies), how does this affect the actual value of a nation's GNP or GDP?

Answer: Their value in terms of what a dollar can buy (called "purchasing power" -- this names how much stuff you can get for a buck) changes from day-to-day too. This means that representing a nation's GDP or GNP as a single number not in flux is actually a kind of useful fiction. And since inflation shrinks the U.S. Dollar a little every year, comparing this years GDP to last years -- if you are looking for progress -- has to have an adjustment made to it.

If you compare last year's dollars this year's, they will be different in two important ways. First, each dollar will buy a little less amount of stuff in the U.S. (maybe by 3% inflation). And second, each dollar will buy more or less of FOREIGN stuff (imports), depending on whether a given foreign currency rose or fell in value (in the past year) against the U.S. dollar.

Remember the cheese-carrot problem? It's the same with the Dollar and Yen, or the Dollar and the British Pound, or Swiss Franc. Hint: the way to standard cheese and carrots, we saw was with currency, but what is supposed to keep one currency stable and standardized against another? So they don't bounce around like yo-yos on steroids (wreaking havoc with economies)?
The Bible has the answer: Gold and Silver.

The Word of the Living God is altogether perfect, like silver refined in a furnace of clay, purified seven times (Psalm 12:6). Put that in your economic textbooks.