James Frank Solís

31 May 2007

12:02 PM

Larry Elder explains “Skyrocketing” fuel prices here.

You know, it is undeniable that fuel prices are “increasing” in a certain sense. That is the superficial appearance. But we ought not make judgments on such appearances. We ought to get to the real truth of matter insofar as we are able (see, e.g., John 7.24). Part of getting to that reality involves having a good grasp of how numbers really work when it comes to economics.

The real truth of the matter, innumeracy notwithstanding, is that fuel prices are not “skyrocketing.” Yes. We do pay “more” for fuel than we did any given number of years ago. But we pay “more” for lots of things. But this “more” is in many respects a bit deceptive.

The house I purchased last year would have cost me 30% “less” in 1977. In other words, when I take what a comparable house cost in 1977 and adjust for inflation (using S. Morgan Friedman’s inflation calculator, a very useful tool using CPI, here) I find that in today’s dollars I spent just about what I would have spent 30 years ago. And when I take my income, assuming all other things are equal, and compare what it would have been in 1977 with the price of that new home, I find that my incomes in both 2006 and 1977 are just about the same percent of the cost of those houses.

Let’s let I₁ and H₁ represent my income and the cost of a comparable house respectively in 1977 dollars. Let’s let I₂ and H₂ represent the same items in 2006 dollars. Now let’s say that I₁is n% of H₁. I find that, today, I₂is just about exactly n% of H₂ (indeed the difference amounts to .055%).

I have heard – heard mind you, so I don’t have a link to a source – that very few Christians tithe. I think I now know why. We are told that Exxon’s 10% profit is obscene. Well, if I thought 10% was an obscene percentage I probably wouldn’t tithe either.

Labels: Business, Christianity and Culture, Economics, Education

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