No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Seven: Production: Man at Work 154 INTRODUCTION As a young student, you have the world in front of you. If you are a Christian, you have the God of the universe who wants you to succeed (in ways that honor Him, and sanctify you!). The Bible and history both witness to the concept of ethical cause and effect: if you are obedient to God, you receive long-term covenantal blessings (albeit not necessarily material); if you are disobedient, you eventually receive curses (Deut 28; Psalm 73) . What an exciting time to be alive! Some of you want to complete college—likely most of you. Some may be ready to get a job. Some may want to own your own business. One of you might be the college dropout who starts the next Microsoft. Whichever path you wish to take, we must serve others if we want to survive and prosper (unless you live on a deserted island like the fictional character Robinson Crusoe ). But whatever you ultimately do, you will be involved in the production process. FACTORS OF PRODUCTION The production process takes various inputs to make an output; historically most economists have categorized the factors of production as land, labor, and capital. Others have also recognized the importance of entrepreneurship to guide the application of those factors. In this chapter we will explore the interaction of these factors of production to answer questions such as: (1) how much should employees be paid; (2) what value does the entrepreneur add to the production process; and (3) how do middlemen fit in the production process? We can illustrate the production process through the example of the building of Solomon’s Temple as in Figure 7.2 below. Solomon has to take raw materials from land such as gold, silver, cedar trees, etc., and convert those raw materials into the Temple. Solomon built the Temple in Jerusalem which required land as well. Capital equipment would include any of the tools that made this process easier: saws, hammers, boats, and horses—anything used in the production process that ultimately was not part of the final product. In the building of the Temple, Scripture doesn’t give tremendous details, but we see that timbers were sent by sea in rafts and we know that saws cut timber. The building of the Temple required both skilled (such as Huram-abi) and unskilled (such as the 150,000 aliens) labor . All of the building was done according to the direction and leadership of Solomon, who acted as an entrepreneur to determine both the end product and how land, labor, and capital were allocated to produce the Temple. STRUCTURE OF PRODUCTION: STAGES OF CAPITAL Production of the Temple was a hugely complex task, and the result was highly commended by both God and man. God chose to ensure that the description of the building process occupied several chapters of the Bible, suggesting its importance.