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Setting the Record Straight on Time-Price

After Bill Bonner’s scintillating critique of time-prices as I interpret them, I received a response from time-price pioneer Gale Pooley. Now, I’m passing it on to my readers below.

But first, what strikes me most tellingly is the range of our agreement. We agree that subjective estimates of technological progress are unrevealing compared to actual willingness to pay for products. We all agree that monetary policy has been manipulative and obscurantist, that central banks represent a form of pernicious socialism, that US debt and deficits are on an unsustainable trend, that GDP, wages, inflation, trade gaps and other government data are deeply misleading, and that the problem is political intervention and control. We agree that the Federal Reserve can print “money” but it cannot print time.

As an analyst of technology, I focus on the impact of innovation. We all disparage the ridiculous “hedonic adjustments” that guess the value of technical improvements. We deride CPIs excluding food and energy, and doubt the real worth of many employee “benefits.”

Time-prices show that the impact of worldwide technological progress has been far greater than even the “hedonic” claims. This recognition is important for investors who are told that the valuations of technology companies are drastically spurious. I believe that we are in the midst of a real technology boom. Bonner legitimately challenges my confidence. He makes telling points.

Time-prices are an attempt (I believe successful) to transcend tendentious economic debates and statistics (including F-150 and iPhone prices and features!). The aim is to distill an index of economic progress based on the hours and minutes people have to work to buy goods and services (including widely useless government services and dubious benefits in the numbers).

I believe that time-prices are a major innovation in economic measurement. Bill Bonner could use time-prices, as I do, to debunk the constant streams of economic propaganda issued by government statisticians around the world to show that socialism works.

The following is Pooley’s response, which I edited slightly for clarity and length:

“Thank you, Bill Bonner, for reading our paper and providing your analysis. Please allow us the opportunity to answer your questions and clarify our thinking.”

Gale Pooley continues his response…

Foundation Commodities

In our 2018 study, we included all commodities traced by the World Bank and the IMF. These 50 commodities are essential for flourishing of human civilization. These commodities, unlike F-150s and medical services have not changed much over time. Wheat, crude oil, and gold are pretty much the same today as they were in 1980 or 1880.

This approach allows us to measure the power of human innovation in creating abundance. We found that, on the average, these time-prices have fallen over 70% in terms of human labor since 1980. This is great news for emerging economies where people are just starting to enjoy the benefits of freedom and innovation. You and I don’t care much about the price of wheat, but Indians worked seven hours a day to earn the money for food in 1960. They only need to work one hour a day to buy food today. As such, they have six hours a day to discover new ways to create value.


We agree that GDP does not fully capture what an economy is really accomplishing. Your example of Paul Samuelson and the Soviet Union highlights that problem. You see, $1,000 worth of shovels is not as impactful as $1,000 worth of iPhones. GDP counts things with dollars, but we should measure value with time.

We think that time is a much better measure of abundance than money. Unlike money, time is a universal constant that everyone is familiar with. It is not subject to inflation and manipulation. Because we all get exactly 24 hours in a day, everyone is perfectly equal in terms of time available to them.

Times-prices tell you how long you have to work to earn enough money to buy something. Time-prices are equal to the nominal money price divided by nominal hourly income. Money-prices are expressed in dollars and cents. Time-prices are expressed in hours and minutes.

Hourly Income

The denominator in the time-price equation is hourly compensation. We have good estimates of these rates in the United States. Professors Samuel H. Williamson and Lawrence H. Officer are recognized authorities on economic history and publish their research at measuringworth.com. Their data include series on unskilled labor and production or blue-collar hourly compensation and are linked to BLS data.

Benefits began to be included as part of compensation in 1906 as a way to provide non-taxable benefits and circumvent government wage controls. They were not significant until the late-1930s. Today, benefits represent around 30% of compensation. It would be misleading not to include benefits since they are, in a very real sense, a part of hourly compensation.

Now, measuringworth.com reports two categories: Unskilled and Production Workers compensation, most people “upskill” over their working years.

They start as unskilled and end up at least as blue-collar production workers. We created a third series we call upskilling workers to acknowledge this common experience. Since 1980 US unskilled worker nominal income has increased by 215%, blue-collar compensation by 251% and upskilling wages by 690%.

Someone starting their first job as an unskilled worker in 1980 earned around $4.00 an hour. According to the AAA, gas in 1980 was $1.19 per gallon. This means it took 18 minutes to buy one gallon of gasoline. Today the average gas price is around $2.65. If you never acquired any skills over the past 38 years you would be earning around $12.75 an hour and your gallon of gasoline would cost around 12.5 minutes. The time-price has fallen by 30%.

Workers who acquired some skills and moved up to a blue-collar or production job, would see their hourly compensation rise to $32.06 an hour. Their gasoline now costs 5 minutes a gallon, which amounts to a 72% drop between 1980 and 2019.

Put differently, the time it took to earn enough money to buy one gallon of gasoline in 1980 will buy 3.6 gallons today. We would guess that this is what Bill Bonner’s personal experience has been. As Jordan Peterson notes, “we must compare ourselves to who we were yesterday, not to who someone else is today.”

Remember, it’s not the hourly income rate but the rate of change in the rate that’s important. If people’s hourly incomes are increasing faster than the price of goods and services, then life is becoming more abundant.

Pickup Economics

George Gilder argues that you can’t compare a 1970 pickup with one made today. He’s right. They are almost as different as a Yugo and a Lexus. In 1970 Ford made the F-100. The F-150 was introduced in 1975 as a way to avoid certain emissions control restrictions.

Instead of trying to compare a 1970 F-100 to a 2019 F-150, let’s find something manufactured today that is equivalent to the 1970 Ford pickup. India’s Mahindra Bolero Maxi and China’s Foton, JAC, and Hilux all make something similar to the 1970 F-100 for around $8,000.

In 1970 a basic Ford F-100 sold for $2,599. US blue-collar compensation then was $3.93 per hour, indicating a time-price of 661.3 hours. The China-India equivalents sell for $8,000 and blue-collar production worker compensation today is around $32.50 an hour indicating a time-price of 246.1 hours.

This approach would suggest that pickups have become 62.8% cheaper. For the time required to buy one pickup in 1970, you will get 2.7 today.

If Bill owns a new F-150 and is willing to trade for a Mahindra Bolero I would be happy to accommodate him. In fact, we are willing to trade today’s Mahindra Bolero for today’s F-150 with anyone.

Medical Services

We agree that medical costs have increased dramatically since 1970.

A large part of this is due to the cancerous growth of government regulation, litigation, and third-party pay schemes. But who would trade a 1970s doctor, hospital, and technology for these same things today?

Many rare and risky surgeries have become routine and safe. MRIs and arthroscopes are just two technologies that have made life much better and longer. Cancer killed 152 Americans per every 100,000 in 1970. In 2013, it killed 111 Americans. That’s a huge improvement, especially when we consider that the risk of death from cancer increases with age and we are living longer.

According to the World Bank from 1970 to 2016, life expectancy in the US increased 14% from around 70 to 80 years old. In India it increased an astonishing 45% from 48 years to 68 years. During this same period, infant mortality in the US fell 75% from 15 to 3.7 per thousand.

Perhaps a better way to measure the increasing abundance of medical care is to look at elective procedures that people pay for with cash. Mark Perry at AEI has done an extensive study on 19 cosmetic procedures from 1998 to 2018.The average nominal price of these 19 procedures had increased by 22% while CPI increased by 54%. So, adjusted for inflation, elective procedures decreased in price. In contrast, medical services costs increased by 109.8% and hospital services costs increased by 201.6%. Entrepreneurs make things more abundant; bureaucrats make things costlier.

What do these procedure costs look like when analyzed as time-prices? We analyzed the prices from three perspectives:

  1. Unskilled labor
  2. Production workers (blue-collar)
  3. Upskilling workers

For unskilled workers the average cost declined by 26% indicating a time-price multiplier of 1.35 (time in 1998 divided by time in 2018). Blue-collar production workers saw time-prices fall by an average of 30.8%. Workers who were upskilling over this period saw time prices fall by 70.5%. For upskilling workers, in other words, the average time required to earn the money to buy one of these procedures in 1998 could buy 3.39 procedures in 2018.

Please Bill, don’t have a quadruple bypass done with 1970’s doctors and their ancient medical practices.

As Eric Topol, one of the nation’s top physicians notes, we’re on the cusp of astonishing medical breakthroughs as personal nanotechnology becomes ubiquitous at a small fraction of the cost imposed by our modern healthcare system.

Are Houses Getting Cheaper?

Bill notes that “It cost $23,000 in 1970 to put a roof over his head. Today, it’s $240,000.” What he forgot to mention is that the average house in 1970 was 1,500 square feet. Today it’s closer to 2,700 square feet. The nominal price per square foot in 1970 was $15.33 and blue-collar hourly compensation was $3.93 indicating a time-price of 3.9 hours per square foot.

Today, the nominal price is $88.89 per square foot and blue-collar hourly compensation is around $32.50 indicating a time price of 2.74 hours per square foot.

This would indicate that housing has declined almost 30% since 1970.

We also note that household size in 1970 was over three persons. Today it’s closer to 2.5. So, square footage per person has more than doubled from around 500 to 1,080. And of course today’s new homes, compared to those built in 1970, are much more energy-efficient. They come with better, bigger, and more bathrooms, closets, and garages; they’re equipped with better and more home appliances; and they almost all include modern features like central air conditioning and granite countertops. Where houses have gotten significantly more expensive look for highly restrictive zoning and regulatory requirements than have artificially raised the price of land.

The reality is we’re getting much more house for much less time.

In Conclusion

Bill is not wrong in his observations, but if he really wants to understand our world, he must replace the false and finite economics of Samuelson et al with Gilder’s economics of wealth as knowledge, growth as learning, and measure it all with time. -Gale Pooley

Well, I can hardly challenge the conclusion.

I hope the discussion can continue!


George Gilder
Editor, Gilder’s Daily Prophecy

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