By Stephen Smoot
David Lee Keefer passed away in 2022, but his legacy was forged long before. This gentleman, Mr. Keefer as my friends and I knew him, taught economics at Ripley High School to generations of students.
I will say that I took economics classes at three different institutions of higher learning as both an undergraduate and a graduate student. No one taught the fundamentals of the “dismal science” quite like him.
An aside, a pro slavery advocate coined the phrase “dismal science” in reference to economists such as Britain’s Adam Smith and France’s Frederic Bastiat who both defined free market economics and also campaigned against slavery wherever it existed in their times.
This teacher instructed classes in basic economics and advanced economics. In the first class, we learned about the relationship between supply and demand. We drew seemingly endless supply and demand charts and were expected to grasp what the chart specifically stated. At Ripley, students learned the difference between elastic and inelastic demand, the differences between supply side and demand side economics, as well as the relationship between money supply and inflation.
We learned precisely how the “invisible hand” of the market operates and why it works better than managed or planned economies.
Advanced economics introduced us to one of the greatest economics works ever composed, “Free to Choose” by Milton and Rose Friedman. It advocated strong enough economic freedoms to reduce as much as possible barriers to market entry and eliminate to the greatest extent possible “rent seeking.” Rent seeking is an economic term referring to large companies advocating for legal or regulatory changes that will help them and create a disadvantage for their competition.
For example, large corporations support raises in the minimum wage because their “mom and pop” competitors cannot afford to pay the same rates of salaries. They can spread the higher wage costs along a larger area without having to lay people off or hike prices enough to notice.
The Friedmans, however, are not economic libertarians. They support a strong enough framework to protect businesses from unfair practice and responsible management of the money supply and how it relates to the availability of products the nation needs to work and function daily. Inflation is, essentially “too many dollars chasing too few goods.”
Either the government creates the problem by putting too much money for general circulation or the market cannot produce enough supply to meet demand so prices rise to prevent shortages.
With a declining number of cattle farmers and the rising cost of inputs into beef production, the amount of beef available for market has declined, leading to a rise in prices. If consumers purchase less beef at a higher price, the “invisible hand” concept states that surpluses of beef will rise and prices fall as a result. Or, the lure of higher profits will pull more into cattle production and expand supply enough to pull down prices.
That is how the invisible hand operates unless something interferes. More regulations and interference from the government make it difficult to maintain an operation or to break in as a new entrepreneur.
