Uncertainty and Sanity

What do Edmund Phelps, Milton Friedman, and William Buckley have in common? In my case, anytime I started to agree with them, I felt threatened by mysterious forces just beyond my Sight. Ed Phelps wrote this Commentary, and I started to nod my head; then shivered at the thought of the demons which would spring out at me. I decided I must come up with a Counter-Proposal as chant to ward off the evil Gods. Brad DeLong (check the first Link of the Thoma Post) is somewhat on the right Path, though I doubt he holds the silver bullet to defeat the mad beasts of Risk. I consider the Issue, and decide that Risk must reside in the contrary feminist (I await the Picket line outside my window for that comment) nature of Markets.

I will spell out my Contention: Can a Market exist without Uncertainty? The Market must possess some degree of misinformation in order for a competitive Price to appear. Will not adequate information eliminate the Risk? This decision would also dictate the elimination of the Market as well, would it not? Going further down the Road of Uncertainty, can any Risk exist without some level of Uncertainty? I probably have already proven that I know little of which I speak, even if the basic relationship between Uncertainty and Risk remains untouched. I still review my basic premises, and decide that it has basically escaped my poor intellect, but will forward some dross anyway.

Price cannot exist without Risk, which cannot exist without Uncertainty. Elimination of Uncertainty will eliminate the Market structure in entirety. This seems simple enough, but One could wonder why I would stipulate it. Here is where it gets a bit tricky! Markets show a strange power, basically because the human mind insists on an evaluative structure; in other words, humans demand a Price structure. Others will contend I have not proven that Uncertainty must exist for a Price to be established, though it is somewhat intuitive that some Risk must exist for a competitive Price to originate. Still, the Uncertainty of the final outcome must drive the competition necessary for a viable Price; without which there would be no Market. It is my basic Contention that pressure for a Market (to define a understandable Price) pressures for the establishment of Uncertainty, based upon the innovative process of finding new utilizations for Resource or Product to create the necessary Uncertainty. Too Complex? Bill Buckley always insinuated that I had a Mind like hopeless Bread dough, which wouldn’t rise to the occasion. lgl