All the following passages are from blog entries over the past week on Krugman’s blog:

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I’ve mentioned before that my hate mail has reached levels I haven’t seen since 2004 or so. But back then, the hate was in a way understandable. People like me were questioning Bush’s bona fides as the great protector against terrorism, were claiming that he deliberately misled the country into an unnecessary war. Those were strong charges, and in a way you could understand that people who idolized Bush (believe it or not, there used to be a lot of them) were upset.

But now I get spitting, incoherent rage over articles on, um, health care economics or macro modeling. What enrages people so much about these pieces? Usually, it’s impossible to tell — in fact, I often have the sense that the enraged correspondents haven’t read the things at all. But that’s OK — they know that I’m corrupt, a liar, a Nazi, and have been spewing my evil in my writings.

The point is that whatever is driving all this doesn’t have anything to do with the realities of what I, or, much more important of course, Obama say or do. Obama could have come in proposing to pursue an agenda identical to Bush, and he would still be a socialist/Commie/fascist, with those of us who don’t see it that way lying Nazis ourselves.

Something is going very wrong in the heads of a substantial number of Americans.

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There are three reasons to be suspicious of that argument [that the public option wouldn't make much difference].

The first is that I suspect that Ezra and others understate the extent to which even a public plan with limited bargaining power will help hold down overall costs. Private insurers do pay providers more than Medicare does — but that’s only part of the reason Medicare has lower costs. There’s also the huge overhead of the private insurers, much of which involves marketing and attempts to cherry-pick clients — and even with community rating, some of that will still go on. A public plan would probably be able to attract clients with much less of that.

Second, a public plan would probably provide the only real competition in many markets.

Third — and this is where I am getting a very bad feeling about the idea of throwing in the towel on the public option — is the politics. Remember, to make reform work we have to have an individual mandate. And everything I see says that there will be a major backlash against the idea of forcing people to buy insurance from the existing companies. That backlash was part of what got Obama the nomination! Having the public option offers a defense against that backlash.

What worries me is not so much that the backlash would stop reform from passing, as that it would store up trouble for the not-too-distant future. Imagine that reform passes, but that premiums shoot up (or even keep rising at the rates of the past decade.) Then you could all too easily have many people blaming Obama et al for forcing them into this increasingly unaffordable system. A trigger might fix this — but the funny thing about such triggers is that they almost never get pulled.

Let me add a sort of larger point: aside from the essentially circular political arguments — centrist Democrats insisting that the public option must be dropped to get the votes of centrist Democrats — the argument against the public option boils down to the fact that it’s bad because it is, horrors, a government program. And sooner or later Democrats have to take a stand against Reaganism — against the presumption that if the government does it, it’s bad.

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It’s easy to be skeptical — how much difference can a speech [like Obama's to Congress this week] make, anyway? But the big problem on health care these past few months has been the sense that Obama had lost control of the issue — that the shouters and cynics had taken over the debate. Now, finally, we have some leadership and clarity from the president.

And maybe this is all it takes to turn the tide.

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FETISHIZING FREE TRADE

Free trade is supposed to be about a principle: nondiscrimination between domestic and foreign goods. Sometimes following that principle requires taxes and subsidies at the border! Thus, “border adjustments” on VATs — taxes on imports, rebates on exports — are what’s needed so that the VAT is an overall tax on consumption, regardless of where the goods are produced.

So it’s disheartening to see that people keep getting it wrong when it comes to climate-change policies. The economics say that we should make consumers pay a price for any carbon emitted in producing the goods they consume, wherever produced — which implies a carbon tariff if the goods are produced in a country without its own carbon-emissions regime. Even the WTO agrees.

Yet when France’s Sarkozy says something entirely reasonable on the subject — and something that may well be an essential part of the politics of climate change policy — the usual suspects pop up declaring that it’s evil protectionism.

Again, it’s the economic principle that should matter — that and, um, saving the planet, which is is any case more important than the trading system.

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What I objected to in the mag article [about what's wrong with the economics profession today was not that I, Paul Krugman, object to the use of mathematics in economics, but rather it] was the tendency to identify good math with good work. CAPM is a beautiful model; that doesn’t mean it’s right. The math of real business cycle models is much more elegant than that of New Keynesian models, let alone the kind of models that make room for crises like the one we’re in; that makes RBC models seductive, but it doesn’t make them any less silly.

And conversely, you can have great work in economics with little or no math. I can’t pull up papers now, but as I recall, Akerlof’s market for lemons had virtually no explicit math in its main exposition; yet it was transformative in its insight.

So by all means let’s have math in economics — but as our servant, not our master.

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