As many economists are glad to tell you, the astronomical American level of health-care spending is largely a function of "price insulation"—of the fact that, um, "care receivers" are, by dint of the nature of typical health plans, prevented from taking costs much into account. We have arrived at our present unsustainable situation because we have moved health care into a liminal zone away from the market discipline of the cash nexus, but not all the way toward the bureaucratic discipline of socialism, such as it is. The most curious thing about Mr Krugman's quasi-religious squeamishness about the "commercial transaction" is that it is normally the economist's lot to explain to the superstitious public the humanitarian benefits of bringing human life ever more within the cash nexus. Yet Mr Krugman has chosen to reinforce rather than fight taboos against trade as if he were a benighted, harrumphing scold, or a sociologist.Both columns are instructive. Economists do sometimes squabble over ideas more profound than the latest trembling-hand refinement or the presence or absence of unit roots.
OUCH. Paul Krugman objects to increased reliance on markets in medical care, which prompts a columnist at The Economist to describe him in terms nastier than "dunce."