What happens if Ben Bernanke isn’t reconfirmed? Well, some folks seem to think it will send markets into a tailspin. But it’s worth emphasizing that in literal terms almost nothing will happen. If a left-right coalition of 40 Senators blocks his confirmation, then it’s hard to see what other candidate would be more to their liking. You’d have gridlock. But Bernanke’s term as a member of the Fed’s Board of Governors is actually a 14-year term that doesn’t expire for a long time. Consequently, the same Open Market Committee that’s making decisions right now would just go on making decisions. Bernanke would, however, be unable to perform the formal responsibilities of the Chairman, so that role would devolve to Donald Kohn, the Vice Chair.

Would that be a ridiculous situation for an erstwhile major country with a functioning political system to find itself in?

Why yes it would. But it would merely be a reminder that we are, in fact, in a ridiculous situation and do not, in fact, have a functioning political system. Take a look at the current Treasury Department org chart and note that only one Undersecretary has been confirmed by the Senate. We’re missing the Undersecretaries for Domestic Finance and for International Affairs as well as a boatload of assistant secretaries. Those sound like important subjects to me amidst a financial crisis. And, in fact, they are important jobs. And they’re not exactly going undone—an ad hoc group of “counselors” to Tim Geithner and such are keeping the show running. But this is not really a good way to run the government.

By the same token, the routine filibustering has done something odd to the president’s ability to fire subordinates. Obama can’t really sack any member of his cabinet or subcabinet unless he has a specific replacement in mind who he’s certain can secure 60 votes in the Senate. Which means he basically can’t fire anyone. I suppose in some cockamamie way all this might advance the electoral interests of Republican Senators (although it’s actually hard for me to see how it does) but it’s not good for the country.

Something we pay much too little attention to when we talk about policy in the United States is the nuts and bolts of making policy work. The French, for example, have a whole system of higher education oriented around the idea that going to bureaucrat school is incredibly prestigious and that has a lot of consequences for what it’s possible to expect the bureaucracy to do. Conversely in the United States if something goes wrong with regulation, we have a tendency to think first and foremost that we should have written some different rules down in the manual. But this may be the wrong place to look:

The single best thing we could do for financial reform: Triple the budgets of all financial regulatory agencies. Immediately. Regulators are woefully understaffed; this is fact.

In addition, I think there’s the airy question of the social status of professional regulators. In the post-1980 United States of America rich CEOs of profitable financial firms are very prestigious individuals. If one of them gets into an argument with a career civil servant, the civil servant loses. That’s not a law you can repeal, it’s a cultural fact you can work to change. But in the USA that exists today, the kinds of civil servants who are respected are the ones charged with public safety (military officers, CIA & FBI personnel, cops & firefighters) and schoolteachers. Presidents don’t worry about getting on the wrong side of professional bank regulators, and members of congress don’t thunder about the need to give professional bank regulators the tools they need to do their job.

Noam Scheiber doesn’t understand why Ben Bernanke doesn’t show a little more savvy:

Having said that, Bernanke needs to understand the political backdrop for his confirmation vote. As yet, he only seems to kinda, sorta get it. Fortunately for him, it turns out there’s something that would give him a lot of bang for his buck politically: Come out strongly in favor of an independent consumer financial protection agency, which the House has already approved and which the White House supports. It seems like a complete no brainer. On the one hand, the Fed, which currently has a lot of authority over consumer protection, appears to have little interest in actually doing the job, if one can judge from the last decade or so. On the other hand, many of the same people who are deeply skeptical of Bernanke and the Fed strongly support an independent consumer agency. Bernanke could, in one fell swoop, get rid of a task the Fed isn’t particularly well-suited to doing (a substantive improvement), while also winning points with a lot of critics (a polticial improvement). And yet, for whatever reason, he still seems to be digging in his heels. It makes no sense. Ben, please, for the love of God, let it go!

I think a lot of apparently mysterious things about Ben Bernanke’s career can be solved if you just assume that Ben Bernanke is doing things that a conservative Republican would do because he is a conservative Republican. For example, remember when conservative Republican George W Bush was president and made Ben Bernanke chairman of the Council of Economic Advisors? And remember when Bush put Ben Bernanke in charge of the Fed? And remember when Ben Bernanke didn’t see the underlying problems in the financial system? But remember how, in a moment of crisis, Bernanke did turn out to believe in forceful government intervention on behalf of financial institutions and asset owners? And that time when, having stabilized asset markets, Bernanke stopped caring about unemployment and wages? And then, of course, there was the time Bernanke opposed the creation of an independent Consumer Financial Protection Agency.

If it looks like a duck and quacks like a duck, then it’s probably a duck. As Paul Krugman says Bernanke “is a great economist” and he’s acting just how you would expect a great economist to act, were he a conservative Republican. The only thing that’s weird about this is why Barack Obama, who’s not a conservative Republican, would appoint him to the single most important domestic policy job in the country.

I note that liberals, in their condescension toward conservatives, sometimes wind up tying themselves into knots about guys like Bernanke. Bernanke is very smart and incredibly accomplished. Many smart liberals think conservatives are dumb. So if Bernanke is so smart, it must be that he’s not really a conservative! But no. Smart conservatives are a very real phenomenon. And in politics the general idea is to give positions of authority to well-qualified people who share your political objectives.

Via Tyler Cowen, one reason why a background of recession and bailouts makes it hard to expand social insurance:

Three experiments demonstrated that feeling wronged leads to a sense of entitlement and to selfish behavior. In Experiment 1, participants instructed to recall a time when their lives were unfair were more likely to refuse to help the experimenter with a supplementary task than were participants who recalled a time when they were bored. In Experiment 2, the same manipulation increased intentions to engage in a number of selfish behaviors, and this effect was mediated by self-reported entitlement to obtain positive (and avoid negative) outcomes. In Experiment 3, participants who lost at a computer game for an unfair reason (a glitch in the program) requested a more selfish money allocation for a future task than did participants who lost the game for a fair reason, and this effect was again mediated by entitlement.

Soon after the election, Rahm Emmanuel was quoted as saying something about how you don’t let a good crisis go to waste. And in general I think there’s a belief among many that bad times are good time to press the charge for reform. This, however, is based on a pretty simplistic reading of the New Deal (FDR’s first term, 1933-36, was actually a time of rapid economic growth wedged between the Hoover-era collapse and the 1937 recession) and Benjamin Friedman’s The Moral Consequences of Economic Growth shows that the pattern from these experiments is much more likely. A bad situation makes people feel selfish and risk-averse.

It’s no surprise that in the wake of what happened in Massachusetts, legislators in other blue states like California are looking at implementing their own state-based universal health care plans.

There are, however, a couple of logistical problems with this. One is that state governments can’t go into deficit during a recession. Which means you’re always going to have a big challenge anytime there’s a downturn. In principle, very responsible management of rainy day funds could make it work, but it’d be hard. The other thing is that in any American state a huge chunk of health care spending happens through Medicare, which is entirely outside of state jurisdiction. That’s not an insurmountable obstacle (Massachusetts forged ahead, after all) but but it means that anything you put together would be intrinsically a bit odd.

Something the United States really excels at is having the very best universities in the world. But the sense in which this is most clearly true isn’t that our universities, on average, are the best in the world. Rather, the point is that of the world’s very best universities the vast majority are American. But as Kevin Carey notes this is hardly all that matters:

Countries around the world are racing to compete in higher education. (Ben Wildasvky has written what promises to be an interesting book on this subject that will be published in a few months.) And they all want to compete in the same way: by building world-class research universities. Indeed, the Shanghai Jiao Tong University rankings of world universities, which are dominated by American institutions, were specifically created as a way to benchmark Chinese universities against the world’s best. World-class research universities only admit the best students. So if you’re China and you want to go from having zero top-ranked universities (Nanjing University, China’s highest-ranked, doesn’t crack the Top 200), to, say, five top-ranked universities, one of the obvious things to do is create a ruthless tournament-style admissions process that sifts through millions of students to find the cream of the crop. (That and bribe some Nobel prize winners to set up shop in Shanghai.)

But at the same time that national governments see world-class research universities as key elements of prestige competition, something else is going on: globalization, economic development and the information age are rapidly expanding the population of people worldwide who want and need a college education. Running them all through a ruthless tournament-style competition and branding the losers as failures is a lousy way to meet that need. It also implicitly and substantially underestimates the level of public resources required. In an otherwise very good article in the Atlantic, James Fallows cited the fact that American has 17 of the top 20 universities in the Shanghai Jaio Tong rankings as hopeful evidence that America is not poised for decline. But it’s really the quality of universities 500 through 1,500 that are going to make the difference in the 21st century. It’s easy (and cheap) enough to allow a handful of relatively small, extremely famous, and fabulously wealthy private universities to get richer and more famous still. Building a high-quality college and university system for the large majority of high school graduates is a lot tougher and more expensive—but that’s what the nation needs.

The point for China and India is this. If you’re a giant country it should be pretty easy to just sort through your existing high school graduates—even if your high schools are actually really bad—and find 6,500 really smart kids. That’s like Harvard without the legacies. Then obviously you need to recruit some faculty. The total Faculty of Arts and Sciences budget at Harvard is a bit less than $1 billion and lots of stuff (janitors, cafeteria workers, etc.) can be done cheaper in China. So it shouldn’t be all that hard to create a world-class college without tackling any of a large country’s fundamental problems. But by the same token, while this would be nice in prestige terms it wouldn’t actually solve anything. It’d be the equivalent of China mounting a manned mission to the Moon—a display of aggregate economic clout and adequate government organizational capacity.

But what China really needs is to over time systematically upgrade the overall standard of education in the country. High schools and colleges that can impart a decent education to large swathes of the population.

For the United States, I think Carey sometimes understates the real value that our prestige universities bring us. I think Stanford/Berkeley and Harvard/MIT have something to do with the Silicon Valley and Route 128 clusters, for example. But the risk is of a dangerous complacency. Our higher education sector is very large and quite important to our economy and our prospects. But the operation of its key institutions is not very well understood (indeed, the economics of nonprofits in general are not well understood) and we basically don’t do anything at all to measure the performance of our colleges. The fact that our very best universities are world-famous and attract talent and interest for all around the globe is nice, but it can lead people to just assume that everything’s fine throughout the sector when the reality is that we actually have no idea.