You can sum up much of 20th century history by saying that in the 1930s Americans decided that markets didn't work and government did, and that in the 1970s Americans decided that government didn't work and markets did.
The protracted and painful experiences of those decades changed basic public attitudes on the balance between government and markets, between regulation and enterprise, between government aid programs and self-reliance. The breadlines and depression of the 1930s moved Americans in one direction; the gas lines and stagflation of the 1970s moved them in the other.
Which raises the question of whether the financial ructions of 2007-08 (09?) will move them back again. One reason to believe this is possible is the passage of time. Americans in the 1980s and 1990s were ready to accept deregulation and tax cuts and welfare reform because so few of them had personal memories of the 1930s.
In 1992, Bill Clinton ran as a different kind of Democrat because so many voters then had personal memories of the 1970s. Today, fewer do. Half the voters did not reach adulthood until the 1980s. They never sat behind the steering wheel in a gas line or paid monthly bills as inflation was skyrocketing. It's plausible that they may be more open to big government programs than their elders.
Barack Obama and other Democrats have used the financial crisis to spin a narrative. The problem, they say, is deregulation and greed. This is not strictly speaking accurate. Obama and the Democrats opposed tighter regulation of the mortgage giants Fannie Mae and Freddie Mac, and John McCain supported it. Unregulated firms like hedge funds have done well, while heavily regulated banks have had troubles.
But the narrative will be advanced by the Obama-loving media ... and by the passage of a giant financial bailout -- er, rescue package. The likelihood, as this is written, is that Obama will be elected president and the Democrats will expand their congressional majorities. Possibly even to the 60 votes they need to effectively control the Senate.
In that case, Democrats might be able to move toward nationalized health care finance. Their card-check bill will promote unionization and do to much of the private sector what union contracts have done to the Detroit Three automakers. Higher taxes and overregulation could reduce economic vitality and creativity. Comparable worth laws could have bureaucrats setting private sector salaries. America could move some distance to becoming another France.