fall of the USSR
welfare reform (maybe)
term limits
end of Prohibition
shrunk militaries
California’s Prop 13
bills of rights

Assurance contracts are interest; I swung from libertarian/semi-anarcho-capitalist to social democrat largely on the problems of externalities and public goods. Though also on concentration of wealth, and the fact that modern Westerners seem unwilling to just let people die at the point of need of food or health care, and that reluctance undermines exclusionary social insurance in those goods. Still, demonstrating assurance contracts working at large scales would help reduce the scope of government action.

Take care,

Cormac

Such ideas have been dubbed “conventional wisdom” by Galbraith. Part of the conventional wisdom of many Americans has involved notions like “smaller government is better than bigger government” and “freer markets are better than regulation.”

Suppose most Americans substitute thoughtfulness for blind adherence to such generalities. But the present financial crisis has made clear — even to a very thoughtless person — that such generalities aren’t always true. Clearly at least some times regulation helps (if for example it prevents bad mortgages and/or banks taking on too much risk) and at least some times bigger government is better (if for example it prevents depositors from losing all their money when a bank fails).

To a person who has always been critical and thoughtful, the lessons learned from the present crisis might be relatively subtle. But to a thoughtless person with the above accepted wisdom, this produces huge cracks in their worldview. And because such a person isn’t very critical or thoughtful, they’re likely to rather blindly accept the next bit of imparted ‘wisdom’ that makes sense of the world to them.

I think for many people, Obama has successfully filled the cracks in the old conventional wisdom with a new narrative. He has been so successful in part because of circumstance — being the focus of attention of an uncritical audience at just the right time — in part because of his intelligence, eloquence, and charisma — which make him a more compelling advocate for those who put at least a modicum of thought into their beliefs — and in part because he has been shrewd in his approach to policy so far, at least giving the appearance of bipartisanship and honest concern, and thus presenting himself as trustworthy.

And so, I think what “changed” was just that a major event caused people to consider that their accepted wisdom was wrong, and the political discourse at the time was dominated by a different voice than the one that dominated whenever they adopted their previous worldview.

Juan Enriquez claims in the beginning of this Ted Talk that while commercial banks have an average of 9x leverage and investment banks 15-20x leverage, Bank of America had 32x and Citibank 47x leverages.

For insurance companies, common leverages leverages are little bit lower. In 2007 Berkshire Hathaway and Montpelier had 2x leverage. Markel, Travelers, White Mountains and Chubb had 4x leverage. AIG had 11x leverage.

As long as the public does not perceive the government as oppressive and exploitative overall, however, the drive towards totalitarianism is strong, because people in general are weak, and need external frameworks to cling to.