Because of YOU, the future of this entire universe is in jeopardy! Buzz Lightyear

The period after World War II was essentially a human paradise. It wasn’t perfect, of course, but compared to any other period in human history it was as close to paradise as mortal humans could ever have expected to experience. Naturally, it is falling apart before our eyes.

The American world order is crumbling:

  • because of a prodigious foolishness on the part of America and its allies in naively enabling the spectacular rise of Communist China while asking nothing in return;
  • because it turned out that the liberal values America espoused – the ideas that it blithely expected would dominate human history going forward – weren’t, in fact, universally accepted, especially by the likes of China, Russia, and Iran, but also by the likes of what we are supposed to delicately call “The Global South;”
  • and, most of all, because we became rich and spoiled and more interested in trashing our own country than in the often thankless process of maintaining world order. Very important elements of the American public – universities, the media, large foundations, much of the nonprofit world – consider America to be the principal evil in the world, an irredeemably racist, sexist oppressor. Never mind that this idea is so preposterous that only a university professor could believe it.

If we want to understand where America is headed, we could do worse than to examine the example of Israel. Israel is a tiny country (there are only 7.5 million Israeli Jews) surrounded by hostile societies bent on its destruction – and by terrorist organizations bent not only on the destruction of Israel but on the destruction of Jews everywhere.

As a result, for most of its existence Israel served as the “Middle East cop,” maintaining a powerful and vigilant military capability and fighting almost constant small – and, occasionally, large – conflicts in order to prevent the huge conflict that could wipe Israel off the map. It was the America-of-the-Middle East.

But in recent years Israelis, like Americans, took their eyes off the ball. They got rich and cosmopolitan and were more interested in tearing their country apart over a fundamentally silly battle over the role of their judiciary. I say fundamentally silly because every right-thinking person knows that the judiciary system in Israel badly needs to be reformed.

But the ham-handed way the Netanyahu government went about the reforms, egged on by its far right wing, led to a violent reaction by the Israeli left and center-left. Tens of thousands of people took to the streets and stayed there for months. Israeli soldiers announced they would never again fight for their country. So badly did Israelis forget their precarious position in the world that a huge music festival for young people was mounted two miles from the Gaza border.

Hamas’s October 7 attack on Israeli citizens humiliated the Israeli military, exposed the Netanyahu government for failing in its most fundamental duty – to protect its citizens – and, worst of all, unveiled the rot that had begun to infect Israeli society.

On 9/11, roughly 3,000 Americans died, while on 10/7 roughly 1,200 Israelis died. Since the US is 44 times as large as Israel, this was the equivalent of 53,000 American deaths. As a result, the impact on Israel was less like that of 9/11 and more like that of Pearl Harbor – which injected America into the horrors of World War II. (The US declared war on Japan on December 8, 1941, and on Germany three days later.)

The results have, so far, been catastrophic for Israel – for its military, for its government, for its people. Israel’s response to the attacks, however understandable, has led it to be virtually isolated in the world community as tens of thousands of Palestinian noncombatants have already died and many more are starving. And Israel has moved politically so far to the right that the left and center-left barely exist.

Bad as all that is, America’s retreat from its keeper-of-the-peace role will be far more apocalyptic. Just as Israel’s extraordinary success economically and militarily deluded the country into its current predicament, America’s very success in creating the post-war world order “permitted generations of Americans to grow up in a bubble [where] war was passe” (Walter Russell Mead) and where the most preposterous indictments of America could be taken seriously.

As divisiveness took a death grip on America the country’s willingness to continue to enforce global peace slowly faltered and is now all but dead. The retreat began early in the twenty-first century but it was publicly announced in 2012 when President Obama backed down from his “Red Line” ultimatum in Syria.

Obama took enormous heat for that incident, but most of the criticism was misplaced. Backing down wasn’t the problem – the President knew, as did anyone who was paying attention, that America had no stomach for additional conflict in the Middle East, and hence his Red Line threat was empty. Obama’s mistake was in making the threat in a public way instead of through quieter diplomatic channels where he could have backed down quietly.

After that fiasco it was all downhill for America as the world’s cop. Whatever mischief was being made by Russia, China, Iran, Hamas, Hezbollah, or others resulted in nothing more from America than handwringing. With US deterrence dead, it was inevitable that something like the invasion of Ukraine would happen – the largest conflict since World War II with (so far) 500,000 combat casualties. As Niall Ferguson recently remarked,  “American power sure ain’t what it used to be.”

The world America built after World War II reminds many observers of the Belle Époque, a period of peace and prosperity that began with the end of the Franco-Prussian War in 1871. That golden era was characterized by optimism, blooming arts and sciences, and no major military conflicts. During those four decades many believed that a permanent era of global harmony had begun. Alas, the Belle Époque was followed by the cascading cataclysms of World War I, the Great Depression, World War II, and the Holocaust. What horrors lie in wait for us following the end of Pax Americana?

We’ll look into that nightmare next week.

Next up: To Greatness – and Beyond! Part 3

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Please note that this post is intended to provide interested persons with an insight on the capital markets and other matters and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.

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