Walter Russell Mead - How America Keeps Winning

Invest Like the Best with Patrick O'Shaughnessy

In this episode of Invest Like the Best, Patrick O'Shaughnessy interviews Walter Russell Mead, a prominent foreign policy analyst and author known for his work on American power. They

Key takeaways

• America's global dominance follows a recurring five-step playbook seen in past hegemonies like the Dutch and British empires.
• The current crisis is not in American power itself but in the collapse of the institutional frameworks—like NATO, the WTO, and alliances—that once stabilized global order.

Main topics

• Historical patterns of global hegemony
• The decline of post-WWII international institutions

Notable quotes

"He has discovered one of the secrets of power in the contemporary world, which is he's managed to turn fame into power, drama into power."

Conclusion

Despite the current unraveling of global institutions and political turbulence, Walter Russell Mead remains optimistic about America's long-term

Transcript preview

Speaker 2 (0:00) Ramp is the only platform built to make your finance team leaner, faster, and better, saving businesses 5 % annually on average so you can stay focused on growth. Ramp customers grow revenue 3.2 times faster than the average American business. Visa, Vercel, Kersher, Stripe, Notion, 11Lab, Shopify, and 70,000 other businesses all now run on Ramp. Mine does too, and so should yours. Learn more at Speaker 3 (0:22) ramp.com slash invest. Speaker 2 (0:25) Felix by Rogo is a personal finance agent that turns a single prompt into finished, client-ready work using your firm's own templates, context, and standards. Send Felix an email like, take these comments and turn them for me. Or update my tracker with the context of these emails. And Felix sends back finished PowerPoint decks, Excel models, and sourced research. Felix works the way your team already does, delivering work quickly and accurately around the clock. Learn more at rogo.ai slash Felix. OpenAI, Cursor, Anthropic, Perplexity, and Vercel all have something in common. They all use WorkOS. To achieve enterprise adoption at scale, you have to deliver on core capabilities like SSO, SCIM, RBAC, and audit logs. Instead of spending months building these mission-critical capabilities yourself, you can just use WorkOS APIs to gain all of them on day zero. That's why so many of the top AI teams you hear about already run on WorkOS. WorkOS is the fastest way to become enterprise ready and stay focused on what matters most, your product. Visit WorkOS.com to get started. Speaker 2 (1:27) Hello and welcome, everyone. I'm Patrick O'Shaughnessy, and this is Invest Like the Best. This show is an open-ended exploration of markets, ideas, stories, and strategies that will help you better invest both your time and your money. If you enjoy these conversations and want to go deeper, check out Colossus, our quarterly publication with in-depth profiles of the people shaping business and investing. You can find Colossus along with all of our podcasts at colossus.com. Speaker 1 (1:51) Patrick O'Shaughnessy is the CEO of Positive Sum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of Positive Sum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of Positive Sum may maintain positions in the securities discussed in this podcast. To learn more, visit psum.vc. Speaker 2 (2:18) Walter, I've been looking forward to this for many, many months. We were introduced through Jeremy Stern, who runs Colossus, who I know credits you with a lot of his skill in writing and thinking about the world. I've been so excited to do this with you. We've got such a wide range of topics that I thought it would be appropriate to begin by having you frame your view of America in the world today. In very, very broad strokes, you've written a lot about how and why the UK and then sort of us as the successor in America. have sort of won the last several hundred years of global affairs. I'd love you to talk about the sweep of that winning, how you conceive of us and our role in the world today. It's a really interesting Speaker 3 (2:57) time because on the one hand, the Pax Americana that we kind of developed after 1945 and then refurbished in 1990, the end of the Cold War, is really in crisis. But if you step back a little bit, American power is not in crisis. The networks that we built up, the way of dealing with the world, the institutionalized relations with Europe and so on, those are all burning or crumbling. But the United States as a power, it seems to me, is, if anything, thanks to the information revolution and sort of this extraordinary raises in productivity that I believe we have experienced and are about to experience, I think we're still charging ahead. It's this odd picture of a dynamic country in a collapsing world system. The Trump presidency has kind of exaggerated a lot of the disruption. I'm optimistic about America's position, medium to long term. I do think we're in rough waters right now. What Speaker 2 (3:59) do you mean by collapsing Speaker 3 (3:59) world system? Well, you think about the World Trade Organization. We used to have this rules-based system for trade. Now your tariff is more or less what President Trump wakes up in the morning and thinks it should be. As a country, we exercise more of our power through institutions, the NATO alliance, the UN even at times. And we're not doing that. Since World War II, it's been sort of a principle of American foreign policy. that we want to be steady, predictable. You want everybody to know where America's red lines are. You want everybody to be able to rely. If we made a commitment in 1955, unless we announced with great fanfare that it's changing, it's still there. So we're trying to provide this bedrock of solidity in the world. And we're obviously not trying to do that anymore for President Trump. I think he believes he maximizes his advantages by being completely unpredictable and also crossing a lot of lines so that past presidents probably would not have said things like, OK, if you don't raise your defense budget, we're going to double your tariffs or something of that kind and try to solve problems through channels. Trump would make the argument that didn't work. And so he's now. completely trashing the institutional networks that for a very long time were the vessels of American power. And I think he's doing it in a way that's going to be very hard for his successors to Speaker 2 (5:35) rebuild. How would you teach someone else his method? You've written a lot about this. I'm very curious how you framed it. He's an interesting president, no doubt, whether you're for or against what he's been doing. How would you teach his method to somebody that was curious to learn how he operates? So distinctive. He really is a genius. He's Speaker 3 (5:55) discovered, I think, one of the secrets of power in the contemporary world, which is he's managed to turn fame into power, drama into power, and to do it in ways that leave him completely free to act. If you lie enough, the marginal cost of your 10,000th lie is nothing. While the marginal law of your first, second, or third, the marginal cost is very high. All of the normal constraints on political figures, reputational and so on, he does not pay. In some ways, I think President Clinton first discovered that shame only matters if you let it. Shame is an emotion that exists in other people's minds. A lot of people thought when the Monica Lewinsky thing. came out, he would have no choice but to resign. This was so overwhelming, so dreadful. He basically realized, no, if you just keep putting one foot in front of the other, you just pass through. The dogs will bark, but the caravan will move on. Trump has deployed that concept on an industrial Speaker 2 (7:05) scale. You talk about this notion of speech and spectacle. Can you say more just about what you mean there? The Donald Trump Show. is the Speaker 3 (7:12) most compelling entertainment, infotainment spectacle that humanity has ever seen. Since the dawn of time, no living human being has occupied the amount of bandwidth of the human race that Donald Trump does. And we can say, well, global media and so on. But, you know, it's very hard to think ever of a single ruler who just dominated everything. Anywhere you go in the world today, I don't care where it is. What you hear is Trump, Trump, Trump, Trump, Trump. Some people hate Trump. Some people love Trump. Some people laugh at Trump. Some people are astonished by Trump. Some people spend their lives thinking about their contempt for Trump. But he remains the center of everything. And he sees that as the key to his unique power. A lot of people thought that when he lost in 2020, it would go away, that that was it. He was just about as dominant out of office as he had been in office. At what he does, he is as good as Napoleon was at what he did. I observed that Napoleon also lost at Waterloo and ended in exile. So this is no guarantee that it will be what Trump would consider a happy ending to the whole spectacle. But he is a major historic figure who has developed a new understanding of how power works in an era of mass communications. and social media, Speaker 2 (8:37) and the rest of us are just trying to deal with it. How do you think the world is or will be the most different because of his role in it? Well, I think he has vastly Speaker 3 (8:48) accelerated the disintegration of the post-World War II slash post-Cold War structures. They're not going to be the same. He's not the only one who's done this, but I think we're entering... an era of much more personal and much less bureaucratic politics. That is, I think for a long time in the 20th century, people got into the habit of thinking one person rule or a central figure should be downgraded and we should be run by institutions and bureaucrats and or committees. I think that one of the impacts of the internet is that people want to be ruled by people again. So that in India, you see a Modi. We saw Abe in Japan, Bibi in Israel, and Erdogan in Turkey, and Trump in the United States. Trump is sort of the greatest of these, the most globally impactful of this new wave of Putin, Xi Jinping. We're back to an era of personal Speaker 2 (9:47) politics. If you think about the broader, longer arc of... dominance or power leading up to this moment. I love the historical context. You're an amazing historian. Talk about why, whether it's maritime dominance or other major reasons that you think the UK and America up until, let's say, you know, the end of the Cold War or something had such an incredible run. Let's just start with the U.S.-China rivalry Speaker 3 (10:12) today. And what you see is the sort of two sides. One is a land-based continental empire, China. which believes that it can match the technological and therefore military strength of the other power without all that political liberalism and messy democracy. Okay, great idea. The first, I think, ruler in modern times to really embrace that was Louis XIV, who thought that his technocratic government of the experts in France could beat those... pesky English with all of that ridiculous, you know, every 20 years they kill the king or kick him out or whatever. Who knows what they do? But it's utterly chaotic. The French idea was we can do that with a strong centralized system. From the time of Louis XIV right up until now, you could sort of argue the dominant theme of global power politics has been this rise of this English-speaking maritime commercial. liberal order. And then it's being contested successively by a series of great power continental states, France under Louis XIV, again with Napoleon, Germany, Prussian World War I, and then World War II, the Soviet Union. And that these contests have been incredibly difficult. There have been moments in every case where the technocratic centralized land power looked like it was just walking away. And the ridiculous, confused, commercial, English-speaking maritime alliance was muddled, lost, crazy. And yet somehow in the end, the hobbits keep winning. I should say that we stole our global strategy from the British. They stole it from the Dutch, who had been doing this earlier in the 17th century. In God and Gold, one of my books, I say that you could sum up the last 300 years of modern history in 10 letters, UP, United Provinces, to UK, to US. Now, obviously, that raises the question to question mark, question mark, question mark. I Speaker 2 (12:27) don't think China has it in it to beat us. What is that strategy, the maritime strategy? What are these three entities done that's been so effective to let the hobbits win? I don't know if I can really reveal all this, the secret five-point plan for global dominance, but okay. Speaker 3 (12:43) Why not? Right. I'm just going to ask everyone who hears this to kind of be careful with how they use this information. It'd be terrible if it fell into the wrong hands. Step one is have an open society at home. Think of the Dutch in the 17th century. Okay, everybody had these wars of religion. Well, the Dutch are pretty Calvinist, but they said, well, you know what? these Lutherans, they're scum, they're going to hell, everybody knows that. But, you know, until they do, they could kind of pay taxes and contribute to the economy. And even the Catholics, I mean, of course, they can't do their filthy idolatrous rites in the streets or anything. But yeah, live and let live. The Jews, live and let live. If an intellectual, a scientist publishes some kind of scientific paper that the church doesn't like, Well, people will write nasty comments about it in other journals. But when Galileo doesn't go to the prison, there's no inquisition. And also, if you have an idea, you can try it. If you are the son of a peasant and you want to sort of try it as a merchant and you can find some people who let you do it, go right ahead. They come up with new ideas for government finance that we still use, the joint stock company. new seagoing technology, circulation of the blood. Locke comes to Holland and writes a lot of his best work there. That's step one. You have this open, dynamic society, and you've got the intellectuals are flocking there. Your universities are flourishing. Step two is now with all of these products that you've developed and innovative technology, you take the show on the road. You trade globally. So you have, I think, There were 10,000 seagoing ships coming from the Netherlands in the 17th century. And they're traveling all over the world. And what this does is it makes you stinking rich. I advise my students sometimes to go to the Met Museum here or any number of places to see the Dutch masters, not to look for, oh, like the brushstrokes and the composition that's so exquisite. all of which is true, but just look at like all the stuff that these people have in their painting. You know, here's the merchant with his like silk robe from China, and he's standing on a rug from Turkey, and he's got a stuffed parrot from Brazil on his mantelpiece. There's just this astounding amount of wealth, which then allows you to start thinking globally. 18th century, the Prussians fight. Frederick the Great fights with Maria Theresa over Silesia. The Seven Years' War. This is a beautiful—I've been there. I've been to Silesia. I love Silesia. It's a sausage-shaped province in modern Poland. And seven years, both countries go bankrupt. And in the end, Frederick gets it, which means he's Frederick the Great, and it's just Maria Theresa who lost. But during that Seven Years' War, the British basically kicked the French out of India and Canada and North America and established the foundations of the world order that we still live today. So you're thinking globally. Once you have built this global system, you then do something extremely treacherous, which is you invite everyone else to participate in your system. So you don't do, say, what the Spanish did in Latin America, where you say, This is ours. We conquered this. Nobody else can trade here. You people stay out, which obviously condemns it to a certain stagnation. The British in the 19th century, they have free trade in the British Empire. Everybody can trade. And the British Navy keeps piracy down for everybody, not just for the Brits. And what this does is it encourages other countries to participate in your system. as we did with Britain. We didn't fight with them after 1812. We came close a couple of times. But at the end of the day, we traded in the British system. We were among the greatest beneficiaries of what the British did. And the Germans did the same thing. Prussia, the German Empire became a great trading power. They had investments in Argentina and Chile. And in many places, their commerce was driving out the British. Then the Germans discovered that we have another little trick up our sleeves. They go to war in World War I, and they suddenly discover that while they were integrating into the world, that made them very rich, gave them great technology, a lot of military power. But now they're dependent on it. Suddenly they're at war with the UK, and they can't get all that grain from Argentina and America that fed their people. They can't get that imported rubber from Malaya that provides the tires that they need for war. So they've grown dependent on that international system. And you're able to cut it off. And this is one of the big reasons the English won so many of these wars. So this system exists. I think a lot of Americans really aren't conscious of it, but we sort of revert to these patterns. Things happen and we just behave in these ways. So after the end of the Cold War, what do we say to Russia and China? Come on in. And just as we said to Germany and Japan in 1945, benefit from the system. Actually, we waited about 47 to do that. But in any case, come on in, benefit. And now both Germany and Japan are principal pillars of the world system. We sort of hoped that Russia and China would do that, too. They've taken more of the Wilhelm II path. Then the Conrad Adenauer path, we are now testing what happens there. It's one of the reasons I'm worried, but it's a pattern that has been recurring. And so far, whenever it finally comes to the test, our side has been winning. Speaker 2 (18:47) Vanta automates security and compliance for over 16,000 fast-moving companies like Ramp, Cursor, and Harvey, keeping them audit-ready around the clock. 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