Walter Russell Mead - How America Keeps Winning

**Patrick O'Shaughnessy** (0:01)
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_2** (0:25)
Patrick O'Shaughnessy is the CEO of PositiveSum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit PSUMVC.

**Patrick O'Shaughnessy** (0:53)
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.

**Walter Russell Mead** (1:31)
It's a really interesting 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 and 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.

**Patrick O'Shaughnessy** (2:33)
What do you mean by collapsing world system?

**Walter Russell Mead** (2:35)
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 exercised 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 announce 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 rebuild.

**Patrick O'Shaughnessy** (4:11)
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.

**Walter Russell Mead** (4:27)
He really is a genius. He's 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.