While strong leadership is needed, a fear of globalization and technological progress has forced a revolt against government.

This does not mean that there will not be some threatening geopolitical event, or that the Pakistan/India relationship or the Middle East are no longer worrisome. But the reality is that for the industrialized world, armies are less fear-inducing than economics. Today, realpolitik is defined by economics and the ability of a nation to subordinate the power of the global market to the interest of the country.

No one is questioning the wonders of the marketplace to create growth and innovation far beyond anyone’s dreams. And the benefits of free markets are more than obvious. The problem is that, at this moment, the raw power of global markets is so much greater than the competencies of modern democracies to protect their citizens against that power.

Warren Buffett often talks about the unstable business partner, “Mr. Market,” who wants to alternately buy your stake or sell you his. That analogy is fine for buying and trading businesses.

The question is, what happens when Mr. Market buys or sells countries, when his demands for efficiency force millions of jobs to move out of a country — or when Mr. Market forces countries into straightjackets of austerity that will never let them grow out of their problems?

In our new world, governments have not kept up with the new economic realities. A rumor is spread in France about the major bank Société Générale — and the 401(k)s of middle-class Americans sink in value. Japan has an earthquake, and U.S. car production falls.

And this is doubly true in the financial sector. Credit default swaps, which were created in the late 1990s to partly insure against municipal and sovereign bond risk by selling that risk in the unregulated global marketplace, have become a multinational contagion. Where the goal should be to limit risk, these instruments have spread the risk globally — and have in the process relieved investors of their responsibility to fully weigh that risk.

America’s failure to protect its citizens against the ravages of the markets has caused a problem as dangerous to the country as unregulated markets themselves.

This dynamic is on display in the current eurozone crisis, as European governments are forced to tiptoe around credit default swaps sold against Greek, Italian and Spanish bonds in order to prevent a worldwide run on the $26.3 trillion default market.

Failure of leadership

The historic failure of most of America’s political leadership to see the global economic crisis coming has compounded the problem dramatically. In theory, no one should have had his or her ears closer to the ground than an American congressperson who needs to have his or her employment contract renewed every two years by the voters.

But whether it is because of gerrymandering or possibly because the early stages of globalization played into America’s notion of continuous innovation — in which one industry dies and is replaced by another — the U.S. Congress failed to see or respond to the snowballing economic and social changes that were being forced on Americans by global markets.

America’s failure to protect its citizens against the ravages of the markets has caused a problem as dangerous to the country as unregulated markets themselves. What is at stake now is trust in government’s ability to solve the problem.

In the 1930s, the New Deal established the principle that the government would create an insurance policy, a safety net, to protect American citizens from the negative side effects of 19th and 20th century industrialization. But there has not been similar action today to protect American citizens from the downsides of globalization.

No wonder there is a Tea Party whose principles appear to be very close to those of Josiah Warren, the early American anarchist. He, too, believed in a stateless government where all goods and services are private.

Armies pale in comparison as a threat to a country’s sovereignty compared to the force of the financial markets.

Why should one trust in government when government has systematically failed to protect a sizeable chunk of the American middle class that has been directly harmed or threatened by globalization?

But whether it is America or our traditional allies in Europe, we are in a similar leaderless place in judging how to confront the global economy. Democratically elected governments only looked at the positives of global markets — and ignored the challenges and the threats.

This lack of foresight has created a disquieting lack of optimism in America, along with a cynicism that borders on anarchy — while in Europe it has brought about a return to traditional parochialism.