The problem with "free" small nations is that bigger nations have a tendency to swallow them. At which point they're not free anymore. For most of its history, the US has been pretty isolated geographically, but a US composed of loosely federated states might not have stayed that way too long, even if the War between the States had not happened.
Gottcha, trade freedom for security. What do you have now that we've done that? No freedom and no security.
