The root of the West's decline goes all the way back to the beginning of Nominalism, with Ockham. Contrary to popular belief, I see the Scholastic period as the height of civilization. The intellectual seed of our decline was planted with Ockham. The first act in the decline of the West, and the slide toward radical individualism, was the Protestant Revolution. Since the Church was disestablished, we have steadily declined through Unitarianism, Rationalism, Atheism, Modernism, and now Post-Modernism.
Of course it was. I am more inclined to place the root of the decline closer to the actual Protestant Reformation than that (Ockham seems to me, was simply one of the many late scholastics with an incidental relevance to us), but I think you trace the trajectory of the decline correctly.
This is why "diverse peoples together" was meaningful in the Middle Ages and became a dangerous platitude today. It is the Church that is holding peoples together as it makes them one body. Abstract ideas about equality and democracy don't. Paper constitutions don't, even less so. Today, to restore freedom, nations must again become not mechanical conglomerations of peoples but an instrument of Christian conversion, which was their original and only possible purpose. Observe that Islam is a false religion and it has no nations, just sects. Let us not become another false religion.