Why are things the way they are in the world?

If life is basically spiritual, why is the world in such a mess?

It's a broad question and it requires a broad reply. When Gautama became finally enlightened after many years of struggle and sacrifice and seeing the futility of seeking, he awoke and became known as the Buddha. The first things he said were, "I am awake. There is no creator nor creation. There is in Truth only Nirvana." This is, of course, unintelligible to someone who is not aware. What he meant was that there is only Nirvana (spiritual joy). The world of matter is created by mind and had nothing to do with pure spirit.
A Course in Miracles explains it best when it emphasizes that Spirit is beyond time and space and therefore enjoyed endless Beingness. Then a 'mad idea' took place when thought started with the idea that it could manifest and enjoy material expression. The world of form started by creating opposites known as duality. Duality meant that everything had to have an opposite in order to exist as form. "up" had to have a "down" and black had to have white in order to see. Male had to have female to procreate. The form had to have two brains -- Right and Left Hemispheres in order to function in the world. The Right brain was the egoless state and experiences joy and innocence as its natural state. However, it needed a Left brain to survive in the world of form. The left brain was built for linear time, space, survival instinct, ego, business sense, money management, intellect and love of power. When a form (human being) was balanced by right and left hemispheres then it was able to cope with daily life and still have a modicum of understanding. The left brain has no love of truth and in fact it is conditioned through survival by doubt and fear. So, while the Right brain is egoless, the left brain is all ego. And, since most people live from ego then the need for power is great. The greater the ignorance of one's true nature, the greater the need for external power. We see this in dictators in middle-east countries. War is inevitable when the leaders want personal power. The need for power completely blocks the right brain so that it is deprived from compassion and, cruelty becomes its way.
The way the world is, is the creation of the left-brain mind and until there is awakening in spirit, there is little hope for world peace and intelligence. Women, as a rule, use more of their Right-brain than men and it is because they are more based on feeling than just intellect.
Is the world real? How could such horrific things we experience in the world be truth? Truth is the joy, peace and love that are in spirit. It was the split from spirit that created the world of duality. However, since the world is not the Truth then it can be a catalyst for Truth. For example, if you suffer and surrender this suffering for greater courage and trust in the true essence that you are, then you zoom to Self-realization. If someone hurts you and you forgive, then you take a giant leap towards pure spirit. So, we can use our experiences on earth to gain our inner heaven. We were cast out from the garden of Eden (you know the analogy) when we chose duality (the tree of good and evil) but it also became our journey back home. Everything is alright as it is as long as we understand the law of oneness.
With love,
Burt