Trump’s New Gift
Why the emperor has no clothes, again
The recent story about Trump receiving “a great gift” reminds me of the classical piece “The Emperor’s New Clothes” by Hans Christian Andersen. The parallels are striking because they are not random; I’ve written about this in an earlier piece. Societies go through phases and the cycles are very much the same each time. Turchin has probably done the most impressive research in this area but many other philosophers have talked about this phenomenon, just using different words to describe it.
I like to look at it through a thermodynamic lens, simply because it ties perfectly together with how everything works. Let me explain: every living thing breathes. Look at the earth and its atmosphere; the rotation around its axis cools down the atmosphere in a breathlike manner. It ensures that parts of it always cool down and heat up such that air can circulate. Every living thing on earth follows the same pattern in some shape or form. And so do our societies. They breathe; exhale and inhale.
During inhales, societies are compressed and more in a state where building skills of various sorts are more important. This shift can already be seen in the way America is attempting to regain its manufacturing base. Another one is the military build-up taking place around the western hemisphere. Just recently, I was at an event where the Swedish officer Passikivi complained about the middle management that acts as a drag on the system. The compression can also be seen in the way globalization is reverting. Tariffs imposed, money supply tightened, tourism declining. I also define this period as a more linear one, where things become more predictable and close to physical reality.
Exhales are the periods that we are just about to leave. It’s when the fundamentals are so strong that coordination is where the value is to be harvested. It’s a period that produces not engineers but rather economists, lawyers and so on. It’s the less linear one, where things become less predictable and more abstract and where globalization flourishes. The late stages are what some people define as decadence. The late stage is precisely where we are now.
We are currently in a transition period between exhale and inhale, which is what Turchin calls a boom-bust cycle. The shift creates friction and that heat is the conflicts we are seeing around the world. During inhale periods, reality is compressed and societies start living closer to fundamentals: real materials, energy supplies, linear relationships. The conservatism is not random; it’s precisely what happens during these periods.
The even more interesting part is that “The Emperor’s New Clothes” was written in 1837, during Denmark’s own transition from the late flourishing of its Golden Age toward the upheavals that would culminate in the revolutions of 1848 and the loss of Schleswig-Holstein. Andersen wrote the story at a moment when Danish society was still wrapped in the comfort of cultural achievement and royal prestige, but the cracks were already forming. The aristocracy performed confidence while the foundations were shifting beneath them. A child calling out the obvious truth was not just a fairy tale; it was a diagnosis of a society that had lost the ability to say what was real.
Turchin actually noticed that as time progressed, societies shifted away more and more from wars to competition. So basically, the transition periods create friction that the underlying geometry of our societies is able to channel more efficiently over time. It’s actually remarkable to witness and on one hand terrifying for what it can bring to the world, but on the other hand comforting that it’s most likely not going to be as bad as previous cycles.
And what would this all be for if I didn’t try to predict what will happen next.
Contrary to what people have said about population decline, I actually think we will see a reversal in that pattern and start seeing an uptick. In a linear world, relationships will be easier to form, which in turn should lead to more babies.
This is not investment advice, but I think stocks like oil and infrastructure will outperform tech moving forward for years to come. AI in particular will see a major reversal, partly due to the overhyped LLM cycle but also the de facto energy constraints as well as the reallocation of resources to sectors that societies truly need. If anything, Iran showed us that you don’t need much AI to win decisive battles and potentially wars. But this doesn’t mean no AI; it just means a stop to this insane capital allocation in one single sector with the hope that AGI is soon going to take over the world anyway.
And probably the most obvious one, is that US hegemony is de facto over and we’ll witness a new world order taking shape: The gift Trump is talking about does not exist.