🌍 Principles for Dealing with the Changing World Order by Ray Dalio

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Human life longevity relates to health. Similarly, empires' longevity relates to certain principles:

Empires experience cycles. Each cycle has phases.

The big cycle of economic order of empires

There are 3 phases:

The 3 phases of the big cycle of economic order of empires

📈 The Rise

Empires rise due to visionary leaders. They centralize power. They set up functional systems. These systems choose good successors.

Result? Peace. Prosperity. Productivity. Why? Strong leadership. Happy citizens. They don't resist.

Benefits include:

These positives make citizens productive. Their global competitiveness grows. Economic output increases. World trade share rises. A reserve currency allows more borrowing. This grants more leverage.

🏔️ The Top

At the peak, prosperity saturates the dominant nation. Citizens there earn more, making them pricier and less competitive.

As emerging nations offer cheaper labor, they gain an edge. They also adopt the leading nation's technologies, leveling the playing field.

The dominant nation faces external challenges.

Internally, complacency can grow. There's less urgency for innovation. Wealth gaps might widen. Social unrest may brew.

📉 The Decline

In this phase, once-dominant empires face multiple challenges:

The combination of these factors accelerates the decline. The cycle then resets as new powers begin their rise, learning from the previous empire's mistakes. The ebb and flow of empires continue, driven by these patterns of rise, peak, and decline.

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