The adults, you see, were too afraid. His trusted advisers, we're told, were particularly stressed. "They did not dare to let it be known that they could not see a thing."
Too right. They had mortgages, car payments, kids crying out for Xboxes.
Why take the risk of disagreeing?
According to author and business consultant Mette Norgaard, that's the message which her compatriot Hans Christian Andersen gives us in this oft-invoked story.
"Are you running on the ever-greater-standard-of-living treadmill?" she writes in her entertaining book, The Ugly Duckling Goes to Work, asking, "If so, is it energising you or is it killing you?"
Selling out - for that's what it is - is probably more common in the business world, where jobs are more likely to be on the line. It does exist in education, though, when advisers and heads and leading teachers feel forced to fall in behind policies and trends for which they would once have professed contempt.
Are there any answers? Mette Norgaard discovered one, when she became obliged, as the only woman director of a manufacturing company, to support an unethical policy.
"I realised that my debts had made me lose courage. So my husband and I simplified our life to the point that we could live on one income. This has given us the freedom to speak our minds..."
Could you downsize in the same way? Are you going to work unhappy, just so you can pay tax at 40 per cent and run the second car that you wouldn't need if you weren't both racing around in high pressure jobs? It's not that either of you are definitely going to leave. It's more that knowing you could sends you off with a lighter tread each morning. Why not make an emergency exit plan? Label it as such, and pin it up by the back door.
Another piece of advice from Dr Norgaard centres on the moment in the Andersen story when the child states the obvious.
The point is that what the child says is factual, specific and self- evident, and so forces agreement. A vague opinion - "The emperor is a fool!" would just have started an argument. Bear that in mind when you challenge your own naked emperor.
"The Ugly Duckling Goes to Work: Wisdom for the workplace from the Classic Tales of Hans Christian Andersen" by Mette Norgaard. "Amacom" American Management Association