Horizons Newsletter – week 40 // 2020

Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
Do you have a question about the digitization of consumer’s daily lives? As a research-driven investment company, we want to be relevant to you, so please provide us with your questions and remarks. Your feedback will help us to drive our research agenda.

American ‘soft power’ is under pressure
The American Dream is showing cracks and the U.S. has ceased to be the country the rest of the world looks up to. Although a recent soft power index still puts the U.S. in first place, its (failing) public administration and international cooperation are already leading to a loss of American soft power. As a result, the U.S.’ ability to persuade or entice other countries to follow a certain course is declining, and the country may have to turn to military or economic means to have its way. For the U.S. to restore its soft power position, it will have to reinforce its social-moral infrastructure to make the U.S. alluring to other countries again. We can expect the entertainment industry and big tech to be heavily involved in such a project. In the meantime, waning American soft power opens the door to other ideas about the Good Life, citizenship, public administration and international relations. Europe now has the opportunity to exhibit moral leadership, but there will also be more room for Chinese ideas about democracy and the economy.

The long hegemony of currency
As the U.S. dollar has fallen to a two-year low against the euro, speculation about the future of the dollar as the global reserve currency has increased. These speculations are largely based on financial and economic calculations, but a clearer picture emerges when taking a historical perspective based on the hegemonic cycle. By comparing several elements of hegemony (e.g. military, trade, innovation), Ray Dalio has shown that the power of the global reserve currency outlasts all the other elements of hegemony by decades. Nevertheless, the emerging Chinese financial ecosystem may undermine the position of the U.S. dollar. Already, Chinese financial ecosystems are going global by spreading across Asia and Africa and the Chinese central bank is experimenting with a digital currency. In addition, China’s alternative to the financial transaction network SWIFT is gaining significant momentum. These efforts, however, will not push the dollar from its seat of power yet. Hegemony ends when the hegemonic currency loses its status as the global reserve currency, but such a shift is likely to take a very long time.

The not-so United States of America
In the run-up to the U.S. elections, a lot of attention has been paid to partisan, generational, ethnic and socio-economic dividing lines. These differences however, are transcended by the various American “nations” with their distinct geography and economic systems and unique history and culture. For example, the east and west coast share a ‘Yankee’ mentality of individualism, combined with belief in reform and social engineering by the State. In Yankeedom, support for egalitarian and liberal policies is highest. Washington D.C. meanwhile, was founded by English gentry who created an aristocratic and very unequal society. The central regions of Greater Appalachia and the Midlands were founded by Irish and Scots with a fierce warrior ethic. These “nations” suffered from deindustrialization and still support Trump against Yankee domination, while also opposing southern nations they see as ‘Mexamerica’. Within the southern nations, large differences also loom, such as between Texas and California, which hold different ideas of the future of the U.S. In fact, the United States might not be as united as we perceive them.