ACE

Category: ACE Research

  • Introduction to the United Nations

    Introduction to the United Nations

    History 

    In the wake of World War II, delegates from fifty nations met in San Francisco and unanimously adopted the final version of the Charter of the United Nations. The Charter set forth a mandate to maintain international peace and security. The mission to promote international cooperation was a familiar yet challenging goal. The League of Nations, established after World War I, embraced a similar initiative. However, the organization was ultimately unsuccessful in preventing the Second World War. President Harry Truman advocated for the Charter’s ratification and emphasized its importance in his address to the United States Senate:

    “In your deliberations, I hope you will consider not only the words of the Charter but also the spirit which gives it meaning and life… It is the product of many hands and many influences. It comes from the reality of experience in a world where one generation has failed twice to keep the peace. The lessons of that experience have been written into this document.”

    President Harry S. Truman, July 2 1945

    Unlike its predecessor, the UN Charter was drafted during wartime and granted smaller nations a voice in its inception. The League of Nations halted operations following the creation of the UN and granted the new organization access to all of its archives and resources. 

    Structure

    The Charter of the United Nations established the following principal organs:

    • General Assembly: The GA is the main deliberative body of the UN. Each of the UN’s 193 member states are granted a vote in all GA matters. 
    • Security Council: The UNSC is tasked with the actual maintenance of international peace and security. The UNSC has the unique power to deploy peacekeepers, enact sanctions, and authorize military action. The council is made up of fifteen members, five of which are permanent (P-5) members who enjoy veto power. The P-5 members are China, France, Russia, the United Kingdom, and the United States. The other ten members serve two-year terms. 
    • Economic and Social Council: ECOSOC is under the jurisdiction of the General Assembly and focuses primarily on economic and social issues. The GA elects the council’s 54 members to serve three-year terms. 
    • International Court of Justice: The ICJ is the judicial body of the UN. It settles disputes between states concerning violations of international law and acts as an advisory body to other UN bodies and agencies.
    • Secretariat: The Secretariat is the executive body of the UN. The Secretary General has the power to set the agenda within the UNSC and oversee the daily operations of the UN. 

    Agencies and Funds

    The image above illustrates the integrated nature of the UN system. Specialized agencies, funds, and commissions work alongside the main organs to supplement resolutions with expert research and a means to carry out the initiatives passed by the UN. Specialized agencies, unlike funds and programs, are independent international organizations who partner with the UN. For example, the International Monetary Fund works alongside the General Assembly to support initiatives concerning economic development. 

    Principles

    According to the Charter, the UN holds itself to the following principles:

    1. Sovereign equality 
    2. Peaceful conflict resolution
    3. Refusal to threaten force against any independent state
    4. Refrainment from providing assistance to a state against which the United Nations is taking preventive or enforcement action
    5. Refusal to intervene in matters which are within the domestic jurisdiction of any state unless the matter is brought to the UN for settlement
    6. Universal application of these principles for non-member states 

    Operations

    The UN aims to improve quality of life across the globe in order to prevent conflict and maintain international peace and security. The organization works on a range of issues including, but not limited, to sustainable development, gender equality, disarmament, non-proliferation, disaster relief, refugee protection, drug trafficking, global trade, and infectious disease prevention. There are also thirteen ongoing peacekeeping operations, most notably in the Golan Heights, India, Pakistan, and South Sudan. 

    For example, the UN General Assembly works alongside the United Nations Development Program and the World Food Program to provide Syrian refugees with food, healthcare, temporary housing, and access to educational programs. Following an 8.8 magnitude earthquake in Chile in 2010, the UN worked alongside the World Health Organization to deliver medical care and supplies to the nearly 2 million Chilean citizens affected. More recently, the UN created the COVID-19 Response and Recovery Trust Fund to assist less developed countries in crafting a sustainable response to COVID-19 and catalyze economic recovery. 

  • EU-Turkey Migration Agreement

    EU-Turkey Migration Agreement

    The EU-Turkey Migration Agreement was a 2016 agreement made between the 28 European Union member states and the Republic of Turkey to decrease crossings on the Greece-Turkey border. The agreement is still in effect in 2021.

    Context of the Agreement

    European nations experienced an unprecedented humanitarian crisis in 2015 when hundreds of thousands of migrants traveled from the Middle East and North Africa to apply for asylum. The leading cause of this crisis was the Syrian Civil War, which began in 2011. By 2015, nonstate actors and extremist groups controlled more than half of the country, so millions of Syrians fled. In addition to Syria, protracted conflicts in Iraq and Afghanistan contributed to the surge in asylum applications. At the peak of the crisis in 2015, 1.3 million people filed asylum applications in the European Union. The Greek-Turkey land and maritime border became a main pathway for those seeking to enter the EU.

    Source: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Asylum_statistics

    The European Union has a similar asylum policy to the United States; any person with a well-founded fear of persecution on account of “race, religion, nationality, political opinion or membership of a particular social group,” can apply for protection from an EU-member state if they are unable or unwilling to return to their country of origin. This definition does not automatically apply to those fleeing violence and war, so EU law includes a stipulation for “subsidiary protection,” where a person who does not qualify through the traditional pathway but can demonstrate they would suffer a real risk of serious harm if returned to their country also qualifies for protection. European Union member states granted protection through both pathways during the humanitarian crisis.

    Logistics of the Agreement

    The agreement had three main components:

    1. All new “irregular migrants” crossing to Greece via Turkey could be returned to Turkey, as well as asylum seekers in Greece whose applications were denied. In exchange, for every irregular migrant returned to Turkey, one Syrian would be resettled in the EU. “Irregular migrants” was not defined in the agreement, but it is generally accepted to mean those without visas to enter Greece, which would include asylum seekers. This was designed to incentivize displaced people to stay in Turkey, rather than cross to Greece and apply for protection there. Since the agreement came into force, 28,000 Syrians have been resettled in the EU from Turkey through the exchange agreement.
    2. The European Union would provide €6 billion ($7.1 billion) to Turkey for refugee aid.
    3. Turkey and the European Union would work to revitalize cooperation through trade agreements, visa liberalization, and Turkey’s accession to the EU.

    Since the agreement was implemented, irregular migration to Greece has decreased 97%

    European Perspective

    Arguments in support:

    1. Humanitarian concerns: as asylum seekers flooded into the Greek islands, the conditions in refugee camps and shelters deteriorated. The camps became overcrowded and unsanitary, and it was seen as vital to stem the flow of migrants for the wellbeing of those already there. In addition, many asylum seekers drowned attempting to sail to Greek islands, or else paid smugglers to transport them and fell victim to human trafficking. 
    2. Political concerns: there was a widespread perception among citizens of member states that the European Union was failing to handle the crisis. A 2016 survey found that citizens overwhelmingly disapproved of the EU response, with attitudes ranging from 60 to 80% disapproving and reaching as high as 95% disapproving among Greek citizens. Governments and citizens felt overwhelmed by the sheer number of asylum seekers, and were concerned about the economic burden and a potential strain on the social safety net. The United Kingdom voted to leave the EU in 2016 (also known as “Brexit”) and the refugee issue and immigration concerns played a large role in that decision. All of these factors contributed to a desire to take immediate action.

    Arguments in opposition:

    1. Outsourcing asylum: human rights organizations and activists objected to the agreement because they felt it allowed European Union member states to abdicate their obligation to those in need of international protection. The agreement effectively created a “buffer state” blocking asylum seekers from applying for international protection. Following the Turkey agreement, the European Union came to a similar deal with Libya.
    2. Turkey as a “safe country”: recent reports suggest that Syrians and other displaced people in Turkey do not have access to resources to fulfill basic human needs. Many are homeless or living in dilapidated housing, and rely on charity or work in the informal sector. In addition, human rights organizations have documented the Turkish government forcibly relocating refugees back to Syria, violating the international principle of “non refoulement,” which means refugees should not be forced to return to a country where they will face persecution. Because of these factors, some argue that Turkey is not itself a safe country, and therefore returning refugees to Turkey also violates the non refoulement principle.

    Turkish Perspective

    Arguments in support:

    1. Improve cooperation with the EU: the agreement included a provision to discuss visa liberalization, meaning that Turkish citizens would be able to enter the Schengen Area without applying for a visa in advance. In addition, the EU and Turkey currently have a Customs Union which allows for tariff-free trade with several exceptions; part of the agreement involves updating the Union for improved trade relations. Finally, the agreement specifically mentions working towards Turkey’s accession to the European Union, however there are doubts about whether either side really believed this would come to pass. Turkey had not met the economic and political standards needed to join the EU at the time of the agreement, and subsequently experienced democratic backsliding which made joining the EU even more distant.
    2. Funding for refugee aid: as part of the agreement, Turkey received €6 billion to fund refugee aid and resettlement, relieving some of the pressure on the government.
    3. Strong lever in international negotiations: Turkey is currently working to project influence in its neighborhood by playing a larger role in the outcome of conflicts in the region. This brings it into conflict with the European Union in the protracted Cyprus conflict and the Libyan Civil War, among others. The 3.6 million Syrian refugees in Turkey make for a powerful bargaining chip in EU-Turkey negotiations. In March of 2020, Turkey opened the border with Greece and actively pushed for migrants to cross, after a disagreement over military strategy in Syria.

    Arguments in opposition:

    1. Same political concerns: although Turkey was initially welcoming to refugees, after five years, 3.6 million refugees, and no end in sight, public approval has turned decidedly negative. Refugees tend to be conservative and religious, while a large portion of the Turkish middle and upper classes are secular and more progressive, creating a culture clash. In addition, Turkey’s economy was struggling even prior to the COVID-19 pandemic’s toll on the tourism industry, which accounts for 12% of Turkey’s GDP. In the last election, the governing AKP party experienced significant losses which were largely attributed to economic and refugee issues.
    2. Costs outweigh benefits: the Turkish government estimates it has spent €35 billion on refugee resettlement and aid, far outpacing the EU commitment of €6 billion. In addition, Turkey is far from  from meeting EU accession targets and no progress has been made on the visa liberalization as of yet.

    Impact and Future Developments

    The immediate impact of the agreement was a dramatic decrease in the crossings from Turkey to Greece (97% down two years out). In the longer term, Turkey-EU relations have continued to worsen despite the immigration cooperation, due to a lack of strategic alignment on regional issues. Despite the agreement, European citizens overwhelmingly disapprove of government handling of the refugee crisis. This led to the rise of anti-immigrant parties across Europe. It is possible that without the agreement, disapproval with the government response would be even higher.

    In the future, the situation in Turkey for refugees is likely to devolve. Turkish citizens want to see progress on the issue, but Syria is still largely unsafe for refugees to return. There have been some reports that the Turkish government is deporting Syrians and returning them to unsafe areas—these reports are denied by Turkey.

  • Disenfranchisement of Convicted Felons and Incarcerated People

    Disenfranchisement of Convicted Felons and Incarcerated People

    Disenfranchisement, or the deprivation of the right to vote, of criminals is a practice adopted from English law which many states integrated into their constitutions after the Civil War. Every state except Maine, Vermont, and Washington, D.C., enforces some restriction on voting for incarcerated persons. The Tenth Amendment gives states jurisdiction over their election and voting laws, so every state has its own policy on felon disenfranchisement.

    Within the range of policies, 20 states restore voting rights upon an inmate’s release, 17 require completion of parole/probation, and 11 states have additional requirements including personal grants of clemency from the governor. To learn about your state’s policy and how it compares to the rest of the nation, see this interactive map designed by the American Civil Liberties Union.

    De Facto Disenfranchisement

    Today, felon disenfranchisement occurs mostly through “de facto disenfranchisement,’’ meaning those impacted could still legally cast a ballot, but are unable to due to other obstacles. Pretrial detention is not legal grounds for disenfranchisement in any state, yet many people held in jails awaiting conviction are not given the chance to vote. Misinformation spreads easily because those working with incarcerated individuals receive limited, if any, training on their state’s felony disenfranchisement laws. Incarcerated individuals are often overlooked during election season, so efforts are not made to register and educate incarcerated individuals. In addition, many of the materials needed to vote, like voter registration forms, mail-in ballot applications, and information regarding candidates and ballot measures, are available online. Inmates often have limited internet access, so they have to submit physical applications through the postal service. This longer process can cause inmates to miss important deadlines for registering with their state and casting their ballots.

    Felon Disenfranchisement and Socioeconomic Status

    African Americans are disenfranchised due to felony conviction at a rate four times greater than other racial groups. This is partly due to a disproportionate incarceration rate of Black versus white Americans: Black men and women comprise about 13% of the US  population, but account for 35 and 44% of the incarcerated populations, respectively. Hispanic Americans are imprisoned 1.4 times more than whites. Incarceration rates for Latinx/Hispanic Americans is likely understated as some states’ ethnicity reporting includes Hispanic inmates within the white prison population, and four states—Alabama, Maryland, Montana, Vermont—do not record racial/ethnic data at all. 

    Low income Americans are also overrepresented in the nation’s jails and prisons. Some states like Florida and Alabama require payment of LFOs (legal financial obligations) before re-enfranchising a felon, so low economic standing—perpetuated during incarceration periods—leads to the suspension of voting rights. Current policies restricting voting rights of incarcerated people and convicted felons affect people of color and low-income Americans at higher rates than white and high income citizens. The states without felon voting restriction, Maine and Vermont, are overwhelmingly white compared to the rest of the country, meaning their universal suffrage status still favors whites over people of color in their communities. 

    Arguments For and Against Felon Voting Restrictions

    Although it has recently gained momentum as a topic of public discourse, much of the public believes felons should not retain voting rights. A 2019 poll conducted by Hill-HarrisX showed 69% of Americans believe incarcerated felons should not be able to vote. Debates around the four categories of restrictions—de facto, during incarceration, parole/probation, and following the completion of additional requirements—all follow the same logic. 

    Those who believe that felons should not be able to vote often base their arguments on their interpretation of what it means to vote. Proponents for felon voting restrictions argue that voting is a privilege, rather than an absolute right of citizenship. Once a person is incarcerated, they lose that privilege to vote. By committing a crime, a person has chosen not to follow the law, and has no place deciding the nation’s future. Those who support disenfranchisement argue that those who have violated the law in a manner serious enough to warrant arrest, detention, and probation should not have a role in shaping the laws for everyone else, especially citizens who have not violated any laws. It is argued that individuals who have committed serious crimes do not meet the minimum standards of conduct and responsibility required to vote. 

    Opponents of restrictions on incarcerated individuals believe that voting is a fundamental right which can’t be taken away, even if one is convicted of a crime. Especially in cases of de facto disenfranchisement, they see these restrictions as unjust because they prevent people who would normally cast a ballot from participating in elections. They argue that if under the law a person is allowed to vote, they should not face additional obstacles to casting their ballot. In addition, some feel that extra effort should be made to reintegrate felons into society, and participating in the democratic process is an important part of existing in the community.

    In addition to those two black and white perspectives, some believe that incarcerated felons should not be able to vote, but should be allowed after they have paid their debt to society. They view incarceration as a time when the right to vote is limited along with the freedom of movement, but that should only occur for a finite period of time. In 2018, Florida voters passed Amendment 4 which restored voting rights to felons who had completed their prison sentences (with the exception of those convicted of murder or felony sexual offense). The Florida legislature weakened the amendment by including a provision that all LFOs had to be paid in addition. Many were outraged by this decision, because they felt like the voters of Florida had made a decision about when voting rights should be reinstated and the legislature had reworked it, pushing back the finish line.

    Effects of Disenfranchising Felons

    Preventing felons from voting disproportionately impacts communities of color and can result in misrepresentative election results. This is particularly true for Black Americans, with more than two million being prevented from voting. Advocates for enfranchising felons argue that restricting voting may lead to skewed election results. Local, state, and federal elections can be decided by extremely small margins and the inclusion of citizens who were previously unable to vote could greatly influence these outcomes.
    Beyond deciding elections, disenfranchisement of incarcerated people affects the ways in which communities are afforded representation. The Census Bureau counts incarcerated people as residents of the location of their detention facility. When it comes to redrawing congressional districts or allocating representatives in local weighted voting systems, for example, the incarcerated population is counted towards the population tally but are not able to participate in the decision-making process. That is, incarcerated individuals swell the data upon which representatives are delegated to certain communities without being able to offer their opinions about candidates. This grants a disproportionate amount of influence to citizens living outside of detention centers, undermining the premise that each voice matters equally in a democratic election.

  • Environmental Regulation and Housing Affordability

    Environmental Regulation and Housing Affordability

    Environmental regulations are laws, imposed by the federal or local government, to mediate between natural systems and human systems, often with the intent to improve and preserve ecosystems and safeguard human health. Environmental regulations influence the supply and control the uses of developable land by restricting land use, regulating sources of pollution, and setting aside land for the protection of vulnerable ecosystems and species. Environmental laws also provide pathways for citizens to participate in decisions that affect their community through public comments, public hearings, and citizen lawsuits. Regulatory processes and requirements imposed by environmental laws can increase the cost of building and reduce the supply of available housing, thus increasing housing prices. 

    Housing Affordability

    Environmental laws that impact housing supply and affordability include:

    Environmental regulations pose challenges to tackling housing affordability and insecurity issues. Housing affordability is determined in part by the cost of housing, which incorporates building costs, financing costs, operating costs, and supply of housing. Environmental regulations largely impact the building, operating, and supply components. Building costs vary with the availability of land and the ease of development. Laws such as wetlands regulations can limit the land available for development. Furthermore, construction creates pollutants that must be mitigated, creating additional building costs. Environmental regulations often impose restrictions on water usage, waste management, and energy use, increasing utilities fees and operation costs. Low-income housing is disproportionately affected because homes tend to be older and less efficient, and there is little money to spend on repairing or replacing inefficient systems. Additionally, environmental laws allow citizens to sue government agencies if they believe a law has not been adequately enforced, but the threat of these lawsuits can discourage developers from proposing new projects. If lawsuits do occur, they can delay construction, create additional costs, and sometimes stop projects altogether. Finally, environmental regulations more frequently apply to federal agencies than private organizations or companies. While most public housing projects are subject to environmental regulations, private projects that do not involve federal funding, work, or permits are usually unaffected. Thus, environmental regulations might create an additional challenge for public housing projects.

    Arguments for Strict Environmental Regulations

    Individuals who advocate for strict environmental regulations argue that strong environmental regulations protect people, especially low-income communities and people of color, from environmental burdens caused by development projects. Environmental regulations ensure that developers’ and businesses’ actions are environmentally and socially conscious since the most cost-effective and convenient actions often involve environmental externalities. Additionally, locally unwanted land uses such as landfills, oil wells, and manufacturing facilities are disproportionately sited in low-income communities of color. Environmental laws require agencies to invite public comments on environmental impact statements, giving communities input into the location of these projects. They also allow citizens to file lawsuits against an agency if they fail to uphold the law, providing the public with an important legal tool to combat pollution and environmental burdens in their neighborhoods. 

    Some researchers and studies indicate the impact of environmental regulation as a barrier to development is overstated. Compared to the number of projects subject to environmental regulations, relatively few are litigated. In some cases, environmental assessments can save money by discouraging impractical projects or revealing environmental issues that can be solved before construction begins. Strict regulations also encourage companies to develop and improve sustainable technologies, making those technologies more accessible and less expensive.

    Arguments for Streamlined Environmental Regulations

    Others argue that environmental regulations should be streamlined to reduce the cost and timeline of development projects. Environmental impact reports, which are often required by environmental regulations, increase the time, cost, and uncertainty of getting a construction project approved. Additionally, land-use restrictions, pollution screening and mitigation, and utility fees imposed by environmental laws increase the building and carrying costs of housing. The threat of litigation over environmental concerns can deter developers from starting housing projects, and if a developer is sued they will likely face extensive project delays, expensive litigation costs, and environmental review fees. Since any member of the public can file a citizen suit to enforce environmental laws, locals have abused this tool to prevent unpopular development projects, including affordable housing, from being built in their communities. Environmental regulations do not often consider socioeconomic inequality, and this can disproportionately affect housing affordability for low-income communities. Regulations and environmental policies encourage developers or landlords to upgrade energy systems, install new windows, or update appliances to be more energy efficient. However, this increases home values and puts those units out of reach of low-income tenants.

    Questions to Consider:

    Many factors contribute to this debate, including the need for healthy communities, environmental justice, affordable housing, a greater supply of housing, and protections for ecosystems and species. 

    • Should exceptions to environmental regulations be made to increase the viability of affordable housing projects? 
    • Can environmental laws be simplified to reduce housing insecurity and improve the quality of life for low-income individuals without jeopardizing the health of disadvantaged communities? 
    • Finally, should we sacrifice environmental protections to streamline development, or can other measures be equally, or more effective in improving the housing crisis?
  • Promoting homeownership and supporting renters?

    Promoting homeownership and supporting renters?

    A source of debate within U.S. housing policy is whether the federal government should favor policies that promote homeownership or policies that support renters. In the United States, homeownership and renting are targeted by our existing housing policies, but which area should be favored by policymakers? With a limited amount of federal funding available, policymakers must weigh the benefits and drawbacks of investing in homeownership or rental as they make policy.

    Supporting Homeownership

    Recent federal budgets have spent twice as much on programs supporting renters than those supporting homeownership. Policymakers have traditionally favored policies that build homeownership such as guaranteeing mortgage payments to lenders through the Federal Housing Administration and the mortgage interest deduction because owning a home is the main form of wealth building in the United States. Homeownership can help American families purchase property that is likely to steadily increase in value over time and that can be passed down to the next generation. The passing of wealth through generations gives future Americans a financial step up and creates upward economic mobility. Ideally, this generational cycling of wealth will give the future family the financial means to purchase their own home, invest in businesses, or use it to attend college. Owning a home does not only increase the wealth of the owner themselves, but also has long term economic impacts on society. Making homeownership more accessible to more people can improve the wealth of present and future households and benefit the U.S. government through increased tax revenue, a more educated population, and decreased use of social welfare programs.

    Supporting homeownership policies also has short term economic benefits for other households seeking to purchase a home. The federal government runs two publicly owned enterprises called Freddie Mac and Fannie Mae that sell government assisted mortgages to private lenders and then reinvest the profit in federal housing programs. These programs actually turn a profit for the federal government who then uses that profit to support more Americans in purchasing a home. There is no comparable economic multiplier when it comes to programs supporting renters where the government can recover the money spent on renters.

    Those in favor of prioritizing homeownership in housing policy also see these policies as a way to address the wealth gap in the United States between White and Black households. As Black households were often excluded from past government efforts to build homeownership, White households gained wealth over time while Black households did not have the same opportunity for economic mobility. Today in the United States, there is a 30 percent gap between the homeownership rate of White households and Black households. A gap of this size has not occurred in the U.S. since racial discrimination in housing was outlawed by the Fair Housing Act of 1968. Government investment in policies that increase the homeownership rate, especially the homeownership rate in communities of color, can build generational wealth in communities that were historically excluded from government support in wealth building through homeownership. Given that homeownership is the main form of wealth building for most Americans, assisting Americans in achieving homeownership could be a policy choice for policymakers interested in wealth and income equity.

    Supporting Renters

    Proponents of increasing funding for federal policies that support renter households point to several economic trends that have made homeownership an unrealistic expectation for every American household. Median home prices increased 121 percent nationwide since 1960, but the median household income only increased by 29 percent. Owning a home is no longer affordable for many American households as they simply do not have the income to support a down payment, monthly mortgage payments, and home repairs. The Millennial generation of Americans are 8 percent less likely to own homes compared to other generations at the same age. The generation that is at the prime age of entering homeownership is instead staying in the rental market because of cost, decreasing the U.S. homeownership rate for the first time in decades. The lackluster growth in household income has kept millions of households in the rental market. Investing in policies targeting renters can support households that do not have the economic opportunity to own a home as that trend becomes more common. Policies targeting homeownership would eat up money as homes become more expensive, making rental-based policies seem more reasonable to policymakers.

    Renters are more likely to be low income households, while homeowners are more likely to be middle or high income. Many feel that government programs should prefer aiding low income Americans to middle or high. In 2019, the median household income for households that owned their homes was around $84,000, whereas the median household income for households that were renting was around $46,000. Equity advocates also point to the fact that renting households are disproportionately households of color. These are households who may have not had access to generational wealth to own a home in the first place and they rent because it is their only option. Without generational wealth to support a down payment, additional investment, or higher education to earn a higher income, many renter households will not be able to transition to homeownership without significant financial aid. In the short term, it would be more equitable to subsidize their rent than try to entice them with current homeownership programs that still require participants to be able to put up a down payment on their own and mortgage payments without a subsidy that accounts for their low-income. Investment in renter-focused policies will help low-income households and households of color secure quality affordable housing rather than give subsidies to high income households.

    Moreover, renting can still provide families with safe, quality, affordable housing while being realistic about the hidden costs of homeownership. Also, even if the federal government helps low-income Americans access mortgage loans with better terms that fit their income, there is no government intervention for necessary repairs, which are more likely to happen to homes priced in the range of what a low-income household could afford, and improvement costs to maintain the home’s value. Even if a low-income household becomes able to purchase a home, that home will most likely not build as much equity as a home owned by a high income household, repeating the cycle of poverty as low income homeowners do not recoup their investments and deal with hidden costs of homeownership. 

    In addition to inequities in homeownership in terms of income access, there are also large racial inequities in the valuation of homes owned by Black households. For Black households that do purchase a home, they can also face a smaller appreciation of home value because of how homes are appraised. Homes in majority-Black neighborhoods were valued on average $48,000, or 23% less than those with few or no Black residents, even when controlling for differences in schools, crime, and other neighborhood characteristics. In some cases, low income and/or Black households will be able to purchase a home, but they still may not reap the benefits of homeownership that homeownership policies are intended to create. They are less likely to build generational wealth through homeownership compared to white and/or high-income households, and so, the federal government should instead be more realistic about homeownership as a panacea to all housing and income inequality issues in the United States. Supporting renters acknowledges the reality of the U.S. housing market and existing inequities in homeownership while still helping Americans attain quality, affordable, and stable housing.

    Questions to Consider:

    • Currently, there is limited funding appropriated for housing policy. Should the federal government focus on increasing access to homeownership or supporting renter households? Which is a better use of federal money?
    • Which policies seem more realistic given past and current trends in housing?
    • Which policies are more equitable and will help address existing disparities in the United States?
    • Which policies would be more politically popular and thus more likely to receive support from policymakers?
  • Operation Warp Speed: Accelerated Covid-19 Vaccine Development

    Operation Warp Speed: Accelerated Covid-19 Vaccine Development

    The Covid-19 pandemic is one of the most challenging public health crises the United States has contended with in over a century. During a state of emergency, the benefits of creating effective vaccines and the risks of delaying their release are extremely high. Vaccinating the population as soon as possible decreases loss of life and allows economic activity to resume, but the vaccine approval process must be completed diligently with particular attention paid to the statistical rigor of the clinical trials. If a vaccine is released that lacks adequate efficacy, the relaxed behavior that occurs in people who are vaccinated could lead to the paradoxical result of more infections. If a vaccine is released that has a high occurrence of unpleasant and/or deadly side effects, vaccine hesitancy may negatively impact the number of people who choose to get vaccinated. These realities caused a dilemma for public health authorities—every month the Covid-19 vaccines delayed cost tens of thousands of lives, but prematurely releasing the vaccine could have caused just as much, if not more, damage. In response to this historic pandemic, the federal government and biomedical research companies cooperated to develop effective vaccines in just under a year, a speed that is historically unprecedented. 

    Coordinated efforts by the United States to develop a Covid-19 vaccine began with the announcement of Operation Warp Speed (OWS) on May 15th 2020. OWS was a private-public partnership between the United States Federal Government and pharmaceutical companies with the goal to “produce and deliver 300 million doses of safe and effective vaccines with the initial doses available by January 2021, as part of a broader strategy to accelerate the development, manufacturing, and distribution of COVID-19 vaccines, therapeutics, and diagnostics”. OWS was an interagency program which consisted of several components of the Department of Health and Human Services (HHS) including the Centers for Disease Control and Prevention (CDC), the Food and Drug Administration (FDA), the National Institutes of Health (NIH), the Biomedical Advanced Research and Development Authority (BARDA), and the Department of Defense (DoD). BARDA functioned as the leadership and financial interface between the federal government and the biomedical industry, providing funding for research and manufacturing to the companies that produced the most promising vaccine candidates. OWS received nearly 10 billion dollars of initial funding, 6.5 billion of which went towards medical countermeasure development and the other 3.5 billion towards NIH research. As clinical trials progressed, OWS funding was expanded to over 18 billion dollars. Six vaccine candidates (out of over one hundred) received substantial funding from OWS. 

    Rather than pursuing a Biologics License Application (BLA), the standard licensure requirement for distributing vaccines to the general public, pharmaceutical companies were able to acquire Emergency Use Authorizations (EUA). The federal government established the use of EUAs as a means to quickly produce and distribute unproven but potentially life saving drugs to the general public following the declaration of a public health emergency by the Secretary of Health and Human Services. Once a state of emergency was declared, the FDA published several guidelines for issuing EUAs. By pursuing an EUA as opposed to a BLA, pharmaceutical companies were able to expedite vaccine research, clinical trials, and mass production. The Covid-19 EUA also standardized the clinical trial protocols that pharmaceutical companies had to follow. Standardizing the clinical trial protocols ensured that all of the vaccines met the same efficacy and safety standards. Due to the dangers of releasing ineffective vaccines, the FDA required certain efficacy standards.

    While the Covid-19 vaccines had to comply with the same safety criteria as every other preventative vaccine for an infectious disease, certain parts of the process were shortened. Normally the periods between phase 1 and 2, and phase 2 and 3 of the clinical trial have six month observation periods to observe if any side effects develop. This six month observation period was reduced to two months in the EUA, with the rational being that 95% of adverse reactions occur within 6 weeks. 

    Another way that the Covid-19 EUA expedited the process was by encouraging pharmaceutical companies to engage in financially high-risk vaccine development. In normal situations, vaccine development is not a highly profitable endeavor. Pharmaceutical companies spread out the financial risk over a longer period of time by completing each step sequentially in the development process. In the standard paradigm, the process usually occurs as follows; 

    1. In vitro laboratory research, 
    2. In vivo animal studies, 
    3. Phase 1 clinical trial, 
    4. 6-month observation, 
    5. Phase 2 clinical trial, 
    6. 6-month observation, 
    7. Phase 3 clinical trial and manufacturing scale up, 
    8. Manufacturing process and product validation, 
    9. Biologics License Application (BLA) approval (standard licensure requirement for distributing vaccines to the general public),
    10. Production at a commercial level

    This entire process can take anywhere between 5-15 years, and given that less than 10% of vaccine prototypes end up acquiring a BLA, spreading out the steps is a financially smart decision. If a vaccine were to fail in the early clinical trial stages, the financial losses would be minimized since little investment was made towards manufacturing. In financially high-risk vaccine development, however, many of the steps occur simultaneously. In vivo animal studies and phase 1 of the clinical trial are often merged, as well as phase 2 and 3 of the clinical trial. This reduces the clinical trial time substantially without undertaking significant safety and efficacy risks since all of the steps that would have occured in a normal biologics license application trial have still occurred, albeit in a merged or overlapped manner. Most importantly, manufacturing scale up and commercial manufacturing of the vaccines occur simultaneously to the clinical trial. This is a financially high-risk strategy since significant investments are made into manufacturing before knowing if the vaccine is safe and effective. In this case, the federal government provided funding for the large manufacturing scale up, removing the financial-risk from the pharmaceutical companies. 

    Although this was an expensive and financially high-risk strategy, it led to vaccines being created, tested, and distributed in an unprecedented timeframe. Covid 19 vaccines were available to the first qualified members of the general public in just under a year, significantly faster than the normal 10-15 year timeframe. Of the six vaccines that received research funding from OWS, just two vaccines (Moderna and Janssen Pharmaceuticals) received an EUA from the FDA. The total funding for the other four vaccines that did not receive EUAs amounts to nearly five billion dollars. Two of the vaccines (Astrazeneca and Merck) have been either paused or terminated, and the other two vaccines (Norovax and GlaxoSmithKline) are still in development. Although OWS did not fund research for the Pfizer-BioNTech Covid-19 vaccine, an EUA was granted following submission of data from their phase 3 clinical trial and two billion dollars worth of vaccines were pre ordered.

  • Intro to the Racial Wealth Gap

    Intro to the Racial Wealth Gap

    In the United States, there is a significant gap in wealth between white households and households of color. In 2019, a typical white household held eight times the wealth of a Black household and five times that of a Hispanic household. This gap has existed for the entirety of American history, and has continued to increase over the last 30 years. In addition, the gap persists regardless of a household’s education level. White households with a bachelor’s or postgraduate degree are three times wealthier than Black households with the same education. This disparity only increases as education decreases. 

    Wealth is understood as the difference between a household’s assets and its debts. Assets include income, investments, homeownership, and other monetary resources. The ability to accumulate wealth is the basis for financial security, which significantly impacts one’s opportunities and quality of life in terms of access to education, employment, healthcare, and more. Addressing the racial wealth gap has become a divisive issue and a political priority for activists, politicians, and citizens alike.

    The Black/white wealth gap has its roots in slavery, as enslaved African Americans were unable to own property, receive income, or accumulate wealth. There are several reasons why the gap has persisted since the abolition of slavery and continues to grow today. In the immediate aftermath of the Civil War, attempts to build wealth for the Black community stalled. Federal efforts to assist newly freed Black Americans in finding work and financial success suffered from mismanagement and lack of political willpower. 

    Throughout the 20th century, Black Americans were repeatedly and deliberately prevented from accumulating wealth by both private and government entities. Jim Crow laws significantly limited opportunities for Black people by restricting their movement and mandating racial segregation in schools, workplaces, and public facilities. These laws remained in place until school segregation was deemed unconstitutional in 1954. Most other discriminatory laws were outlawed by the Civil Rights Act of 1964 and Voting Rights Act of 1965. The practice of redlining systematically prevented minority families from receiving government-insured loans to purchase homes and devalued property in Black neighborhoods. Redlining was supported by the Federal Housing Administration (FHA) and the Home Owners’ Loan Corporation (HOLC)—both federal agencies. 

    Wealth accumulation is intergenerational in nature. The wealth of previous generations provides access to the financial resources necessary for an individual or household to accumulate more wealth. People of color who have historically been prevented from accumulating wealth through traditional methods such as earning degrees and buying homes have fewer resources with which to access wealth in the present day. Essentially, they start out several steps behind in the process of growing wealth. A lack of generational wealth, along with the aforementioned obstacles, is part of why the racial gap remains in such force today.  

    In recent years, many laws and programs have been proposed to help close the racial wealth gap. On June 1st, 2021, the Biden-Harris Administration announced a set of initiatives to help close the gap, mostly by supporting homeownership and entrepreneurship. Their proposals include:

    • Ensuring equity in home appraisals 
    • Increasing government assistance to small, disadvantaged businesses
    • Expanding housing options for lower-income buyers and ending exclusionary zoning

    Other actions to address the gap may take the form of congressional legislation or similar initiatives at the state and local levels. For example, the proposed Green New Deal contains provisions to address the racial wealth gap. The Green New Deal is a comprehensive framework for combating climate change and economic inequality through overhauls of the economy and infrastructure. It targets the racial wealth divide with investments in job creation for vulnerable communities, as well as by ensuring healthcare and housing for all in order to lessen the impacts of wealth inequality.

    Addressing the gap, along with racial inequality generally, is a major priority for the Democratic Party. Their members are the main proponents of political action on the issue. The Republican Party generally opposes such action because racial inequality is not a priority for most of their voters and they believe in limited government intervention. Regardless of party, the racial wealth gap is an important piece of recent national conversations surrounding racial inequality.

  • The History of Housing Policy in the United States

    The History of Housing Policy in the United States

    Contemporary housing policies in the United States have evolved from major economic events in the 20th century. The Great Depression marked the start of these catalysts as the worst economic emergency in the United States hit the housing market first. In the 1930s social welfare programs were limited and wages were lower, partially due to weak labor unions. Once the stock market crashed in 1929, President Hoover and his successor, President Roosevelt, had to reconcile with the housing crisis and create new government institutions to resolve these issues–the first of their kind.

    The 1930s

    The biggest housing issues for low-income Americans were the substandard conditions of the housing stock and lack of access to home ownership for low-income families. Homeownership was less of a priority and being a tenant was more socially acceptable, as financing a house was out of reach for most low-income Americans. Congress passed the Emergency Relief and Construction Act of 1932, which created the Reconstruction Finance Corporation (RFC), allowing banks to lend to private corporations that provide housing for low-income households. In the same year, President Hoover implemented the Home Loan Bank System, which consisted of twelve Federal Home Loan Banks and a Federal Home Loan Board. The Home Owners Loan Corporation essentially bailed out defaulting home buyers by trading government bonds for bad mortgages. However, Hoover’s new system was outpaced by growing unemployment and home ownership continued to decrease to two-fifths of all households in 1933. 

    The National Housing Act passed in 1934 under FDR formed the Federal Housing Administration (FHA) with the mission to improve housing conditions by providing credit for home repairs and home purchases. Insurance policies of the FHA allowed for mortgage loans to be paid monthly, forming a secondary market for home mortgages. The FHA was reported to have helped 12 million people improve their living conditions, but this number ignores the discriminatory lending practices called redlining, a system the FHA and the Home Owners’ Loan Corporation used to grade the profitability of neighborhoods. The four categories were green (“best”), blue (“still desirable”), yellow (“definitely declining”), and red (hazardous). These grades were largely based on the neighborhood’s racial, ethnic, socioeconomic, and religious composition. White, middle-class neighborhoods received FHA loans whereas Black and Hispanic neighborhoods were deemed hazardous and declining in value and did not receive FHA insured mortgages or loans. Redlining continues to impact the intergenerational wealth of Black and Hispanic Americans due to these discriminatory zoning and lending practices. 

    Congress had first pushed to introduce public housing in 1933 on a trial basis. This was encouraged from outside of the administration by activists and scholars. The United States Housing Act of 1937 solidified public housing and created the United States Housing Authority to administer the program. This bill allocated federal subsidies to local housing authorities to improve the conditions of low-income housing. The same top-down system is used today. The USHA created the regulations for construction costs, limits on tenant incomes, and architecture for local authorities to follow. Public housing became standardized to fit these stipulations, and low-income housing became distinguishable across the country by the monotonous brick-laid buildings. 

    In 1938, the Federal National Mortgage Association (Fannie Mae) was created by Congress as a subsidiary of the RFC. It was implemented to stimulate construction for housing. Fannie Mae backed loans in the secondary mortgage market but did not directly lend to homeowners. Its sibling program, the Federal Home Loan Mortgage Corporation (Freddie Mac), was chartered in 1970 to continue money flow into the mortgage market. The purpose of Freddie Mac is to also stimulate homeownership and rentals for middle-income Americans. 

    The 1940s

    After World War II, the United States faced another housing crisis as millions of veterans returned home from overseas. There was a lack of available housing for the influx of people and President Roosevelt was forced to address the housing shortage. The Servicemen’s Readjustment Act passed (also known as the G.I. Bill) in 1944 and created programs to support returning veterans of World War II. This included mortgages and loans at low interest rates but were denied to Black veterans. The G.I. Bill was extremely beneficial for those included in its assistance but also perpetuated the unjust housing policies that harmed Black Americans and other minority groups. 

    The 1950s

    The Housing Act of 1954 provided funding to construction, demolition, rehabilitation, and conservation of decaying neighborhoods. This new effort arose from the booming economy that followed the war-torn previous decade. Urban renewal became the new focus of federal housing initiatives, especially in inner cities. Sections 203 and 207 of the Housing Act of 1956 gave priority to the elderly and paid those displaced by urban renewal. The Federal Highway Act was passed in 1956 which chartered the construction of an interstate highway that bulldozed “blighted neighborhoods” and impacted low-income communities the most. Highways encouraged white flight from urban centers into suburban areas. This is the start of visualizing the “American Dream” in terms of white picket fences and suburbia. 

    The 1960s 

    In 1968, President Johnson signed the Civil Rights Act which included the Fair Housing Act (FHA). The FHA protected citizens from discrimination when buying or renting a home and increased protections for those seeking federally funded housing. This bill also outlawed practices like blockbusting which was a common practice where real estate agents would convince  White home owners to sell their homes before Black Americans moved into their neighborhoods and decreased property values. The FHA eventually formed the U.S. Department of Housing and Urban Development (HUD) at the cabinet level. The mission of HUD was to assist homeownership, community development, and affordable housing through federal programs. HUD continues to be the major agency of housing in the U.S.

    The 1980s

    President Reagan cut more than 50 percent of HUD’s budget, dropping from $83.6 billion in 1976 to $40 billion in 1982. He then implemented the Low-Income Housing Tax Credit (LIHTC) in 1986. With this program, banks and private companies can purchase federal income tax credits and use profits to build affordable housing. This continues to be the primary source of funding for affordable housing today. Section 8 Housing Choice Voucher Programs were added to the Housing Act of 1937 in 1974 and continue to aid extremely low-income households. Vouchers allow tenants to pay 30 percent of income towards rent while the rest is covered by federal subsidies. Despite the success of vouchers for recipients, the waitlist for Section 8 vouchers is often multiple years long and many landlords refuse to rent to people with vouchers. 

    The 1990s to 2008

    In 1992, Congress implemented the HOPE VI program to focus on urban revitalization. This provided block grants for low-rise and mixed-income housing to combat previous histories of public housing and segregated socioeconomic neighborhoods. Unfortunately, many cities that receive these funds use it to destroy slums and implement private housing. In 2007, the housing market crashed and forced 3 million foreclosures over the following three years. The U.S. continues to rebuild the housing market over a decade after the crash. The history of housing in the U.S. proves the ever changing social and political context of affordability and access, and where contemporary issues develop. 

  • Intro to Rent Control

    Intro to Rent Control

    The term ‘housing crisis’ encompasses many different issues, including housing affordability, affordable rental housing, lending standards, and housing value. According to the National Low Income Housing Coalition, there is a housing shortage of 7.2 million homes in the United States. Affordable housing is any housing unit that can be afforded (requiring up to 30% of total income) by those below the median household income. One way to make housing more affordable and accessible to low-income households is through rent control laws.

    Rent control laws are legislation placing a limit on rental rates in a city or a state. Rent control varies by location, but it generally states a maximum amount of rent that can be charged for a unit, as well as the amount that the rent can be increased by per year. The specific numbers vary based on local inflation and cost of living, and it is largely influenced by political party divisions and politicking. These laws are intended to keep living costs affordable for lower-income citizens and regulate the housing market. 

    Rent control laws ensure that rent is priced below market-rate housing. The lower price of rent-controlled apartments makes housing affordable, especially in neighbourhoods with a high median price. This causes several main benefits:

    • Education: One cause of systemic poverty is the quality of education. This paper by Servaas Van Der Berg et al. explains how “the low quality of tuition offered in schools in poor communities can entrench exclusion and marginalisation.” By artificially lowering rent costs, lower-income families are able to live in higher quality school districts and safer neighbourhoods, breaking cycles of poverty. 
    • Stability: Since rent controlled units are affordable and have predictable pricing long-term, they have lower turnover rates than other units. A neighbourhood with long-lasting tenants will build a sense of community and camaraderie. Residents are more invested in the safety and prosperity of their neighbourhood. This article from the Urban Institute explains how constant moving impacts education, social and political capital, health, financial security, and the level of safety and crime in a neighbourhood. This study by Dr. Oshi concludes that children who move repeatedly in their childhood report more behavioural problems and poorer academic performance. 
    • Ending “No-Cause Evictions”: Rent control laws have included language that will protect tenants from evictions without cause. Currently, these laws do not exist on a federal level and landlords have the ability to evict tenants without cause (“no-cause evictions”). Since the main tenants for rent-control units are the elderly and low-income families, rent control laws will allow these tenants to live without the fear of a sudden rent increase by ensuring that rent is increased by a set amount each year. Reducing the number of no-cause evictions also increase neighbourhood stability and community.

    Overall, rent control allows lower-income renters to achieve greater levels of stability and protects them from individual landlord decisions about price by delegating these decisions to local legislators.

    The longer a unit is rent controlled, the further the rent will fall behind market-price. Because tenants are paying cheaper prices for each unit, the landlords make less profit per unit than they otherwise would without the rent control policy. This causes several main drawbacks: 

    • Poor Apartment Maintenance: in non-rent control apartments, landlords generally upgrade unit appliances every few years to make units more appealing to potential tenants. If landlords make less money from rent-controlled units, they will have to spend less on maintenance and upgrades to keep the same profit. 
    • Rising Rent Costs: landlords will likely offset the decreased profits from rent-controlled units by raising the prices on their market-rate units. This artificially increases the rent-price in a certain area, making the area unaffordable for low and moderate-income families. 
    • Decreased Housing Supply: developers are not incentivized to build new buildings in rent controlled areas because developers often intend to price newly-built units at or above market rate for the area. With rent prices below market rate, developers won’t turn profits on new builds for years, and they will skip over rent-controlled markets in favour of freer markets.

    (More information on the pros and cons of rent control)

    Case Study: Berlin

    Berlin experienced a drastic increase in rental rates, which spurred three of Berlin’s leftist parties to enact a five-year rent control freeze. This is an unusual policy; most rent control policies restricts rental increase and have no set time period. The policy stated that rent for all apartments built before 2014 are frozen at their June 2019 price for the next 5 years, which applies to 90% of Berlin’s available housing units. This decision encourages new builds, as they will not fall under the rent control policy. 

    This split Berlin’s available housing into two markets: the 90% of rent-capped units and the smaller market of unregulated units built after 2014. The average rental price for rent-capped apartments plummeted when compared to other major European cities; the average rental price for the smaller unregulated market soared. Since the supply of non-regulated apartment buildings is so slim, and landlords are looking to make up the costs incurred from their rent-controlled apartments, the rent for newly built apartment buildings are now even more unaffordable for new tenants. With young people still flocking to Berlin, and a lack of movement in apartment units, there is a sharp decline of regulated apartments available for new tenants. 

    Berlin’s housing market is seeing the effects of this policy only a year later with a substantial increase in median rental price on apartments. According to Bloomberg, the rent in Berlin’s regulated apartments (90% of units) grew at -57.7% (March 31st, 2021) relative to the growth in the 13 next-largest cities in Germany. The rent in Berlin’s unregulated apartments (10% of units) grew 8.8% (March 31st, 2021) relative to the growth in the 13 next-largest cities in Germany. (More information about Berlin’s policy and the one-year analysis available here, here, and here)

    Conclusion

    Those in favour of rent control believe that the benefits of affordable rent today outweigh the long-term negative impact on the rental economy. They believe that landlords should not be able to increase rent by large amounts each year. Rent control laws give more power to the tenants. Those opposed to rent control argue that artificially low rental rates result in lower-condition housing, which decreases living standards overall. They believe the current units will become dilapidated and new units will not be built, resulting in a housing shortage crisis in the near future. 

    The Berlin case study sheds light on the immediate effects of rent control policy on the housing market. This policy was more aggressive than usual rent control laws, so it’s hard to conclude what exactly the impact of rent control laws will be in the long run.

    Rent control is one of the many policy tools city council members can use to make housing more affordable; it should not be considered in isolation. Other policies, including government subsidies and mortgage interest deductions, can work with existing rent control policies to create a multi-pronged approach to affordable housing.

  • Intro to Carbon Taxes and Credits: Part 2

    Intro to Carbon Taxes and Credits: Part 2

    Carbon Fee & Dividend

    This brief is the second in a 4-part series on carbon tax and credit policy in the United States: carbon tax, carbon fee & dividend, cap & trade, and discussion.

    A fee and dividend system (FDS) incorporates a traditional carbon tax, a “fee”, and a “dividend”, which is a check that is equally distributed to qualified citizens without any spending stipulations. A carbon tax is a fee on emissions that aims to reflect the additional costs created by fossil fuels while also providing a financial incentive to switch to more renewable sources of energy.

    How it Works

    An FDS would tax firms producing fossil fuel emissions which are harmful to the environment, but instead of the tax revenue going to the federal government (a traditional carbon tax) it would be distributed to citizens periodically. Essentially, citizens become shareholders for the environment, and when the environment is impacted through fossil fuel emissions, citizens are compensated. The amount of compensation is dependent on the level of carbon taxation (current proposals range from taxing carbon at $20-150/metric ton).

    Currently, the US runs a dividend program through the Alaska Permanent Fund (APF) which returns surplus revenue from state-owned oil and gas reserves to eligible Alaskans. The Alaska Fund does not tax carbon and does not provide a strong incentive to reduce emissions, but is a working example of distributing equal lump-sum payments to citizens. 

    Carbon Fee & Dividend Legislation

    FDS legislative bills have since been introduced in the 116th Congress, such as the Climate Action Rebate Act (introduced by Sen. Coons and Sen. Feinstein). This bill calls for an initial fee of $15/metric ton and would increase by $15 annually. The revenue would be partially distributed in taxable carbon dividends, partially put towards research and development, and partially invested in transitional assistance. A similar bill is the America’s Clean Future Fund Act (introduced by Sen. Durbin) which includes a similar carbon pricing system, but 75% of the tax revenue is returned as a dividend while the rest is invested in clean energy and transition efforts. More recent fee and dividend developments include The Energy Innovation and Carbon Dividend Act (introduced by Rep. Deutch in the 117th Congress). While many examples of such bills exist, each maintains differences in their implementation or distribution. See this carbon pricing bill tracker for more information.

    Benefits and Downsides

    An FDS can reduce harmful emissions and stimulate the economy by incentivising companies to reduce carbon outputs while sparking innovation and competition in the private sector. A recent study found that an FDS could reduce carbon dioxide emissions by 52% below 1990 levels after 20 years. The same study also found that recycling the revenue back into the economy through dividends could create nearly 2.8 million jobs. Additionally, one of the main drawbacks of a carbon tax is that it can disproportionately impact low-income households who spend a large share of their income on emission intensive products. A Fee and Dividend System has the potential to make a regressive carbon tax progressive by rewarding poorer households, who typically have smaller carbon footprints, with higher payouts than their larger, wealthier counterparts. For this benefit to stand, progressive dividends would need to be written into the FDS legislation.

    One key benefit of the carbon tax is the opportunity to raise funds to invest in green technology. If the revenue from the carbon tax is instead distributed to citizens, it will have less impact in stimulating a green economy and providing aid to areas suffering from the impacts of climate change.

    Since the core of a fee and dividend is a carbon tax, there are similar drawbacks to this policy. Without certain mechanisms or safeguards in place, like border carbon adjustments, there is a high risk of outsourcing.