The European Union Trust Fund for Africa: Understanding the EU’s Securitization of Development Aid and its Implications Migena Satyal Author Jason Fu Sophie Rukin Editors Abstract Migration policies in the European Union (EU) have long been securitized; however, the 2015 migration crisis represented a turning point for EU securitization of development aid to shape migration outcomes from various African countries. In 2015, the European Union Emergency Trust Fund for Stability and Addressing Root Causes of Irregular Migration and Displaced Persons in Africa (EUTF) was created at the Valletta Summit on Migration to address the drivers of irregular migration such as poverty, poor social and economic conditions, weak governance and conflict prevention, and inadequate resiliency to food and environmental pressures. The duration of this fund was from 2016-2021. Central to the strategy of the EUTF was addressing “root causes” however, the fund came with security dimensions. Under its objective of improved migration management, the EU directed capital to various security apparatuses in Africa to limit the movement of irregular migrants and prevent them from reaching Europe. This method diverted aid from addressing the existing problems faced by vulnerable populations in the region and contributed to practices and organizations that are responsible for implementing coercive measures to limit movement of migrants and committing human rights abuses. This paper examines the political and ideological motives and objectives behind the EU's securitization of development financing via the EUTF, how it has strategically used the “root causes'' narrative to secure these arrangements, and the ways in which this pattern of interaction is inherently neo-colonial. Introduction: The European Union Trust Fund for Africa (EUTF) The European Union Emergency Trust Fund for Stability and Addressing Root Causes of Irregular Migration and Displaced Persons in Africa (EUTF for Africa) was passed in November 2015 at the Valletta Summit on Migration where European and African heads of state met to address the challenges and opportunities presented through the 2015 migration crisis. African and European heads of state recognized that migration was a shared responsibility between the countries of origin, transit, and destination. They were joined by the African Union Commission, the Economic Community of West African States, states parties to the Khartoum and Rabat Process, the Secretary General of the United Nations, and representatives of the International Organization for Migration. The Valletta Summit identified the root causes of irregular migration and forced displacement which became the guiding narrative to create and implement the EUTF. The Action Plan of the Summit stated, “the Trust Fund will help address the root causes of destabilization, forced displacement, and irregular migration by promoting economic and equal opportunities, strengthening the resilience of vulnerable people, security, and development.” Therefore, addressing these issues via development aid would limit irregular migration. The European Commission claimed that “demographic pressure, environmental stress, extreme poverty, internal tensions, institutional weaknesses, weak social and economic infrastructures, and insufficient resilience to food crises, as well as internal armed conflicts, terrorist threats, and a deteriorated security environment” needed to be addressed within the EUTF framework. However, the root cause narrative itself was partially based on assumption rather than empirical evidence. Economic data analyzing the correlation between economic development aid and migration show that the two variables have an inverse relationship. Economic and human development increase peoples’ ambitions, competencies, and resources, encouraging them to emigrate. Migration has a downward trend only when a country reaches an upper-middle income level. This concept is also known as a migration hump. Although EU officials were aware of this phenomenon, they ignored the underlying issues of the root causes narrative and proceeded to create the fund. Between 2016 and 2022 the EUTF dispersed approximately EUR 5.0 billion across 26 African countries in the Sahel and Lake Chad, North Africa, and the Horn of Africa. This funding was on top of pre-existing EUR 20 billion annual aid from the EU to these geographical regions. Despite packaging the EUTF as development aid and extracting the money almost exclusively from the European Development Fund (EDF), which specifically targets economic, social, and cultural development programs, the EUTF fell within the 2015 European Agenda on Migration, introducing a security dimension to development financing. The EU and African partner countries used a significant amount of aid from the EUTF to bolster migration management initiatives via the funding and strengthening of security apparatuses that are responsible for targeting migrants within Africa, before they could embark on their journeys to European states. Under the EUTF, improved migration management constitutes “contributing to the development of national and regional strategies on migration management, containing and preventing irregular migration, and fight against trafficking of human beings, smuggling of migrants and other related crimes, effective return and readmission, international protection and asylum, legal migration, and mobility.” It includes increasing logistical capabilities by providing capital to train border agents, and bolstering surveillance infrastructure to monitor citizens’ movement, and expanding logistical capacities. In some cases, it also relies on encouraging certain policies in recipient countries to align with the priorities of the donor countries. As shown in EUTF annual reports (Figures 1.1-1.6), there was an increasing diversion of capital towards funding migration management projects in Africa, which came at the expense of economic development projects. By using aid to fund security goals, the EU securitized and politicized development financing. Securitization in migration policy refers to the externalization and extra-territorialization of migration control through border controls and reclassification of various activities like drug trafficking, illegal immigration, and delinquency of migrants as national security concerns. Still, some EUTF funding went towards projects geared at economic development. As stated in the Action Plan and shown in subsequent annual reports, the EUTF implemented programs that promoted job creation, education, entrepreneurship, and building resiliency. However, they also used the money from the development package to strengthen migration management initiatives and shift responsibilities to third countries in Africa, ultimately creating “legal black holes” where European norms about human rights did not apply. Despite the clear evidence of the EU’s contribution to abuses towards African irregular migrants, the EU continues to implement repressive policies through various externalization mechanisms and faulty narratives that have been empirically proven to not work – such as the root causes narrative – in order to further its own interests in the African continent. Research Question The practice of funneling capital toward security-related migration management projects raises the following question: Why has the EU opted to securitize its development aid through EUTF in the aftermath of the 2015 migration crisis? Furthermore, what are the implications of aid securitization in terms of development aid effectiveness, human rights practices, and the EU’s external legitimacy as a normative actor? To answer these overarching questions and understand the promotion and proliferation of migration policies through pacts like the EUTF requires an inward look into the European Union and its political and ideological interests in the migration policy domain. Therefore, I propose that the EUTF was a neo-colonial mechanism through which European member states could further their migration policy priorities into certain African states thereby reinforcing their colonial legacy hierarchies. Methodology First, I will provide background information about the EUTF, highlighting its objectives and strategies for development aid implementation and effectiveness. Then, I will provide quantitative data regarding the dispersion of money from the EUTF to show the increasing investments toward migration management schemes. Understanding these specificities and inherent challenges of the EUTF will contextualize my hypotheses. Next, I will support my hypothesis through case studies of specific EUTF security operations in African countries, analysis of the EU’s previous migration policies, interviews with African and European Union stakeholders about EUTF’s development and impact, and various theories to help explain how the EU navigates its migration policies. Finally, I will assess the implications of aid securitization in both Europe and Africa. My research will rely on official documents from the EU about its migration agenda and policies. It will also use data from academic journals and previous literature that have examined the trajectory of the EU’s migration-development nexus, specifically through the EUTF. Assessing the current nature of the EU’s migration policies will be useful in helping guide future policies. As migration becomes an increasingly salient issue, it is crucial to determine strategies or “best practices” that are humane and sustainable to address it. Adhering to human rights norms should be at the center of these policies. Background The Action Plan of the Valletta Summit was based on five priority domains: Reducing poverty, advancing socio-economic development, promoting peace and good governance. Facilitating educational and skills training exchanges between EU and EU member states as well as the creation of legal pathways of employment for migrants and returnees. Providing humanitarian assistance to countries needing food assistance, shelter, water, and sanitation. Fighting against irregular migration, migrant smuggling, and trafficking. Facilitating the return, readmission, and reintegration of migrants. During Valletta, Martin Schulz, the former President of the European Parliament stated, “By boosting local economies through trade, for example through economic partnership agreements and through ‘aid for trade’ programs, by investing in development and by enhancing good governance people will be enabled to stay where they want to be ‘at home.’” He reiterates that the purpose of the EUTF is not “fight the migrants” but rather, “fight the root causes of migration: poverty and conflict.” This seemingly proactive approach underscores the belief that addressing the primary drivers of migration by promoting development measures will empower people to remain in their respective countries by choice rather than feeling compelled to migrate elsewhere. “Root Causes”: Overlooking Evidence The problem with the EU’s understanding and use of the “root causes” narrative is that it ignores how wage differentials contribute to migratory patterns. Wage differentials refers to the discrepancy in wages for similar jobs due to factors like industry or geography. While development aid can be effective, it is not enough to redistribute wealth and address the deep structural inequalities of the global economy that drive migration to more developed and wealthier countries. Subsequent sections will elaborate further on the adoption of the root causes framing. EUTF Annual Aid Reports (2016-2022) As stated in the Valletta Summit political declaration, the EU was committed to “address the root causes of irregular migration” through the EUTF. However, aid allocation data (Figures 1-1.6) from EUTF annual reports, which highlight the distribution of aid in amount and percentage terms by geographical window and five of the EUTF’s objectives, show an increased prioritization of implementing migration management schemes at the expense of development projects between 2016 and 2022. In 2016 (Figure 1), when EUTF was in the implementation phase, EU officials distributed significantly more funds for economic development projects across North Africa, the Sahel, and Horn of Africa than any other domains which aligned with the root causes narrative that was emphasized at Valletta. In 2017 (Figure 1.1), the allocation for improved migration management significantly increased across the three regions. In North Africa, funding for economic development, strengthening resilience, and conflict prevention was eliminated while EUR 285 million was given to migration management. This pattern is strategic due to the geographic proximity of the region to southern European borders. In 2018 (Figure 1.2), North Africa remained the biggest recipient of migration management funds but did not receive funding for development projects. In 2019 (Figure 1.3), 31.56 percent of total funding was invested in migration management. In 2020 (Figure 1.4), 2021 (Figure 1.5), and 2022 (Figure 1.6), improved migration management projects continued to receive most funding at the expense of other objectives. The funding patterns outlined in these reports show the EU’s increased focus towards its migration objectives. Figure 1: EUTF Projects Approved in 2016 Figure 1.1: EUTF Projects Approved in 2017 Figure 1.2: Projects Approved in 2018 Figure 1.3: Projects Approved in 2019 Figure 1.4: Projects approved in 2020 Figure 1.5: Projects approved in 2021 Figure 1.6: Projects approved in 2022 Taking the background information and data into account, I will prove my hypothesis, explaining why the EU increasingly invested in migration management projects in the following sections. Defining Neo-Colonialism The concept of ‘neo-colonialism; was coined by Kwame Nkrumah’s Neo-Colonialism: The Last Stage of Imperialism, in which he argues that neo-colonialism is a contemporary form of colonialism that is perpetuated through less traditionally coerciece methods, such as development aid. This theory can be applied when assassing relations and interdependency between former colonial states with formerly colonized states. Interdependence is manufactured by former colonial powers that “[give] independence” to their subjects, only for them to follow up by allocating aid.” They speak about guaranteeing independence and liberation but never implement policies to preserve them in an effort to maintain their influence and objectives via unobstrusive and monetary means rather than directly coercive ones. As a result, these countries’ economic system, and thus their political policy, is “directed from outside” through foreign capital.” EUTF as a Neo-Colonial Instrument In the 19th and 20th centuries, European powers reshaped all aspects of African society, through colonialism, for their own strategic imperatives. These included, but were not limited to, extraction of material resources, manufactured dependency, and assertion of European institutions and policies at the expense of indigenous cultures and institutions. The complete overhaul of pre-colonial Africa interrupted economic and political development in the region and led to its continued structural subordination despite achieving independence from European colonial states in the 21st century. As a result, the repercussions of colonialism have contemporary implications in EU-Africa relations. During the colonial era, colonial powers used military power and additional forms of coercive strategies to assert foreign influence; currently, former colonial powers capitalize on the weaknesses of African countries and use political and economic measures to gain influence. Colonialism never disappeared, but rather, evolved into neo-colonialism. This concept is demonstrated in the framework of the EUTF which, despite being a development aid package and product of a seemingly coordinated multilateral process, imposed conditionalities and security measures on African states to achieve political goals in the field of migration. Under the EUTF, patterns of cooperation between European countries and their former colonies to limit migration are also prevalent, especially in the case of Libya and Niger. These initiatives safeguard colonial-era power structures and undermine the sovereignty of the respective African states. The EU took advantage of its status as a donor institution through three mechanisms that enforced hierarchies between African and European powers: The governance structure,designed to dismiss African stakeholder engagement EU’s imposition of positive and negative conditionalities to certain African states The strategic partnerships between European and African states to implement migration management programs These steps demonstrate the EU’s broader goals to assert their influence in the region’s migration policies by implementing security schemes, jeopardizing the needs of African states and the preservation of human rights in the process. The use of EUTF to conduct such projects signals the “de facto policy purchase” on the African government’s stance on migration. Consequently, African states become an “instrument” for European neo-colonial policies, especially in the migration domain. Eurafrica to Modern EU-Africa Relations The legacy and discourse of colonialism and neo-colonialism are not equal among EU member states. Many European countries were colonial powers, with the exception of Ireland and Malta, along with several central European countries that were subjugated to the authority of larger imperial powers. However, specific past actions hold little significance when discussing the broader nexus between European integration, the European Union, and colonialism. In Eurafrica: The Untold History of European Integration and Colonialism , Peo Hansen and Stefan Jonsson argue that there was a vast overlap between the colonial and European projects. Several African countries, under colonialism, have historically played a key role in efforts towards European integration and unity from the 1920s to the 1950s under the geo-political concept of Eurafrica. According to this idea, European integration would only occur through “coordinated exploitation of Africa and Africa could be efficiently exploited only if European states cooperated and combined their economic and political capacities.” The pan-European movement in the interwar period was based on conditions for peace through a “united colonial effort” in Africa. Eurafrica turned into a political reality with the emergence of the European Economic Community (EEC) made up of Belgium, France, Italy, Luxembourg, the Netherlands, and West Germany, along with colonial possessions that were referred to as “overseas countries and territories” (OCTs). For the EEC, Africa served as a “necessity,” “a strategic interest,” “an economic imperative,” “a peace project,” “a white man’s burden,” and “Europe’s last chance.” Put differently, “Africa was indispensable for Europe’s geopolitical and economic survival.” Africa became the guiding force of European integration and Eurafrica became a system through which colonial powers could preserve their empires. Eurafrica, in its original form, did not materialize because African countries took back control from European colonial powers, but its legacy is crucial to the development of the EEC and modern EU-Africa relations. Today, the EU describes its relationship with Africa in terms like “interdependence,” and “partnership of equals.” Nonetheless, the EU’s colonial past still plays a significant role in its foreign policy with Africa as it promotes the adoption of European rules and practices in its “normative empires.” The continuation of these empires has cemented core-periphery dynamics of interaction, which ultimately advances European interests, especially in the migration domain. Specifically, the EU’s externalization of border and migration management efforts to transfer the European model of governance to third countries have transformed them into “southern buffer zones” to curtail unwanted migration and enhance Europe’s sense of security. Such measures demonstrate the separation of physical borders from functional regimes in Europe’s fluid borderlands, which are antecedent to imperial practices when control was extended beyond territorial boundaries. These practices are evident in the EU’s security operations through pacts like the EUTF, EU-Turkey Deal, and Operation SOPHIA. These externalization policies ensure the continuity of the vision derived from the Eurafrica project in the 21st century. Conditional aid The EUTF was conditional as it leveraged development aid to finance security-related migration projects and imposed positive and negative conditionalities that were used as leverage for African cooperation. When the European Commission announced its Migration Partnership Framework in 2016, it stated that development and trade policies will use positive and negative conditionalities to encourage cooperation on EU’s migration management projects. The “more for more, less for less” framework embedded into development financing means that “African governments use migration cooperation as a bargaining chip for procuring finance through renting inherent powers of state sovereignty to control entry and exit.” This coercive and concessional method contradicts the nature of cooperation that was emphasized at the Valletta Summit in 2015 and undermines the autonomy of the African states as these conditionalities perpetuate neo-colonial practices. EUTF Governance Structure and Oversight The EUTF was a product of a multilateral decision-making process. However, its governance structure, which limits proper stakeholder engagement from African representatives, signals the EU’s push to prioritize its policies over development in Africa. The European Commission claims that it is taking a bottom-up approach where the EU delegations play a key role in identifying and formulating the EUTF through consultations and dialogues to build partnerships with local stakeholders (civil society organizations, national and local authorities, and representatives). Subsequently, proposals are created by the EUTF for African teams based on EU Commission Headquarters and EU delegations. Then, the proposal is submitted to the Operational Committee for approval. Once approved, the proposals are implemented via EU member states’ authorities, developmental and technical cooperation agencies, civil society organizations, international or UN organizations, and private sector entities. The governance of the EUTF is dependent upon the Strategic Board and Operational Committees for each of the three regions where the EUTF distributed funds. The Strategic Board is responsible for “adopting the strategy of the EUTF, adjusting the geographical and thematic scope of the EUTF in reaction to evolving issues, and deciding upon amendments to the guiding document establishing the internal rules for the EUTF.” The board is chaired by the European Commission and composed of representatives and contributing donors. The Operational Committee is responsible for “reviewing and approving actions to be financed, supervising the implementation of the actions, and approving the annual report and accounts for transmission to the Strategic Board.” In the Board and the Committee, the African partner countries can only act as observers and do not hold decision-making powers. This management framework is ineffective as it is designed to limit the participation of African parties that have more comprehensive knowledge regarding the needs of the continent and areas where funds need to be directed. However, they are structurally silenced. The classification of the EUTF as development aid from the EU to Africa also provided a loophole under which parliamentary oversight was not required. The European Development Fund, which operates outside the EU budget, funded most of the aid, bypassing conventional parliamentary procedures, allowing for swift implementation of the fund. As a spokesperson for the European Commission’s DG DEVCO claimed that simplifying the procedures allows for more flexibility so projects can be implemented earlier. Proponents of the fund believe that the easy implementation process is what makes it advantageous. However, opponents of the fund like Elly Schelien, a member of the European Parliament’s Development Committee, claimed that the EU Parliament has not been given “the right democratic scrutiny” of the fund. The framing of the fund as an “emergency instrument” led to retracted bureaucratic measures to increase effectiveness as project cycles were much shorter than traditional development programming. The consolidation of power to the EU institutions and representatives meant that EUTF projects were “identified at the country level under the leadership of the EU Delegations, discussed and selected by an Operational Committee.” Engagement from African stakeholders and civil society was not required. An interview with a representative from the Operational Committee revealed that EUTF “projects were simply approved without discussion. Negotiations took place upstream between EUTF managers, European agencies, EU delegations, and partner countries.” This form of decision-making amplifies hierarchical structures between European and African representatives. Strategic Partnerships Certain EU member states partnered with African states to implement migration management programs in which they exercised authority over the movement of migrants within Africa, especially in the origin and transit countries. Not only do these policies directly conflict with the EU’s stated commitments regarding development aid and cooperation with partner countries, but the EU’s agenda is antecedent to European empires leveraging local African officials to undertake security operations in the continent. Today, this exploitative relationship is parallel to the EU’s allocation of capital, military equipment, and capacity-building instruments to African representatives who adhere to the needs of EU leaders. This pattern is visible in various projects and funding executed under the EUTF. Though reluctant to enter into such agreements with Europe, African policymakers are forced into a “perpetual balancing act, juggling domestically-derived interests with the demands of external donor and opportunity structures.” This concession stems from inherent power asymmetry between relatively weak and powerful states, upholding colonial legacy hierarchies. Case Studies on Libya and Ethiopia In the following section, I use Libya and Ethiopia as case studies to provide evidence that EUTF’s prioritization of funding migration management projects, increasing policing and surveillance in these countries, and imposing positive and negative conditionalities are reflective of neo-colonial practices to assert dominance over the movement of African irregular migrants. I chose these countries to study because each one falls within one of the two geographical windows and serves either as a popular departure or transit country where the European Union is heavily involved in migration management projects. Libya Libya is a major departure country for migrants from West African countries of origin such as Nigeria, Guinea, Gambia, Ivory Coast, Mali, and Senegal. Italy demonstrated strategic interest in Libya due to its geographical proximity and colonial legacy. Between 2017 and 2022, the Italian Ministry of Interior (MI) led implementations of various migration management projects that sought to curb the arrival of migrants into Italy. In 2017, MI led the first phase of its project called “Support to Integrated Border and Migration Management in Libya” with a budget of EUR 42.2 million and a EUR 2.23 million co-financing from Italy. The principal objective of this phase was migration management. Focus areas included strengthening border control, increasing surveillance activities, combatting human smuggling and trafficking, and conducting search and rescue operations. The second phase of this project was launched by MI in 2018 until 2024 for EUR 15 million. This phase was focused on capacity-building activities and institutional strengthening of authorities such as the Libyan Coast Guard and the General Administration of Coastal Security. It also advanced the land border capabilities of relevant authorities and enhanced search and rescue (SAR) capabilities by supplying SAR vessels and corresponding maintenance programs. The beneficiaries of this project included 5,000 relevant authorities from the Libyan Ministry of Interior (MoI), Ministry of Defense (MoD), and Ministry of Communications. The indirect beneficiaries include “future migrants rescued at the sea due to the procession of life-saving equipment to Libyan Coast Guard and General Administration for Coastal Security for them to be able to save lives.” Italy’s actions under the EUTF compromise the proper use of development financing tools by diverting them for the use of security-related projects. Its engagement and strengthening of Libyan security apparatuses such as the Libyan Coast Guard also undermine the values of human rights that EU member states claim to promote in their foreign policies as the Libyan Coast Guard is notorious for violating non-refoulment principles and committing human rights violations such as extortion, arbitrary detention, and sexual violence against migrants and asylum seekers. Recognizing brutal actions by the border authorities and the deplorable living conditions in detention centers in Libya, the Assize Court in Milan condemned the torture and violence inflicted in these centers. In November 2017, the UN High Commissioner on Human Rights released a statement criticizing the EU’s support for the Libyan Coast Guard as “inhumane” as it led to the detention of migrants in “horrific” conditions in Libya. Despite institutional disapproval of the EU’s and Italy’s involvement in Libya, funding for these security projects continued. Ethiopia While Ehtiopia was never formally colonized, it remained under Italian occupation from 1935-1941 and subsequently fell under (in)formal British control from 1941-1944. The EUTF initiatives in Ethiopia do not show the same patterns of cooperation as seen in Libya and Niger, since Ethiopia served as a key interest to the EU due to its status as one of the main countries of origin, transit, and destination for migrants and refugees. EUTF report from 2016 highlighted that Ethiopia hosts over one million displaced people. It is also the biggest recipient of EUTF funding in the Horn of Africa. Its geographical proximity to countries like Eritrea, Somalia, and South Sudan has vastly affected its migration demographics, making it a focus area for the EU’s development aid under the EUTF. While there pre-existing migration management schemes in Ethiopia, they were concerned with the returns and reintegration of irregular Ethiopian migrants and refugees rather than building up the capacity of various security actors as seen in other regions. This objective was linked with positive conditionalities as the Third Progress Report on the Partnership Framework with third countries under the European Agenda on Migration links progress in the returns and readmissions field with more financial support for refugees that reside within Ethiopia. Additional projects in Ethiopia were geared towards economic development and focused on addressing the root causes as outlined in Valletta. Some of these initiatives included job creation, providing energy access, healthcare, and education to vulnerable populations which are in line with development cooperation. However, the European Union’s increasing focus on returns and readmission of Ethiopian migrants can decrease revenue derived from remittances which contribute three times more to the Ethiopian economy than development financing. This approach ensures the fulfillment of the EU’s migration interests while undermining Ethiopia’s economic needs. Ethiopian officials also expressed disappointment with the EUTF measures because they were guided by the EU’s focus on repatriation, thereby eroding migration cooperation with Ethiopia. In regards to EU interests in Ethiopia, an EU official claimed: “We can pretend that we have joint interest in migration management with Africa, but we don't. The EU is interested in return and readmission. Africa is interested in root causes, free movement, legal routes, and remittances. We don't mention that our interests are not aligned.” This non-alignment in interests is irrelevant to the EU because it is the more dominant actor and has the power to assert its priorities by using money as leverage. However, this pattern of interaction comes at the cost of losing cooperation with Ethiopian stakeholders and diverging finances from refugee and migrant populations in Ethiopia who need humanitarian assistance. Perspectives from Africa African representatives and ambassadors displayed suspicion about the fund’s motives and called on the EU to fund projects that increase economic opportunities in their respective countries. As Nigerien mayor of Tchirozerine Issouf Ag Maha stated, “as local municipalities, we don’t have any power to express our needs. The EU and project implementers came here with their priorities. It’s a ‘take it or leave it’ approach, and in the end, we have to take it because our communities need support.” Maha’s statement highlights the role the EU plays in shaping the direction of development money and how its priorities overshadow decisions and input from local officials, who are significantly more knowledgeable about the needs of their communities. Despite diverging interests and priorities, African officials concede to their demands because their communities require financial resources to alleviate hardships. President Akufo-Addo from Ghana claimed that “ instead of investing money in preventing African migrants from coming to Europe, the EU should be spending more to create jobs across the continent.” Similarly, Senegalese President Mackey Sall and former Chairperson of the African Union warned that the trust fund to tackle the causes of migration is not sufficient to meet the needs of the continent stating, stated that “if we want young Africans to stay in Africa, we need to provide Africa with more resources.” The allocation of aid to security-related projects comes at the expense of funding genuine development projects that align with the needs of African communities. It also takes advantage of the ‘cash-starved’ governments.” These statements underscore the necessity of the EUTF to direct capital towards structural and sustainable economic development as opposed to combatting, detaining, or returning migrants. However, the EU has not been responsive to these inputs from its African stakeholders despite stressing the importance of cooperation and partnership during the Valletta Summit. Reinforcing Power Imbalances The imposition of European policies and priorities through the EUTF takes advantage of African nations' relatively weaker economic standing and agency, showing that the political and security needs of powerful states and institutions determine where and how development aid is designated. It also shows the continued influence and intervention of European interests into their ostensibly independent former colonial holdings, therefore reiterating Nkrumah’s theory that foreign capital, such as development aid, can be used for the exploitation of developing countries by their former colonial powers. This hypocrisy goes against the EU’s normative approaches to its foreign policy while also continuing to reinforce power imbalances and colonial-era hierarchies between Europe and Africa. Discussion Critically examining the European Union Trust Fund in the broader context of EU-Africa relations demonstrates how EUTF represents a complex intersection of historical legacies, political interests and expediency, and political ideologies that determine attitudes towards migrants and refugees and thus, shape policy outcomes. These factors reinforce each other by showing the multifaceted nature of migration governance. The neo-colonialism lens in my hypothesis provides historical context to show how enduring colonial legacies continue to guide policies today. This lens also forms the basis for discourse about EU-Africa relations because of the visible power imbalances that are sustained through policies like the EUTF which are structurally designed to achieve European political interests at the expense of the needs of African states. As seen through the case studies on Libya, Niger, and Ethiopia, development aid is not always allocated for the benefit of the recipient. Rather, aid can be abused as a political tool to reach the objectives of the donor institutions. Despite the rhetoric of cooperation between stakeholders, preservation of human lives, equal partnership, and addressing root causes, as stated in Valletta, the strategic policy design of the EUTF highlights the persistence of neo-colonialism because it continues historical patterns of exploitation and hierarchies between Europe and Africa. Conclusion The findings in this paper show that EUTF was not merely a development instrument but also a political one that came with negative consequences for African irregular migrants. The securitization of aid along with the EU’s other externalization policies have not effectively solved the problems that have caused the migration crisis. Instead, it has reinforced them. The model of the EU’s migration policies under the EUTF has also created issues beyond the realm of migration. As discussed, it continues to sustain power imbalances between Europe and Africa, shift aid priorities, and undermine development goals.Addressing the migration crisis will require a paradigm shift in the EU migration policy domain. The EU needs to deviate away from a security-based approach to a holistic and rights-based approach. This ideological reform requires the EU to look inward to address its own limitations and failures by recognizing its neo-colonial practices, acting out of mutual rather than political interests, and lastly, collectively humanizing migrants and refugees arriving to Europe for safety and opportunities. Through these measures, the EU and African stakeholders can address the true root causes of migration – which stem from structural global inequalities. References “A European Agenda on Migration.” European Commission. 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In the Augenblick, Not the Moment: A Heideggerian Critique of Temporal Inauthenticity Lukas Bacho Author Gabriel Gonzalez Alexander Gerasimchuk Matthew Wong Editors “Be in the moment!” In our chronically online and attention-deficient age, this admonition is a constant refrain. It usually means: “Focus on neither the past nor the future, but rather the present—what is happening right now. ” A favorite instruction of guided meditations, it may also be heard as a protest against the impulse to sully a beautiful view with a photo shoot. Too often, our minds are clouded by remorse for past events or anxiety about future events that we are unable to appreciate the present for what it is. Clearly, there is some truth to this. However, the normative force of “Be in the moment!” relies on the misleading descriptive claim that we are only ever in the moment (so why try to exist outside it?). This, in turn, rests on a conception of time as a series of punctual moments, as on a timeline, that seem linked only because we perceive them as such. Martin Heidegger had a name for this understanding: “now-time,” or the “ordinary” (Vulgär ) conception of time. I seek to argue, with Heidegger’s help, that the admonition to “be in the moment” obscures essential features of our temporality, thereby diminishing our potential for authentic living. My primary aim is to reconstruct Heidegger’s accounts of now-time, world-time, originary temporality, and the authentic mode of relating to all of these. What emerges is the foundation for a more authentic way of relating to time whose explanatory priority lies not in one’s present situation but in one’s future possibilities. Now-time (Jetzt-Zeit ) is the most proximal conception of time according to which we humans, as Dasein , live our lives. On this understanding, Heidegger writes, “time shows itself as a sequence of nows which are constantly ‘present-at-hand,’ simultaneously passing away and coming along. Time is understood as a succession, as a ‘flowing stream’ of nows, as the ‘course of time.’” The language of “sequence” and “succession” indicates that time is here understood as a series of discrete moments so short that their continual coming and going seems to constitute a flow, but in fact does not. Each moment, or “now,” is “present-at-hand” in the sense that it has an objective (and thus constant) duration. One can quibble about how long exactly the “now” is, but most would say a fraction of a second. Heidegger calls this conception “now-time” because it views time as nothing but these infinitesimally short “nows,” linked by nothing but one another; for “the sequence of nows is uninterrupted and has no gaps.” Now-time resembles a popular position in contemporary philosophy known as the cinematic or snapshot view of time, which holds that “neither our awareness itself nor its contents have temporal extension.” But now-time is also the idea we live by in our everyday lives, most obviously in our use of clocks. The convention of designating the current “now” with clock-time reflects our conception of time as a series of discrete moments: 4:17 comes after 4:16, the fourth second of a minute comes after the third, and so on. Heidegger emphasizes that now-time existed far before the invention of clocks, for Dasein has always measured its time, whether by the sun or some other means; the only difference is that the units of measurement have changed. If time were divided into sufficiently short instants, the logic goes, there would be nothing between them. Indeed, now-time is so integral to our everyday existence that it is hard to imagine any other way to conceive of time. Now-time is implicit in our telling someone to “be in the moment.” To show how, let us begin by acknowledging that the imperative asks one to exist in the present, at the exclusion of both the past and the future. What is the present? Although the word “moment” seems to leave the present’s length ambiguous—it could be a split second, or the multi-hour duration of an activity—the statement’s exclusion of the past and future actually requires that the “moment” be infinitesimally short. If one were to “be” in the next minute or even the next second—that is, anticipate or worry about what will happen then—one could not claim to be in the moment. Thus, the perception of time as a succession of constantly fleeting nows underlies “be in the moment.” But that is not all: the insistence upon the singularity of the moment betrays the idea that there is only ever one moment to be in. In fact, the moment has no duration: like the instants of now-time, the moment is a point . Thus, “be in the moment,” as a statement of now-time, objectifies the present in such a way that there is nothing significant about it except the fact that it is the present. Why should we be in the present? Because it is the present—because it is all that is. Heidegger complicates this picture by introducing the notion of world-time (Weltzeit ). If now-time is responsible for our sense of the present’s punctuality, world-time is responsible for our sense of the present’s universality, and is thus explanatorily prior to our conception of now-time. As Heidegger puts it, world-time is “that time ‘wherein’ entities within-the-world are encountered.” In other words, it is the kind of time that enables us to encounter things in the world. We can clarify what world-time is by examining its four constitutive aspects in turn: publicness, datability, spannedness, and worldhood. The most accessible of world-time’s four aspects is publicness (Öffentlichkeit ). Indeed, Heidegger often calls world-time “public time.” Publicness is the characteristic of world-time whereby we take ourselves to be in the same “now” as one another at any given time. Publicness allows me to say to another person, “Now it is twelve o’clock,” knowing that if they are in the same time zone, it is now twelve o’clock for them, too. If they are not in my time zone—if we are talking on the phone, for instance—I still understand that while it is currently another time for them, we are fundamentally in the same now . And publicness extends beyond the now: only because we understand time as public, as shared, as out there in the world, can we say that we “use,” “buy,” or “borrow” time. Publicness is perhaps the aspect of world-time that is least concealed in now-time, since the measurement of time with clocks and timeliness obviously presupposes that any quantified time will be intelligible as the same “now” by everyone. Still, the fact that we take ourselves to be in the same now remains hidden in now-time. We take for granted that “now” is simply now —that when one person says “be in the moment,” the other will know what time they mean. A second aspect of world-time is datability (Datierbarkeit ), the structure by which Dasein assigns a temporal structure to its experience. In practice, datability refers to our assignment of times to events and events to times, even “before” we impose the numerical values of now-time (like “November 8” or “9:15 a.m.”) on those events. For example, when we say “It is cold,” we mean “It is cold now ,” just as when we say “It was cold,” we mean “It was cold formerly .” Conversely, time has content for us, for “When we say ‘now,’ we always understand a ‘now that so and so.’” Although datability includes the word “date,” it has nothing to do with numerical dates. Instead, datability simply means that all that happens is happening at a time, and every time is a time when something is happening. Clearly, datability enables the conception of now-time, since interpreting time as a sequence of nows makes sense only if Dasein has an intuitive idea of its existence within a structure of past, present, and future. If Dasein could not date itself, time could not seem to be a “flowing stream,” since Dasein would not be fixed in relation to it. In this admittedly murky way, now-time reveals datability as a feature of world-time. Mostly, however, now-time covers up datability, for the now of now-time is not understood to be “now, when x ,” but rather simply “now.” This is especially glaring in “Be in the moment!” In the moment when you are doing what? The admonition suggests that the moment is a space where you need not do anything, when in fact every moment is always a moment when you are doing something. The aspect of world-time which may be most obscured by now-time is spannedness (Spanne ), which affords every “now” the property of duration. Heidegger introduces the concept of spannedness by observing that we understand there to be a length of time—not just a series of nows—between any “now” and a future “then.” This liminal length is itself datable with expressions like “during” and “meanwhile,” which shows that we can conceive of a future “now” (and by extension, any past or present now) with a duration we ourselves have determined. Spannedness accounts for how I can simultaneously say “Now I am writing,” “Now I am a student,” and “Now I am alive,” even though these nows are of vastly different lengths. In fact, no now to which we refer is ever punctual; every now is temporally extended. Even the clock, our paradigmatic instrument of now-time, reveals the spanned nature of world-time by designating as an hour an arbitrary number of minutes and as minute an arbitrary number of seconds. Seconds may be in turn divided into milliseconds, nanoseconds, and so on—there are infinite nows between one second and the next—though the clock does not show this directly. Assigning numbers to time requires that we pin down the now as if it were punctual, when in fact it is spanned. Much like a clock obscures the spannedness of seconds, the statement “be in the moment”—in its exclusion of anything that might be called past or future—obscures the spannedness of said moment, despite the fact that “moments” are by definition variable in length. The fourth aspect of world-time is worldhood (Weltlichkeit ), which situates every time in a normative structure of significance. As Heidegger explains, “The time which is interpreted in concern is already understood as a time for something. The current ‘now that so and so…’ is as such either appropriate or inappropriate .” He returns to the sun for a primitive example: depending on the context, the now of dawn is understood implicitly as the time for waking up or the time for going to work. The clock, as an instrument of now-time, obscures this aspect of world-time by seeming to give every “now” equal status. But it is in light of the worldhood of time that clocks are useful to us: 8:00, for example, is not just a string of numbers—“the time it is now”—but “the time for waking up,” or whatever the case may be. Moreover, the design of a clock—which assigns the hour and half-hour to the extreme points of its vertical axis, and the fifteen-minute intervals between these to its leftmost and rightmost points—reflects our taking certain numerical times to be more appropriate than others as times for anything. For instance, 9:00 is a more “appropriate” time than 9:03 or 9:10 not by itself, but rather for setting an alarm to wake up, holding a meeting, etc. The statement “be in the moment” similarly covers up the worldhood of time by suggesting that the moment is not “for” anything but itself. When someone leading a meditation says it, they want the one hearing to “forget” that they have made the moment significant as a moment for meditating. When a photo-averse person says it, it is because they have designated the moment as a moment for enjoying the scenery, not a moment for taking photos. The worldhood of time entails that by doing anything, I am implicitly asserting that now is the right time to do it. As we have seen, the admonition to “be in the moment” covers up all four aspects of the kind of time (world-time) from which we derive our ordinary conception of time (now-time). Yet Heidegger shows us that world-time is in turn explicable only by an even more basic kind of time, originary or primordial (ursprünglich ) time. Primordial time is the kind of time that Heidegger has been working to uncover throughout Being and Time ; it is “the condition which makes the everyday experience of time both possible and necessary.” In Division II, Chapter 6, he gets primordial time into view by observing that Dasein is not just Being-towards-the-end (i.e., death), but also Being-towards-the-beginning (i.e., birth). To see this, we need not look further than Dasein’s characteristic activity of thrown projection, by which Dasein claims the circumstances it has been thrown into from birth , even as it reinterprets them by projecting its own possibilities until death. Because of the bidirectional gaze of thrown projection, “Dasein does not exist as the sum of the momentary actualities of Experiences which come along successively and disappear.” In other words, Dasein does not exist exclusively in now-time, for Dasein is not just the sum of its experiences at a series of present-at-hand nows. Rather, Dasein is also its past circumstances and future possibilities. As Heidegger puts it, Dasein “is stretched along and stretches itself along ” primordial time via its own activity. The scope of primordial time is Dasein’s entire lifetime, without which the four aspects of world-time could not exist. The now could not be public, datable, spanned, or worldly without the finite being that discloses the now as public, dates the now, relates the now to the broadest now of its own life, and renders the now a time for something in light of its finitude. Therefore, primordial time is the kind of time that makes Dasein a whole and undergirds its Being as care (cf. ). Encouraging someone to “be in the moment” obfuscates primordial time, thereby exemplifying an inauthentic relation to time that Heidegger calls “making-present” (gegenwärtigen ). Making-present describes a state of “falling into the ‘world’ of one’s concern”—the everyday realm where Dasein’s perspective is confined to the objects it encounters as equipment for fulfilling immediate ends. In making-present, Dasein’s attention becomes myopic: it seems to forget its Being as thrown projection, which is to say it forgets that it goes about all its everyday tasks in the context of broader priorities. Of course, the most global context Dasein forgets in making-present is its own finitude, in virtue of which all its priorities matter. The imperative to “be in the moment” epitomizes making-present because it disallows making sense of what one is doing now in light of anything futural; thus, it stands opposed to the maxim “live every day as if it were your last,” even though similar sentiments may motivate the two statements. To “be in the moment” is to forget not only that one has priorities, but also that everything one does is an implicit articulation of those priorities. Consequently, one’s experience of time becomes “an inauthentic awaiting of ‘moments’—an awaiting in which these are already forgotten as they glide by.” Time seems never to arise, but only to pass away; one conceives of oneself not as stretching oneself along time, but rather passively lost in its flow. What making-present makes present, then, is primordial time itself, whose past and futural aspects are subjugated to the cult of the present “moment.” Heidegger reveals our potential for a more authentic relation to primordial time and world-time by contrasting making-present with his concept of the Augenblick , in which Dasein recognizes its past, present, and future as inseparable aspects of its own wholeness. The Augenblick is “the resolute rapture with which Dasein is carried away to whatever possibilities and circumstances are encountered in the Situation as possible objects of concern.” Bearing in mind both its possibilities (projection) and its circumstances (thrownness), Dasein does not lose sight of its priorities amid the world of its concern, but sees those priorities themselves as objects of concern to be constantly actualized and reevaluated. In the Augenblick, Dasein understands its Being as care and itself as finite, but not in such a way that it is afraid of its own death; its rapture is resolute , at once unflinching in its acknowledgment of mortality and steadfast in its commitment to living. The Augenblick is an “ecstasis” in the sense that it allows Dasein to stand outside the world of its concern—outside the punctual present of now-time—and grasp world-time and primordial time, if only implicitly, as the grounds of its temporal experience. Crucially, the Augenblick does not mean an escape from the present—where all experience occurs—but rather expands the present to include one’s whole life. If we translate it as “moment,” we had better bear in mind the English word’s other meaning of “importance,” from which we get “momentous.” The Augenblick renders the present important—i.e., consequential—precisely by being the “gaze of the eye,” for it is in the present (both right this second and during one’s life ) that one judges practically what is worth attending to by focusing on certain things rather than others. The Augenblick, then, could not be more different from the “moment” of “be in the moment,” for while the former imbues the now with momentous stakes by maximally dilating it, the latter deflates the stakes of the now by maximally contracting it. Even the English word “moment” obscures the essential relation between Dasein and time, whereas the German word Augenblick identifies Dasein’s caring activity—its gaze—as the precondition for temporal experience and Dasein’s sense of continuity from one moment to the next. It is an inevitable consequence of the Augenblick’s expansion of the now that the future acquires explanatory priority over the present in the question of Dasein’s Being. While the inauthentic understanding of one’s potentiality-for-Being “temporalizes itself in terms of making present,” Heidegger observes, the Augenblick does so “in terms of the authentic future.” This means that while making-present confines the implications of one’s activity to the punctual now of now-time, the Augenblick discloses those implications as primarily futural. Thus, the Augenblick is explicable not in terms of the vulgar “now” (dem Jetzt ), but in terms of future possibilities: as the “gaze of the eye,” it “permits us to encounter for the first time what can be ‘in a time’ as ready-to-hand or present-at-hand.” In the Augenblick, Dasein discovers itself in the equipment that constitutes the world of its concern, which in turn leads it to recognize that it is the one responsible for stretching oneself along and projecting itself toward certain possibilities rather than others. The worldhood of time becomes particularly apparent, for the current “moment” no longer seems trivial; every “now” becomes significant in terms of what it is a time for , which is to say in terms of its bearing on the future. So while “be in the moment” suggests that the present is all that matters, the Augenblick insists that the present matters only because the future does. In Heidegger’s categories of inauthenticity and authenticity we find the foundation I promised for a more authentic way of relating to time. “Be in the moment” exemplifies an inauthentic mode of relating to time—i.e., making-present—that obscures world-time and primordial time as the fundamental structures of our experience. To be in the Augenblick, on the other hand, is to relate to the now authentically : it means to own up to the present as datable, public, spanned, and worldly; and to understand it as inseparable from the past and future. In the inauthentic mode, one is lost in one’s immediate concerns rather than seeing the “big picture,” and passively awaits the future rather than owning it as the ground of one’s priorities. Thus, although “be in the moment” seems to inflate the status of the present, it actually diminishes the present into a kind of hollow shell. But in the authentic mode, one owns up to both the past and future—stretching back to one’s birth and forward to one’s death—as constitutive of who one is and what one does. Heidegger’s authenticity is proto-ethical in that it denotes appropriation of one’s own temporality as the ground of one’s reasons for doing this rather than that in any given case. Yet authenticity is not fully ethical, for while it describes a relation to one’s reasons (the “subjective ought”), it fails to prescribe specific actions (the “objective ought”). The extent to which one could derive the latter from the former is doubtful, at least within the framework of Being and Time. Yet authenticity, if proto-ethical, is far from irrelevant. We could retort that relating authentically to time is further than most people get in life—never mind living ethically. By saying things like “be in the moment,” we evacuate ourselves from the now, only to reinsert ourselves in it as passengers. We say that time is a flowing stream, forgetting that we are the ones stretching ourselves along. At worst, we pretend indifference, when in fact—as being in the Augenblick reminds me—there is nothing more fundamental to our experience than that we care. References Hägglund, Martin. “Lecture 25: Now-Time, World-Time, and Originary Temporality.” Lecture. PHIL 402: Being and Time, Yale University, 24 April 2024. Heidegger, Martin. Being and Time . 1927. Translated by John Macquarrie and Edward Robinson, Harper Perennial, 2008. Phillips, Ian, editor. The Routledge Handbook of Philosophy of Temporal Experience . Routledge, 2017.

Bess Markel Rural Despair and Decline: How Trump Won Michigan in 2016 Bess Markel Introduction When Donald Trump won the Electoral College vote in 2016, he shocked the entire world. In part, people believed he could never win because he would never crack the Democrats’ famous “Blue Wall”: the combination of Michigan, Wisconsin, and Pennsylvania. But he did, winning counties that John McCain and Mitt Romney could not. Political pundits asked themselves: How did this entitled, brash, inexperienced New York millionaire appeal to rural voters? What seems like thousands of think-pieces have been written on the issue, each suggesting that Trump won the election because of Russian interference, deeply rooted misogyny, racial backlash to Obama’s presidency, the rise of social media, and a myriad of other factors. However, some scholars have suggested that Trump’s unexpected triumph could be traced to another factor: pain and discontentment across rural America. Over the past several decades, America’s working class has seen its way of life disappear. With a loss of jobs due to innovative technology, outsourcing of manufacturing jobs, and mass migration out of Rust Belt states, residents of Illinois, Indiana, Michigan, Ohio, Pennsylvania, West Virginia and Wisconsin—areas that used to be vibrant parts of America’s heartland—feel left behind (1). Some believe that this downward trajectory helped spark the rise of Trump. While this might seem counterintuitive at first because Trump is viewed by the liberal media as an uncaring, East Coast elite, scholars have strived to understand the appeal of Trump among working-class, white voters, particularly in the Midwest. This line of research is particularly important for the future of electoral politics. The movement Trump’s election sparked, and even Trump himself, are not going away anytime soon. Understanding Trump’s appeal can explain his continued support and how other candidates can seize upon the movement he built. This research paper will explore the connection between despair and the rise of Donald Trump. It will use data on unemployment, education levels, and levels of drug- and alcohol-related deaths and suicide taken from the swing state of Michigan, which narrowly helped Trump win the 2016 election. The data section will show that Trump performed better in places where residents seemed more likely to feel economically and socially left behind. However, we must first classify and understand what scholars mean when they discuss despair in rural, working-class America. Understanding Rural Support for Trump Political scientist Katherine Cramer, in her book Politics of Resentment, argues that rural politics can be understood as stemming from the creation of a rural community consciousness, rooted in resentment toward “elites” and urbanites (2). Through interviews with a group of locals in rural Wisconsin, Cramer discovered what rural consciousness looks like and defines it as three sentiments: caring about perspectives of power, primarily that urban areas have all of it and rural areas have none; respect for the “rural way of life”; and the perspective that too few resources are allocated to rural areas (3). All in all, her definition of rural community consciousness paints a picture of rural Americans feeling that urban Americans, and by extension government officials who are overly influenced by urban values, have no respect for their way of life, and are draining rural resources and livelihoods through welfare programs and other legislative efforts that advantage urban areas. This perceived allocation of resources toward exclusively urban areas is not actually the case, and many government funds and programs target rural areas. However, governmental bodies do not always prioritize marketing their budget allocations and as a result many rural communities are uninformed about the inner workings of the political system. In addition, because rural Americans are disillusioned, they have low desire to learn about government activities, leading these causal beliefs to go unchallenged and unresearched (4). This breakdown in communication and understanding has long-reaching effects. The Republican Party has seized upon these sentiments to further its agenda. Many rural Americans are wary of governmental employees and programs that they view as elite and guilty of stealing rural money for personal or political gain (5). Journalist Thomas Frank understands the power of rural resentment but argues that it is not necessarily about a lack of understanding of budgetary inner workings or community anger but is rather about character assessment. He asserts that while resentment and hostility are important in understanding the rural vote, the most crucial factor is actually authenticity.6 Republicans, he argues, have successfully rebranded Democrats as out-of-touch city elites worthy of scorn. Even as Republican political figures push legislation that hurts working-class Americans, they successfully market themselves as relatable, the politicians that a voter would want to have a beer with (7). This authenticity wins them voters despite their lack of concrete political achievements for lower-income, working-class Americans. When putting these scholarly findings in conversation with the campaign message on which Trump ran, it is easy to see how in 2016 Trump played upon the resentment and despair of rural areas by framing the Democrats, and by extension the urban liberal elite, as the cause for all problems. Throughout the campaign, Trump had a habit of saying exactly what was on his mind, perhaps giving him an air of over-a-beer-authenticity and relatability—he certainly appeared honest due to his unfiltered dialogue. Moreover, his lack of political experience likely worked in his favor in areas where government officials are seen as untrustworthy. By contrast, his opponent, Secretary of State Hillary Clinton, had held governmental office at various levels for many years, which played into Trump’s painting of her in the eyes of many rural communities as an urban elite living off the people’s hard earned money. Further complicating the relationship between rural and urban areas is the perception that urban areas are more liberal or have different ways of life. Sociologist Jennifer M. Silva argues that some rural voting patterns can be explained by the considerable amount of fear that exists in many of these places, both around shrinking economic opportunities and the general future of communities (8). This fear often manifests itself as a feeling that America must return to “disciplined values” such as hard work, or worries that immigrants are stealing all the well-paying jobs. In his campaign, Trump certainly identified these fears (9). This could be seen in his harsh anti-immigrant rhetoric, seemingly placing the blame on them for the lack of decent-paying jobs. Trump also emphasized his skills as a businessman, arguing that they would help him run the country and increase the job market. Many authors believe that Trump’s strong performance in rural counties can be explained by the “landscapes of despair” theory, arguing that all of the areas in which Trump over-performed or Clinton underperformed have experienced immense social, economic, and health declines over the past several decades. These authors believe that Trump appeals to voters who are not necessarily the poorest in America but whose lives are worse off than they were several decades ago (10). Trump spoke to that pain and offered these Americans a message that appealed to their despair. Goetz, Partridge, and Stephens find that economic conditions have changed over time throughout rural communities, with urban centers becoming more prominent and fewer agricultural jobs available. However, they find that not all rural areas are doing uniformly poorly economically across America. Instead, there has been “profound structural change” in most of these areas in terms of the types of employment available (11). This structural change could contribute to the feeling among many rural Americans of having been left behind and could also explain some of the draw to Trump’s nationalism, as trade and increased globalization, along with new technology, have contributed to this extreme change (12). Goodwin, Kuo, and Brown agree with this theory and find a correlation be- tween higher rates of opioid addiction in a county and the percent of the county that voted for Trump (13). They found that opioid addiction is one way to measure the sociocultural and economic factors that often created support for Trump and noted that simple unemployment measurements fail to capture this same trend. These two pieces of data imply that the voting patterns of Trump’s supporters do not correspond with being worse off economically than the rest of America, but rather are related to whether people personally feel like they and their communities are backsliding, with opioid addiction as an indicator of this attitude. Gollust and Miller argue that the opioid crisis triggered support for Trump, not necessarily because it is a measurement of sociocultural factors within communities, but because it triggered a comparison in the minds of people living in communities where the crisis was rampant (14). Through experimentation, Gollust and Miller found that Republicans and Trump supporters were more likely than Democrats to view whites as the political losers in the country (15). It is easy to see how Trump’s aggressive rhetoric appealed to people who felt like they were losing and that they needed a fighter to advocate for them. Journalists and Political Research Associates Berlet and Sunshine believe that Trump’s rise can be attributed to changing ways of life and Trump’s connection to right-wing populism (16). They argue that there was a rise in the notion that the white-Christian-heterosexual-American way of life is “under threat” in the years preceding the election. They believe that Trump’s brash candidness, his willing- ness to invoke Islamophobia, homophobia, and xenophobia, and his appeals to Christianity and the patriarchy tapped into a deep-simmering rage that had been growing among rural people (17). In this way, white racial antagonism contributed to Trump’s success. Rural Americans redirected their despair into rage toward those individuals and collectives that they perceived as a threat to their way of life. This argument is heavily focused on the effects of bigotry and anger on people’s voting choices, whereas several other authors, such as Cramer and Frank, believe that rural support for Trump was much less rage-based and much more about a lack of trust in government and the feeling of being neglected for years. We believe that the theories of despair and feelings of backsliding can explain some of the trend toward rural support for Trump in 2016. We believe that data will show that the most important despair factors depict not how badly off a community was in 2016, but rather the comparative: how much worse off it was in 2016 compared to several decades earlier. Finally, we agree with Cramer’s theory of rural consciousness and feel that it may have played a role in general distrust for Clinton as a candidate, but found it impossible to test those attitudes given the data available. Methodology To test the effect of rural pain and despair in connection to GOP voting share in Michigan, we used data at the county level, primarily from 2016, which came from the United States Census Bureau and the Institute for Health Metrics and Evaluation (18). We focused specifically on the 2016 election because of the connection between Donald Trump’s share of the vote and struggling rural voters, which was higher than previous GOP candidates Mitt Romney and John McCain (19), as well as Trump’s reputation as an outsider (20). We chose to look at data from all Michigan counties, regardless of which candidate the county voted for or whether the county flipped parties between 2012 and 2016. We chose not to look exclusively at flipped counties because Trump flipped only twelve counties in Michigan. In order to obtain a statistically significant and unbiased result about the effects despair factors had on county result data, more than twelve data points were needed. We instead measured the effect of despair factors on the vote share that Trump received in each county in 2016. We defined six despair factors to represent the challenges and pains each county faced at the time of, or leading up to, the 2016 election. The first three of these factors are defined as the percent change in age-standardized mortality rates be- tween 1980 and 2014 for the following: alcohol use disorders, drug use disorders, and self-harm injuries ( alcoholchange , drugchange , and selfchange , respectively). The source from which we obtained information on drug use disorder–related fatalities did not provide a breakdown by substance so we are unable to determine how much of this factor can be attributed to the ongoing opioid crisis. However, due to the sweeping nature of the crisis, particularly in rural working-class communities, we believe there is some relationship between the drug-use-disorder mortality rate and the opioid crisis (21). Factors that measure changes in living conditions over time, such as changes in fatal overdoses, alcohol deaths, and suicides, will test whether despair is truly about voters’ communities becoming worse than they were before. The fourth despair factor ( undereducated ) represents the education level of each county, using the percent of adults over 18 whose highest educational attainment in 2014 was a high school degree or less. This is an important factor to examine while exploring despair because lower levels of education limit career and income options and are often correlated with greater instances of feeling trapped or stuck in a community (22). The final two factors in the exploration are unemployment and the percentage of the county population that died of any cause in 2016. This last factor is important to consider because higher death rates often show that a county has an aging population and can accordingly suggest that younger people are choosing to leave. If the theories described above are true, unemployment should not matter as much because the “landscapes of despair” theory focuses on decline in communities and in economic opportunities, meaning many voters could be employed but working longer hours, harder jobs, getting paid less, or feeling like they have fewer opportunities than they once did. To test this we ran the same statistical analysis for unemployment but specifically looked at whether the variable was statistically significant in predicting the Trump vote. If it was not, that would prove Goodwin, Kuo, and Brown’s theory that unemployment is not the best measure of Trump’s support in 2016. We used two statistical methods of analysis. First, we used histograms to compare a single despair factor, such as percent change in alcohol use disorder–related deaths, against the way that the county voted in 2016 to see if certain factors of despair disproportionately affected one party’s vote share. Second, we used the regression equation below to test our hypothesis that the six aforementioned despair factors led to Trump’s higher vote share in Michigan. Finally, we analyzed the despair factors individually to show their discrete effects on the GOP vote share in Michigan’s 2016 election. TRUMPSHAREi = β0 + β1DRUGCHANGEi + β2ALCOHOLCHANGEi + β3SELFCHANGEi + β4UNDEREDUCATEDi +β5UNEMPLOYMENTi +β6PRCNTDEATHSi +εi We fit the model using the county-level data we gathered to examine whether the test statistic led us to reject or fail to reject the null hypothesis that there is no relationship between these six despair factors and the percent of the vote share that Trump received in Michigan in 2016. We also used the R-squared from this regression to determine how strong the linear relationship of the regression equation was. Results and Discussion The results we found conclusively show that we can reject the null hypothesis that there is no relationship between the six despair factors and Trump’s success in a county. The first statistical method we used was comparing histograms of each factor broken down by party identification. We found graphical evidence to suggest that death rates, suicide, undereducation, and unemployment were disproportionately higher in Republican counties. Changes in alcohol and drug deaths ( alcoholchange and drugchange ) did not seem to be strongly correlated with one specific party, though counties that voted very strongly for Republicans did seem to have the highest values (highest percent changes from 1980 to 2014) for both of these variables. In some respects, the fact that many of these despair factors were higher in counties that voted Republican makes sense. By 2016, Barack Obama had been president for eight years, and often people who are unhappy with how the economy has been faring or who are unemployed vote for the candidate from the opposite party of the sitting president. However, large values of other factors, such as percent change in deaths from self-harm, are more alarming, as these first three variables measure changes dating back to the 1980s. We were surprised that alcohol and drug deaths seemed to be more evenly spread out between the parties than self-mortality, which was particularly unexpected due to the amount of literature on the correlation between those affected by the opioid epidemic and votes for Trump (23). Perhaps Goodwin, Kuo, and Brown’s theory that increased opioid usage is a good instrumental variable for Trump support still holds because this data only looks at drug mortality, not drug use. It is entirely possible that Trump counties have higher drug use, but we could not make a conclusion based on the data (24). However, due to the large percentage of drug overdoses that can be attributed to the opioid crisis, it is surprising that more of Gollust and Miller’s and Goodwin, Kuo, and Brown’s theories did not seem to be supported in this data set (25). The 3-D graphs in the appendix look at the relationships between the vote share that Trump received and percent changes in alcohol, drug, and self-harm mortality rates (26). The regression planes on these 3-D graphs show that percent change in self-harm mortality is the only variable with a clearly positive relationship to Trump votes. The other two changes in mortality variables have weaker linear relationships with Trump votes in part due to several county outliers. Exploring those outlier counties more and investigating why specifically they might not follow the common trend would be an interesting topic for ethnographic research. When we ran the regression analysis the first time, we included all six of the variables we categorized as measures of despair. We also ran the regression analysis with different combinations of these variables to see if we could increase the adjusted R-squared variable, which shows the accuracy of adding another variable to the model. We found that the model was most accurate when we excluded the unemployment value, and because its t-test statistic was not statistically significant, we made the decision to exclude it from the final regression we ran in order to have a more accurate model. At first, we were surprised that unemployment was not significant in the model; however, this seems to support the theory that many “despair voters” do have jobs—they are just low paying and highly stressful (27). This supports Goodwin, Kuo, and Brown’s analysis that the unemployment level is not a good measurement alone of whether a county voted heavily for Trump. More- over, the histogram shows that high levels of unemployment are not necessarily correlated with high percentages of the vote going to Trump. Clearly, there are other factors at play that this statistic fails to capture, and unemployment could be an incomplete benchmark for despair because it does not measure satisfaction in jobs nor whether a job pays a living wage. Overall, we found that a model with the five factors of despair besides unemployment gave an R-squared of .552, meaning that 55% of the variance among the percentage of votes Trump won in a certain county could be attributed to these factors alone. This is remarkably high considering that neither policies nor previous voting records were added into this regression. However, the only variables that were found to be statistically significant on their own were percent changes in self-harm deaths and percent of undereducated voters. We were surprised that percent changes in alcohol and fatal drug overdoses were not more significant than changes in self-harm deaths, but again, that could be partially attributed to the fact that the data only measures overdoses rather than frequency of use. While one would assume that there would be a positive representative relationship between the two, it is hard to know for sure. However, we can say that, on average, increases in despair in certain aspects of life are correlated with an increase in support for Trump in the 2016 election, supporting the original hypothesis of this paper that rural despair played into Trump’s win in Michigan in 2016. However, we fail to find definitive conclusions regarding some of the connections drawn in previous scholarly literature between opioid overdose and the Trump vote. Perhaps the most striking analysis is running the same regression but with Democratic vote share in the 2016 election and comparing the results with those from the Republican vote share. As seen in the table below, the coefficients for each variable nearly flip signs. A decrease in suicide-, alcohol-, and drug-related deaths, or other despair factors, can be expected on average to be associated with a positive increase among the percentage of the county “voting blue.” Counties that vote Democratic, at least on average, tend to have had some sort of positive change, on the individual or communal level, around certain measures of despair (28). This does not mean that Clinton voters were necessarily better off than all Trump voters across Michigan, but rather that Clinton voters had seen their lives improve, if only marginally, and Trump voters had not. Theories of despair regarding rural voters do not compare the lives of rural voters to those of voters in other areas of the state but rather investigate whether rural communities are worse off than they were several decades ago. Similarly, just because certain counties have seen an improvement in certain despair factors does not mean that their communities are not also grappling with alcohol, drug, and mental health issues. Additionally, better-educated counties tend to vote Democratic, with less-educated counties voting Republican. This is a reversal of certain historical trends (29). Again, at some level it is logical that voters who are doing better vote for the party that has been in power for the past several years. However, the data in these studies capture decades of crumbling communities. There is a downward trend in these communities in terms of levels of despair that shows that regardless of which party these counties vote for (whether they vote for the opposite party when they feel dissatisfied with the current one, or for the same party when things seem to be going well), neither party has been able to stop the 34-year trends of increases in suicide-, drug-, and alcohol-caused deaths. This validates theories of “rural consciousness” and “rural despair” by Cramer and Goetz, Partridge, and Stephens that rural communities clearly see and feel suffering in their communities and perceive a lack of attention and resources given to them (30). One could also argue that this supports Silva’s theory that many rural communities fear for their futures based on the downward spiral these communities have experienced for several years or decades (31). This fear could motivate voters to act more drastically or to believe that a massive change is necessary. In the voting booth, this could lead to their voting for a more unconventional candidate. Trump’s main slogan was “Make America Great Again,” suggesting that, at some level, he understood and was trying to court those experiencing this sense of despair. For many voters, America is the best it has ever been: we have unprecedented levels of rights and acceptance for women, minorities, and members of the LGBTQ+ community. Going back seems like regression, not progress. But as shown by this data, many of the counties that voted for Trump in 2016 were better off by certain metrics in 1980 than they are now. It makes sense that residents of these counties could be worried about the continuing decline of their communities and could want to go back to a better time and quality of life. Not to mention, according to Cramer’s thesis of rural consciousness, voters in rural Michigan could be very distrustful of any type of governmental employee promising change. Trump’s brand as a businessman with no prior political experience could have especially appealed to those affected by rural-consciousness thinking. His role as an outsider was relatable. His phrase “drain the swamp” directly spoke to the prevailing belief in these communities that Washington, DC is full of people who take taxpayers’ money and waste time. His opponent had been in the public eye for years in various government positions and was by extension seen, and marketed by conservative news outlets, as the leader of the “liberal elite.” Particularly in contrast with her, Trump could have seemed particularly appealing to those rural voters. The data we found strongly supports Cramer’s thesis that rural despair and resentment led to the crumbling of the Blue Wall. In order for Democrats to rebuild their former strongholds in these states, the party must examine the real pain and anger that many rural voters experience. They need to understand the hopeless- ness people are feeling and recognize why Trump specifically appeals to them. Trump, and the Republican Party, have been strategic in tapping into the anger, fear, and pain that rural voters feel. Democrats contributed to the phenomenon of rural consciousness and the belief that Democrats are coastal elites who neither care about nor understand middle America (32). Clinton and other Democrats have made several public missteps, including making fun of these voters, that have further reinforced this idea. Trump has succeeded in directing rural voters’ anger and mistrust toward the government, specifically bureaucracy and governmental programs that could actually help rural areas. Overall, Democrats need to strengthen their relationship with white working-class voters, and understanding rural despair and consciousness might be the first step to doing so. They need to consider creating messages that specifically address and appeal to rural voters and find and support candidates who can connect with them. To win back rural voters, Democrats also need to focus on messaging in rural America. That includes creating programs that provide resources and relief to these struggling areas, but also, perhaps more importantly, it requires making sure that rural communities are aware of these resources. If rural communities still view government as ineffective and uninterested in their problems, these programs will not be sufficient. It will take significant effort and messaging on behalf of Democrats to convince enough voters that the Democrats’ party, not Trump’s, actually represents rural Americans’ best interests. While President Biden managed to do this in 2020, very narrowly, it remains to be seen whether other Democratic candidates will be able to or will even want to capitalize on this messaging. It also remains to be seen which candidates will seem authentic to rural voters—clearly this was a big factor in Trump’s victory and was maybe an even bigger factor contributing to Clinton’s loss. Going forward, the Democrats will need to support candidates who can reach rural voters effectively and authentically, which remains a tall order. While Trump, not establishment Republicans, created a new coalition that drew on rural pain and despair, it would be naive to assume that the Republican Par- ty will not continue to take advantage of rural despair to win elections. Since Trump’s defeat, the messaging of the Republican Party has remained largely the same as when Trump was in office. If Democrats do not devote resources to successfully addressing these voters, they will have to accept the possibility that their once reliable Blue Wall will fall again or will never be rebuilt, and they will need to find another sizable coalition of voters to target in order to win elections at every single level. Appendix Endnotes 1 Pottie-Sherman, “Rust and Reinvention,” 2. 2 Cramer, The Politics of Resentment, 11. 3 Ibid., 54. 4 Cramer and Toff, “The Fact of Experience.” 5 Cramer, Politics of Resentment, 127. 6 Frank, What’s the Matter with Kansas?, 113. 7 Thomas, What’s the Matter with Kansas?, 119. 8 Silva, We’re Still Here, 45. 9 Inglehart and Norris, “Trump and the Populist Authoritarian Parties.” 10 Monnat and Brown, “More than a Rural Revolt.” 11 Goetz, Partridge, and Stephens, “The Economic Status of Rural America in the President Trump Era and Beyond,” 101. 12 Ibid, 117. 13 Goodwin et al., “Association of Chronic Opioid Use With Presidential Voting Patterns in US Counties in 2016,” e180450. 14 Gollust, and Miller, “Framing the Opioid Crisis: Do Racial Frames Shape Beliefs of Whites Losing Ground?” Journal of Health Politics, Policy and Law 45, no. 2 (April 2020): 241-276. 15 Gollust, and Miller, “Framing the Opioid Crisis: Do Racial Frames Shape Beliefs of Whites Losing Ground?” 16 Berlet and Sunshine, “Rural Rage,” 480–82. 17 Ibid, 490. 18 Foster-Molina and Warren, Partisan Voting, County Demographics, and Deaths of Despair Data. 19 Monnat, “Deaths of Despair and Support for Trump in the 2016 Presidential Election.” 20 Cramer, Politics of Resentment, 127-137. 21 Florian Sichart et al., “The Opioid Crisis and Republican Vote Share.” 22 Autor, Katz, and Kearney, “The Polarization of the U.S. Labor Market.” 23 Goodwin et al., “Association of Chronic Opioid Use With Presidential Voting Patterns in US Counties in 2016,” e180450. 24 Ibid. 25 Imtiaz et al., “Recent Changes in Trends of Opioid Overdose Deaths in North America.” 26 Created with the help of Ella Foster-Molina. 27 Torraco, “The Persistence of Working Poor Families in a Changing U.S. Job Market.” 28 We do not mean to suggest that Democratic voters do not face their own share of struggles, rather that this data on average suggests that counties that voted Democratic were less affected by these specific measures of despair in 2016. 29 Harris, “America Is Divided by Education.” 30 Goetz, Partridge, and Stevens, “The Economic Status of Rural America in the President Trump Era and Beyond.” Applied Economic Perspectives and Policy 40, no. 1 (February 16, 2018). 31 Kim Parker et al., “Similarities and Differences between Urban, Suburban and Rural Communities in America.” 32 Cramer, Politics of Resentment, 127-137. Bibliography Autor, David H, Lawrence F Katz, and Melissa S Kearney. “The Polarization of the U.S. Labor Market.” American Economic Review 96, no. 2 (April 1, 2006): 189–94. https://doi.org/10.1257/000282806777212620. Berlet, Chip, and Spencer Sunshine. “Rural Rage: The Roots of Right-Wing Populism in the United States.” The Journal of Peasant Studies 46, no. 3 (April 16, 2019): 480–513. https://doi.org/10.1080/03066150.2019.1572603. Cramer, Katherine J. The Politics of Resentment: Rural Consciousness in Wisconsin and the Rise of Scott Walker . Chicago Studies in American Politics. Chicago: University of Chicago Press, 2016. Cramer, Katherine J., and Benjamin Toff. “The Fact of Experience: Rethinking Political Knowledge and Civic Competence.” Perspectives on Politics 15, no. 3 (September 2017): 754–70. https://doi.org/10.1017/S1537592717000949. Florian Sichart, Jacob Chapman, Brooklyn Han, Hasan Younis, and Hallamund Meena. “The Opioid Crisis and Republican Vote Share.” LSE Undergraduate Political Review , February 13, 2021. https://blogs.lse.ac.uk/ lseupr/2021/02/13/the-opioid-crisis-and-republican-vote-share/. Foster-Molina and Warren. Partisan Voting, County Demographics, and Deaths of De- spair Data , February 2019. Frank, Thomas. What’s the Matter with Kansas? How Conservatives Won the Heart of America. 1st ed. New York: Metropolitan Books, 2004. Goetz, Stephan J, Mark D Partridge, and Heather M Stephens. “The Economic Status of Rural America in the President Trump Era and Beyond.” Applied Economic Perspectives and Policy 40, no. 1 (March 2018): 97–118. https://doi. org/10.1093/aepp/ppx061. Goodwin, James S., Yong-Fang Kuo, David Brown, David Juurlink, and Mukaila Raji. “Association of Chronic Opioid Use With Presidential Voting Pat- terns in US Counties in 2016.” JAMA Network Open 1, no. 2 (June 22, 2018): e180450. https://doi.org/10.1001/jamanetworkopen.2018.0450. Harris, Adam. “America Is Divided by Education.” The Atlantic, November 7, 2018. https://www.theatlantic.com/education/archive/2018/11/educa-tion-gap-explains-american- politics/575113/. Imtiaz, Sameer, Kevin D. Shield, Benedikt Fischer, Tara Elton-Marshall, Bundit Sornpaisarn, Charlotte Probst, and Jürgen Rehm. “Recent Changes in Trends of Opioid Overdose Deaths in North America.” Substance Abuse Treatment, Prevention, and Policy 15, no. 1 (December 2020): 66. https://doi. org/10.1186/s13011-020-00308-z. Inglehart, Ronald, and Pippa Norris. “Trump and the Populist Authoritarian Par- ties: The Silent Revolution in Reverse.” Perspectives on Politics 15, no. 2 (June 2017): 443–54. https://doi.org/10.1017/S1537592717000111. Kim Parker, Juliana Horowitz, Anna Brown, Richard Fry, D’Vera Cohn, and Ruth Igielnik. “Similarities and Differences between Urban, Suburban and Rural Communities in America.” Pew Research Center’s Social & Demographic Trends Project. Pew Research Center, May 22, 2018. https:// www.pewresearch.org/social-trends/2018/05/22/what-unites-and-di- vides- urban-suburban-and-rural-communities/. Monnat, Shannon M. “Deaths of Despair and Support for Trump in the 2016 Presidential Election,” 2016. https://doi.org/10.13140/RG.2.2.27976.62728. Monnat, Shannon M., and David L. Brown. “More than a Rural Revolt: Landscapes of Despair and the 2016 Presidential Election.” Journal of Rural Studies 55 (October 2017): 227–36. https://doi.org/10.1016/j.jrur- stud.2017.08.010. Pottie-Sherman, Yolande. “Rust and Reinvention: Im/migration and Urban Change in the American Rust Belt.” Geography Compass 14, no. 3 (December 7, 2019). https://doi.org/10.1111/gec3.12482. Silva, Jennifer M. We’re Still Here: Pain and Politics in the Heart of America . New York, NY: Oxford University Press, 2019. Torraco, Richard J. “The Persistence of Working Poor Families in a Changing U.S. Job Market: An Integrative Review of the Literature.” Human Re- source Development Review 15, no. 1 (March 2016): 55–76. https://doi. org/10.1177/1534484316630459. Previous Next

The Pay Gap Among Academic Faculty for Higher Education in the U.S Yucheng Wang Author Aditi Bhattacharjya Jason Fu Meruka Vyas Editors Abstract This paper investigates whether academic rank, academic field, and gender account for the pay disparity in higher education in the United States. Analyzing 2,235 faculty in the University of Iowa, I find that pay gaps are primarily driven by academic rank, especially among professors and non-tenured faculty. Male assistant professors earn 23.8% more than females, while non-tenured males earn 31.6% less than females. Within identical academic ranks, there are gender pay gaps between assistant professors and non-tenured faculty. By analyzing 301 assistant professors, this paper identifies the academic field as another factor in pay discrepancies across academia, particularly among business, medical, social science, and STEM disciplines. However, gender doesn’t contribute to the pay disparity problem when faculties are under the same academic rank and field of study. Given this paper does not utilize datasets for any private institutions or colleges in other states, the paper’s findings can only be generalized to public universities in the U.S. I. Introduction In August 2023, five of Vassar’s female professors sued the college for wage discrimination against female faculties. According to the Washington Post, full-time male professors at Vassar earn an average annual salary of about $154,200, while their full-time female professors only earn $139,300. In this lawsuit, advocates for Vassar professors argued that the gender pay gap arose due to substantial differences in starting salaries. In academia, there exists a merit rating system biased against females, alongside a discriminatory promotion process that systematically prevents or delays the advancement of female professors compared to males. This gender bias and stark compensation difference between male and female faculty members does not only happen at Vassar College. The American Association of University Professors (AAUP) finds that full-time women professors make up 82% of what their male colleagues earn across academia. Recent lawsuits in Vassar have alleged wage discrimination against female professors, raising questions about the presence of the gender pay gap in academia across the United States. The College and University Professional Association for Human Resources has discovered persistent pay disparities for females in staff and faculty positions at colleges and universities across the United States. Academic researchers and policymakers hypothesize that the gender gap in earnings persists because it is hidden intentionally (Trotter et al., 2017). Given that limited research focuses on the gender pay gap for higher education in the United States, this paper aims to provide evidence of how male and female academic faculties differ in their earnings at colleges or universities in the United States. Moreover, this paper also investigates non-gendered factors contributing to the pay gap in academia across the United States like academic rank and field. Using the University of Iowa as its primary data source, this paper examines whether academic rank, academic field, and gender account for the pay disparity for higher education in the United States. Motivated by Koedel and Pham’s research in 2023, I categorize determinants of salary disparity into two areas: conditional gaps and unconditional gaps. Since compensation differences can be explained partially by the level of faculty’s skills and contributions, the conditional gaps include academic rank and academic field. The remaining unexplained portion of the pay gap falls under the unconditional gap like gender. Faculties with higher seniority typically take more responsibility in teaching and administrative tasks, have more years of experience, and potentially make more substantial contributions to research. Therefore, academic rank has the most significant impact on pay disparity in academia. Besides academic rank, the academic field is the second most influential factor. As some academic fields like medicine or business are historically more prestigious or better funded for research, it leads to a greater pay discrepancy when faculty members have identical academic ranks. As a result, I hypothesize that gender is the least influential factor in the pay gap problem. II. Background President Obama proposed the White House Equal Pay Pledge in 2016 to narrow the gender wage gap across the United States. Following Obama’s campaign, academic institutions formed new committees and commissions on college campuses to address the gender pay inequality problems. For instance, Louisiana State University established the Council on Gender Equity to emphasize gender pay equality. However, research still shows a persistent gender pay gap among university faculty across the United States. AAUP finds that a full-time female professor earned roughly $82 for every $100 a full-time male professor earned in 2023. This compensation difference between male and female full-time professors raises questions about the existence of a gender pay gap for higher education in the United States. Does pay depend on the skills and contributions of males and females equally, or does bias result in differential salary solely based on the individual's gender? From the late 1980s to the mid 2010s, previous research indicates that the gender pay gap, a form of unconditional gap, accounts for 20% of wage difference at research universities (Koedel & Pham, 2023). Besides the unconditional gap, the conditional gap contains the unexplained portion of the pay gap in academia. The conditional gap is typically associated with the academic field, years in the position, and peer performance evaluations. In contrast to the unconditional gap, the conditional gap only accounts for 4% to 6% of wage difference, or 20% to 30% of the unconditional gap (Li & Koedel, 2017). Given that the unconditional gender pay gap is almost three to five times bigger than the conditional gap, this sizable difference underscores the substantial influence of gender on salaries within academia. Furthermore, this finding also suggests that the pay gap in academia is more closely tied to gender-based disparities than to intellectual or performance measurements. III. Data My main estimates are based on an analysis of data from the Iowa Legislature for the University of Iowa in 2022. This annual census survey collects data on full-time and part-time teaching and administrative staff at degree-granting public universities and their affiliated colleges in Iowa State from July 1 to June 30 of the following year. The survey covers 14,295 employees in the University of Iowa, including administrative and support staff, librarians, all full-time tenure track faculties, part-time affiliated staff, adjunct staff, clinical staff in teaching hospitals, visiting scholars, and research staff who have academic ranks and salaries similar to teaching staff, for all those whose term of appointment is not less than 12 months. The main objective of this paper is to examine how male and female academic faculties differ in their earnings at universities or colleges in the United States. Thus, this dataset excludes clinical staff, visiting scholars, research staff, teaching assistants, administrative and support staff, and librarians. Since the Iowa Legislature mandates that state employees participate in the annual census survey, confidential pay information is obtained directly from the Department of Administrative Services without additional verification or editing. As the publicly available salary data is directly obtained from this State Employee Salary Book, the accuracy of data and publicly accessible features make the University of Iowa an ideal choice for this paper. Data about demographics, qualification data, and salaries were collected for all tenured, tenure-track, and non-tenured track faculty. Demographic data include each faculty member’s gender and county information. Qualification data include each faculty member’s academic rank and academic field. The salary data is directly obtained from the Iowa State Employee Salary Book payroll records. A limitation of the Iowa Legislature database is the generalizability problem. The database only includes state-funded public universities like the University of Iowa, Iowa State University, and the University of Northern Iowa. Other private universities or liberal arts colleges are not included in the Iowa Legislature database due to confidentiality concerns regarding wage information. This restriction poses a significant challenge in drawing broader conclusions about pay disparities across all public or private institutions in the United States. IV. Methods Given that the range of faculty’s wages varies from $1,000 to $1,685,834, this paper uses a log specification for salary to normalize the scales of the variables to make it less prone to outliers. To examine whether the faculty’s academic rank correlates with the pay gap, I analyzed 2,235 faculty members among tenured, tenure track, and non-tenured track at the University of Iowa for 2022. Tenured faculty typically secure lifetime professor employment after a six-year probationary period. Tenure track faculty hold positions as Associate Professor or Assistant Professor and are currently in the promotion and evaluation process towards attaining the status of tenured full professor. All faculties besides tenured or tenure track are classified as nontenured track faculties. The tenured faculties include 496 employees as full-time professors. The tenured track includes 415 employees as full-time associate professors or assistant professors. The non-tenured track includes 1,324 employees as part-time Adjunct staff, Professors of Instruction, Professors of Practice, and Lecturers. The general regression model is represented as follows: log Salary= β1AssociateProfessor + β2NonTenured + β3Professor + β4Male + β5AssociateProfessor Male + β6NonTenured Male + β7Professor Male + α + ε where Male is an indicator variable that equals 1 if the assistant professor is a male and 0 if not. AssociateProfessor, Professor, and NonTenured are indicator variables that equal 1 if the faculty member is associate professor, professor, or non-tenured track accordingly, and 0 if not. To test for differential returns for ranking by sex, I include three interaction variables: AssociateProfessor Male, Professor Male, and NonTenured * Male. These interaction variables are equal to 1 if the faculty member is a male assistant professor, male professor, or male in a non-tenured track accordingly, and 0 otherwise. To testify whether the faculty’s academic field correlates with the pay gap, I controlled the academic rank effect and analyzed 301 assistant professors at the University of Iowa for 2022. Faculties are sampled from six academic disciplines: art, business, humanities, medicine, social science, and STEM (Science, Technology, Engineering, and Mathematics). Once a discipline was selected for sampling, all assistant professors listed on the department website were included in the dataset. The Arts discipline includes 22 assistant professors from the Arts Division in the College of Liberal Arts and Sciences. The Humanity discipline includes 21 assistant professors from the Humanities Division at the College of Liberal Arts and Sciences. The STEM discipline includes 61 assistant professors from the College of Engineering and Natural and Mathematical Sciences Division in the College of Liberal Arts and Sciences. The Social Sciences discipline includes 41 assistant professors from the Social Sciences Division in the College of Liberal Arts and Sciences and College of Education. The Business discipline includes 23 assistant professors belonging to the College of Business. The Medical discipline includes 133 assistant professors from the College of Medicine, Dentistry, and Nursing. The general regression model is represented as follows: log Salary= β1Business + β2Humanity + β3Medical + β4SocialScience + β5STEM + β6Male + β7Business Male + β8Humanity Male + β9Medical Male + β10SocialScience Male + β11STEM Male + α + ε where Male is an indicator variable that equals 1 if the assistant professor in the arts field is male and 0 otherwise. Business, Humanity, Medical, SocialScience, and STEM are indicator variables that equal 1 if the faculty member is business, humanity, medical, social science, or STEM accordingly, and 0 if not. To test for differential returns for the academic field by sex, I include five interaction variables: Business Male, Humanity Male, Medical Male, SocialScience Male, and STEM * Male. These interaction variables are equal to 1 if the assistant professor is a male in business, humanity, medical, social science, or STEM, and 0 otherwise. V. Results V.a.1 Academic Rank on Salary AAUP finds that the average annual salary in 2021 for assistant professors, associate professors, and professors was about $83,300, $96,000, and $140,500 respectively. Professors typically have more years of experience and research grants, so they tend to have higher salaries than associate professors or assistant professors. From this result, I hypothesize that academic rank correlates with pay disparity in academia. To test my hypothesis, the regression in Table 1 compared each faculty member’s salary based on their academic rank, with the expectation that professors have the highest wages compared to associate professors, assistant professors, and non-tenured track faculties. The non-tenured track faculty in my dataset consists of adjunct staff, lecturers, Professors of Instruction, and Professors of Practice. In the University of Iowa, the Professor of Instruction and Professor of Practice are instructional faculty solely responsible for teaching and not involved in administrative duties. Since the hiring criteria for instructional faculty is less rigorous in terms of research and scholarship requirements as compared to those for tenured or tenure track faculty, instructional faculty tend to receive lower compensation. In this regression, the adjusted R2 is 54.8%, which is consistent with my hypothesis that academic rank accounts for salary disparity. The β1, β2, and β3 coefficients indicate relative salary differences for female associate professors, non-tenured track faculties, and professors compared to female assistant professors. Because of higher ranks, the predicted signs for β1 and β3 coefficients are positive, suggesting that female associate professors or professors receive higher salaries compared to female assistant professors. However, the β1 coefficient is negative and not statistically significant at 0.01 level, suggesting pay is not increasing for associate professors. The β3 coefficient is positive and suggests that female Professors earn relatively 26.3% higher than female assistant professors. Since non-tenured track faculties are part-time basis or instructional faculty, they receive lower compensation than their tenured or tenure track colleagues. Thus, the predicted sign for β2 is negative. The β2 coefficient is negative and suggests female non-tenured track faculty earn relatively 173.7% less than female assistant professors. Given both Professor and NonTenure variables are economically significant and statistically significant at 0.01 level, I conclude that academic rank accounts for wage discrepancies only in the professor and non-tenured track faculty levels. V.a.2 Gender Effect on Salary Within Same Academic Rank AAUP found that full-time women professors earned 82 cents for every dollar their male counterparts earned in 2023. This compensation disparity motivated me to investigate whether gender influences salary within identical academic rank conditions. In Figure 1, male faculty members earn much more than their female counterparts under professors, associate professors, and assistant professors levels. However, female non-tenured faculty members receive higher salaries than their male colleagues. Therefore, within the same academic rank, I hypothesize that gender accounts for pay discrepancy. To test my hypothesis, the regression in Table 1 compares each faculty member’s salary based on their gender when they have identical academic ranks. The β4, β5, β6, and β7 coefficients indicate relative salary differences for male assistant professors, associate professors, non-tenured track faculties, and professors compared to their female counterparts under the same academic rank condition. I expect males to earn less at the non-tenured level while earning more at the professor, associate professor, or assistant professor level. The predicted sign for β6 is negative while β4, β5, and β7 are positive. However, both β5 and β7 coefficients are not statistically significant at 0.01 level, suggesting that the pay gap for the associate professor and professor level cannot be explained by gender reasons. In contrast, the β4 coefficient is positive and suggests that male Assistant Professor earns relatively 23.8% higher than female assistant professors. The β6 coefficient is negative and suggests that male non-tenured track faculties earn relatively 31.6% less than female non-tenured track faculties. Since both Male and NonTenure * Male variables are economically significant and statistically significant at 0.01 level. I conclude that gender bias accounts for wage disparity only in assistant professor and non-tenured levels when both female and male faculty have identical academic ranks. V.b.1 Academic Field on Salary Within the Same Academic Rank Under the same academic rank, is gender the sole factor contributing to the wage disparity at the University of Iowa? Previous research suggests that academic rank and academic field account for 4% to 6% of wage difference in academia (Li & Koedel, 2017). To examine whether the academic field impacts wage differences, I analyzed 301 assistant professors across six academic departments at the University of Iowa in 2022. The regression in Table 2 compared each assistant professor’s salary based on their academic field. I anticipate that medical, business, and STEM assistant professors will have the highest wages relative to other disciplines. Professions like doctors, investment bankers, and software engineers are known for their lucrative salaries. As a result, students are more likely to declare majors in medical, business, or STEM subjects. To meet the growing demand for these majors while providing a more robust academic curriculum, universities, and liberal arts colleges offer competitive salaries to attract top-tier talent for teaching positions. Therefore, I hypothesize that the academic field accounts for wage discrepancy at the assistant professor level. In this regression, the adjusted R2 is 32.9%, which is consistent with my hypothesis that the academic field accounts for salary disparity. The β1, β2, β3, β4, and β5 coefficients indicate relative salary differences for female assistant professors in business, humanity, medicine, social science, and STEM compared to the female assistant professors in the arts field. Since the business, medical, and STEM fields provide lucrative salaries, the predicted signs and values for β1, β3, and β5 are positive and mathematically larger. It suggests that female assistant professors in business, medicine, or STEM receive higher salaries than those in the art department. Since the β2 coefficient is slightly positive and not statistically significant at 0.01 level, it suggests the salary difference for female assistant professors between humanities and art disciplines is negligible. In contrast, the β1, β3, β4, and β5 coefficients are positive, which suggests that female assistant professors in the business, medical, social science, and STEM fields earn a relatively higher proportion of salaries than those in the art department. Given that the β1, β3, β4, and β5 coefficients are positive and statistically significant at the 0.01 level, I conclude that the academic field accounts for wage disparity for assistant professors in business, medical, social science, and STEM disciplines. V.b.2 Gender Effect on Salary Within Same Academic Rank and Field In Figure 2, I observed the average annual salary between male and female assistant professors separately within the Arts, Business, Humanity, Medical, Social Science, and STEM fields at the University of Iowa in 2022. Within the same academic field, the greatest gender gap is $110,510 in the Medical department while the smallest is only $558 in the Humanities department. Given that the gender pay gap exists among all six departments, I hypothesize that gender accounts for pay disparity when female and male assistant professors are within the same academic field. To test my hypothesis, the regression in Table 2 compared each assistant professor’s salary based on their gender when they are in the same academic discipline. The β6, β7, β8, β9, β10, and β11 coefficients indicate relative salary differences for male assistant professors in Arts, Business, Humanity, Medical, Social Science, and STEM compared to their female assistant professors under the same academic field condition. Since the β6, β7, β8, β10, and β11 coefficients are economically insignificant at the 0.1 level and statistically insignificant at the 0.01 level, I find that there is not any gender pay gap under the assistant professor level within the Arts, Business, Humanity, Social Science, and STEM departments. However, the β9 coefficient suggests the relative salary difference for male assistant professors is 32.4% higher than for female assistant professors within the medical field. As the β9 coefficient is economically significant at 0.1 level while statistically insignificant at 0.01 level, I identify that there is no gender pay gap under the assistant professor level within the medical field. In sum, gender does not account for wage disparity at the assistant professor level within the same department condition. V.b.3 Gender Effects for Assistant Professor in Medical Field Previous research suggests that women may encounter greater pay inequality in which they are underrepresented within a field (Casad et al., 2022). In Figure 3, I find 23 more male assistant professors in the Medical department, while the faculty number difference is less than 10 for each Arts, Business, Humanities, and STEM department. The economically significant relationship is present only in the Medical department due to the underrepresentation of female assistant professors. In the University of Iowa case, there are 58.6% male and 41.4% female assistant professors within the medical field, which implies that females are underrepresented in the medical department. As the β9 coefficient is economically significant at 0.1 level while statistically insignificant at 0.01 level, it partially confirms my hypothesis that the mismatch between male and female faculty numbers leads to the gender pay difference. Historical reasons point to why the medical department has more male faculty members than female. Typically, students need to take three or four years of education in medical schools along with three to nine years of medical training before they enter hospitals or academia. The Association of American Medical Colleges (AAMC) finds that the average age for assistant professors in United States Medical Schools is 45.5 and 43.2 years old in 2023, which suggests the current assistant professors received their M.D. or D.O. degree from medical schools between 1997 and 2004. According to the AAMC records, from 1997 to 1998, 58.3% of medical school graduates were males while only 41.7% were females. From 2003 to 2004, 54.1% of medical school graduates were males and 45.9%were female. Even though the medical department still has high male representation, the rise of advocacy for women in STEM and the increased proportion of female medical school graduates from AAMC records imply that the gender pay gap in the medical field is likely to narrow in the future. VI. Conclusion I use the University of Iowa in 2022 as my dataset to investigate factors accounting for wage disparity in higher education in the United States. The findings show that academic rank explains wage differences in professors or non-tenured track faculty levels. Within the same academic rank, the gender pay gap only exists for assistant professors or non-tenured track level. Besides academic rank, the academic field also accounts for the wage discrepancy when I limit my dataset to only focus on the assistant professor level. The pay gap arose among business, medical, social science, and STEM disciplines. However, when two faculty members have identical academic ranks, there is no gender pay gap within the same department. To improve and expand on this research, diversifying the dataset must be a key focus by adding more public and private universities or colleges. A large dataset would provide a comprehensive perspective on whether the gender pay gap in academia is a nationwide inequality problem or a local inequality problem inside Iowa. If the study reveals stark differences between male and female faculty, it would be advisable to inform policymakers of the severity of the issue and propose equity focused policies such as implementing pay transparency laws to reduce pay inequality and associated gender gaps. Bibliography Gabriel, D. (2023). Female professors sue Vassar College, alleging wage discrimination. https://www.washingtonpost.com/education/2023/08/30/vassar-college-wage-discrimination-lawsuit/ American Association of University Professors. (2023) “Annual Faculty Compensation Survey.” American Association of University Professors, June 2023, https://www.aaup.org/news/aaup reports-third-consecutive-year-faculty-wages-falling-short-inflation Koedel, C., & Pham, T. (2023). The Narrowing Gender Wage Gap Among Faculty at Public Universities in the U.S. SAGE Open , 13 (3), 21582440231192936. https://doi.org/10.1177/21582440231192936 Li, D., & Koedel, C. (2017). Representation and Salary Gaps by Race-Ethnicity and Gender at Selective Public Universities. Educational Researcher , 46 (7), 343–354. https://doi.org/10.3102/0013189X17726535 College and University Professional Association for Human Resources. (2024) “Representation and Pay Equity in Higher Education Faculty: a Review and Call to Action.” College and University Professional Association for Human Resources, April 2024, https://www.cupahr.org/surveys/research-briefs/representation-and-pay-equity-in-higher-ed faculty-trends-april-2024/ The Iowa Legislature. (2022) https://www.legis.iowa.gov/publications/fiscal/salarybook Casad, B. J., Garasky, C. E., Jancetic, T. R., Brown, A. K., Franks, J. E., & Bach, C. R. (2022). U.S. Women Faculty in the Social Sciences Also Face Gender Inequalities. Frontiers in Psychology , 13 , 792756. https://doi.org/10.3389/fpsyg.2022.792756 Trotter, R. G., Zacur, S. R., & Stickney, L. T. (2017). The new age of pay transparency. Business Horizons , 60 (4), 529–539. https://doi.org/10.1016/j.bushor.2017.03.011 Wiedman, C. (2020). Rewarding Collaborative Research: Role Congruity Bias and the Gender Pay Gap in Academe. Journal of Business Ethics , 167 (4), 793–807. https://doi.org/10.1007/s10551- 019-04165-0 Association of American Medical Colleges. (2023) “U.S. Medical School Faculty Trends: Average Age.” Association of American Medical Colleges, Dec 2023, https://www.aamc.org/data reports/faculty-institutions/data/us-medical-school-faculty-trends-average-age Association of American Medical Colleges. (2019) “Percentage of U.S. medical school graduates by sex, academic years 1980-1981 through 2018-2019.” Association of American Medical Colleges, August 2019, https://www.aamc.org/data-reports/faculty-institutions/data/us-medical-school faculty-trends-average-age Appendix Figure 1. Average Salary for Female and Male Faculties in Each Academic Rank Figure 2. Average Salary for Female and Male Assistant Professors in Each Academic Department Figure 3. Number of Female and Male Assistant Professors in Each Academic Department

Aash Mukerji The Growing Incoherence of Our Higher Values Aash Mukerji Nihilism is perhaps the most commonly misunderstood notion in Friedrich Nietzsche’s writings. Not only do many wrongly believe Nietzsche to advocate for nihilistic behavior, but many also see nihilism as the loss of all value and synonymous with the belief that everything is meaningless and valueless. In reality, Nietzsche defines severe nihilism as “the conviction of the absolute untenability of existence when it comes to the highest values that are acknowledged”(1). For Nietzsche, nihilism thus does not necessarily reduce the individual to a living lump of ennui. Rather than lacking all value judgements, Nietzsche portrays nihilism as a condition characterized by the absence of justifiable higher values. This supposed depletion in justification comes from Nietzsche’s infamous assertion of the death of God; Nietzsche held that modern science has made “belief in the Christian God unbelievable” (2). Nietzsche believed that without divine reasons to cherish our higher values, we would ultimately lose them entirely. Moreover, Nietzsche characterizes nihilism primarily as a cultural phenomenon—the societal loss of higher values precedes and causes the affective individual symptoms of nihilism. Nietzsche sees this cultural wave of nihilism as a looming threat; he predicts that humanity is on the brink of succumbing, to becoming nothing more than a group of “last men” Last men are characterized by the aforementioned deficiency in higher values, effectively rendering them incapable of justifying any goals that do not immediately benefit them (3). Nietzsche makes the impending nature of nihilism clear in Zarathustra , where the titular character is confronted by a chorus of individuals who actually wish to become last men (4). Nietzsche’s assertion of the imminence of nihilism was something of great interest to me as it seems that, even in the last two hundred odd years, our higher values have not been lost entirely. Nonetheless, I was not ready to entirely discount Nietzsche’s worries concerning our higher values, and this paper discusses a different manner in which our relationship with them may be deteriorating. In the wake of the death of God, what we are losing may not be our higher values themselves, but instead the unifying principles that require consistency and soundness among them. I will argue that we are progressing towards a world where our higher values are maintained but do not necessitate coherence in order to inform and justify our actions. Indeed, some incoherent higher values evidently already enjoy primacy over other kinds of values. I will attempt to demonstrate this by showing that, though contemporary society has preserved various higher values, individuals and communities frequently act in ways that conflict with those values without recognizing any logical inconsistency. This implies that what is missing from our higher values is the necessity for harmony with our actions and the other values we hold. In this paper, I will discuss some ideologies maintained today that seem to fit the characterization of higher values but conflict with our day-to-day activities and other values. I will attempt to supply some explanation for what causes this incoherence both through a Nietzschean lens and through the analysis of media culture within the framework of Jean Baudrillard. I believe both perspectives provide valuable insight into the mechanics of what is going on. Throughout this paper, I essentially seek to prove that we have retained our higher values but are losing their coherence and structure. First and foremost, we must establish some higher values that have been preserved. In my view, the most prevalent ones seem to be the political and social ideologies we subscribe to individually and culturally. For this paper, I will primarily consider liberalism and conservatism in America as typical instances of these types of values. To distinguish higher values from other more standard values, I will make use of the criteria detailed by Katsafanas in his paper, “Fugitive Pleasure and the Meaningful Life: Nietzsche on Nihilism and Higher Values.” These criteria include demandingness, tendency to generate tragic conflicts, regular induction of strong emotions, professedly great import, exclusion of other values, and propensity for creating communities (5). As far as I can tell, political ideologies seem to instantiate all of these criteria. They are certainly demanding; liberals and conservatives both generally see their chosen credo as the “correct” way to live and believe that it is immune to any sort of compromise. For either group, their ideology does not (in theory) allow them to be frivolous with their moral and political choices or to deviate from the prescribed guidelines is often perceived as a violation of some sort of ethical code. When conflict between our political ideologies and other higher values is acknowledged, such discord is often seen as tragic. For instance, nearly everyone has heard of individuals that have experienced, or have themselves experienced, intense strife with family members due to political disagreements. Family, as a general construct, is widely treated as a higher value. Familial bonds are demanding insofar as compromising them is seen as betrayal of the highest degree, they induce powerful emotions, acting for the sake of one’s family is seen as sufficient to explain most actions, family is often presented as taking priority over all other pursuits in life (to the point of being exclusionary), and family, of course, instantiates strong communities. So, when we experience conflicts between our political ideology and our family, such conflicts are nothing short of agonizing. Is it morally permissible to cut off one’s family members because they are conservative or liberal or libertarian? Is the gap in ideology something so forceful that it ought to trump deep familial bonds? Such questions are not easy to answer (for most) and the dilemma one finds oneself in when faced with them is most definitely viewed as a tragic one. Even if one is not sold on the status of family as a higher value, there are numerous others that can be substituted to illustrate my point. Here I will include a brief clarification that will prove important further on in this paper: The conflict between higher values must be acknowledged. My characterization of political ideology as a higher value relies partially on the notion that if one identifies a conflict between one’s political ideology and another higher value, then such conflict will be viewed as tragic. However, should one have an unrecognized logical conflict between one’s ideology and another higher value for whatever reason (for instance due to growing incoherence in our higher values), then this trait does not go unfulfilled merely because such a conflict goes unnoticed. Elicitation of strong emotions when it comes to political ideology needs no lengthy justification. One merely needs to survey the landscape of almost any social media platform to witness the masses loving, hating, condemning, and worshiping political figures. Likewise, it seems obvious that we believe political ideology is more important than the vast majority of things in our lives. At their core, ideologies such as liberalism and conservatism exist to function as banners of the things we value most in life. For the strong liberal or strong conservative, the very essence of what it means to live a good life is often synonymous with their dogma. Lastly, it is needless to say that political ideology has become exclusionary in nature and is prone to instantiate powerful communities. This phenomenon is represented best by the American political system where, by being part of one community, you are by default excluded (and often even looked down upon) by rivaling groups. As people increasingly and overwhelmingly define themselves and others based on their choices in politics, one’s ideology is commonly seen as central to one’s character. The intense political polarization that has resulted from this is testament to just how exclusionary political ideology has become and how robust the coalitions formed based on such ideology can truly be. Thus far, I have endeavored to establish political ideologies as common examples of higher values that are still held by people today. From here, I aim to show that such higher values are not being lost, but rather becoming increasingly incoherent. To this end, I would invite my reader to consider how party politics works in America. Generally speaking, the Democratic Party is meant to model liberalism and represent liberal people, and, conversely, the Republican Party is supposed to model conservatism in action. But can we confidently say that those values are the basis upon which each party unerringly acts? I have instead found their condition to be best described by the ideas of Baudrillard, whose framework I will use to illustrate what is going on. Of contemporary society, Baudrillard says: “Abstraction is no longer that of the map, the double, the mirror, or the concept. Simulation is no longer that of a territory, a referential being, or a substance. It is the generation by models of a real without origin or reality: a hyperreal. The territory no longer precedes the map, nor does it survive it. It is nevertheless the map that precedes the territory - precession of simulacra” (6). In short, rather than our values and ideals informing the models we use to structure society, the models have begun to determine our values. In this case, instead of political parties typifying our liberal or conservative ideals, it seems increasingly true that the parties are influencing and warping our values. If we accept this Baudrillardian understanding, it seems evident that what retains vital importance in modern society is not our higher values themselves but the models that now precede them. This account also explains why incoherence of higher values seems to be on the rise; we still perceive our higher values to be what drives our society forward, even though this is not the case, which causes a disconnect between the individual and the weight of their own values. In addition, because our models have started to inform our values, we are no longer able to distinguish which actions we take on behalf of a higher value and which we take on behalf of a mere imitation of one. Even worse, the solution is no longer as simple as critically analyzing our values in order to discriminate between which ones are legitimate and which ones are mere simulacra; our genuine higher values have started to emulate the misshapen versions of them embodied by our models. The Baudrillardian fall from grace notably has two distinct steps: First, the models of our values (in this case our political parties) seem to operate completely independently from, and often in contradiction with, our actual values. Second, in a more sinister fashion, our values themselves are altered in a manner that breeds incoherence and an inability to grasp the inconsistencies in our beliefs. This transmutation occurs, on Baudrillard’s account, through media culture (7). This fits nicely with my argument, as it seems overwhelmingly obvious that the media is now inextricably entwined with politics, meaning our political ideology is especially susceptible to modification by mass media. For those readers who are skeptical about the weight Baudrillard and I are assigning to media culture, I will justify this further on in this paper. For now, however, I will provide some evidence that the process I have just described is in fact reflective of our society. First, consider America’s involvement in the ongoing conflict between Israel and Palestine. For the fiscal year 2021, the Trump Administration sought $3.8 billion to support Israel’s military spending (8). Theoretically, this should be a big concern for Republicans. Since the reduction of taxes and minimization of governmental scope are undoubtedly two of the main goals of conservatism, and purportedly the Republican Party, it seems as though the Party ought to support decreasing tax-funded aid to Israel. And yet, studies show that the vast majority of Republicans believe that Trump has “struck the right balance” in dealing with the Israeli-Palestinian conflict (9). As we can see, even if reducing our financial assistance to Israel is in the best interests of conservatism, self-identified conservatives consistently act contrary to this because that is what their party leaders convey to them. A Republican might object to this characterization, on the grounds that America has a responsibility to intervene in areas where it has deemed human rights violations are occurring. But if that is the case, then how can the Republican simultaneously support the construction of a border wall designed to prevent persecuted Latin Americans from fleeing for their lives? (10). The significance of all this is that the status of our higher values, in relation to their models, becomes dubious. This issue seems to mimic the first step quite clearly in our Baudrillardian process. The U.S. support of Israel is but one example of this phenomenon wherein actions resulting from our models are completely separate from the actions that would normally be dictated by our higher values. Next, let’s discuss an example of the second step of the Baudrillardian framework. Firearm legislation is another controversial issue in America at the moment, with various groups holding drastically different positions on whether one has the right to bear arms. Through this issue, I hope to demonstrate the ways in which the incoherence of higher values can lead to illogical stances on both ends of the political spectrum. When it comes to gun control, conservatives are generally in favor of fewer restrictions. This is largely consistent with core conservative beliefs, such as minimizing government input on private lives and preserving the liberties provided by the second Amendment. As a matter of fact, widespread gun ownership is not only morally permissible but even necessary , many conservatives say, in case the state ever decides to infringe on the rights of its citizens or coerce them without due cause. For the conservative, guns are thus a mode through which the individual can retain power over the state. So far, nothing seems wrong. But issues arise when other beliefs, supposedly in line with the same brand of conservatism, are added to the mix. While retaining this belief in the need, and indeed the moral right, to protect oneself from an unjust state as one sees fit , conservatives in America today are also associated with the position that it is unpatriotic and morally reprehensible to kneel during the anthem or otherwise protest the brutality and violence that occurs through the arm of the state, i.e., the police. It seems to me that simultaneously holding these two beliefs is something that is very difficult, if not impossible, to maintain. And yet, these are often considered standard conservative and Republican positions in our society. Contemporary liberals do not fare much better when their higher values are analyzed in this context. For the liberal, government institutions in America have a long history of systemic racism and oppression of minorities and lower classes. Such institutions thus ought to be overhauled or rectified, the logic goes, in order to form a society that reflects more liberal values. Yet at the same time, there is a common liberal view that guns are instruments of death and should be withheld from all except government employees who require them for their job, such as police officers and military personnel. But this view seems to remove an opportunity for the individuals oppressed by the state to gain power, and instead places that power squarely in the hands of the oppressors. The liberal cannot have their cake and eat it too; to believe that the police should be defunded because of their routine violence against the people they ought to be protecting, and simultaneously believe that the state should have full authority and exclusive control over all firearms, seems problematic at best. Even if the liberal attempts to avert this problem by going even further and asserting that nobody should own a gun, then a similar problem arises. It is still the same oppressive and racist state that takes guns away from people. It is still the same state that ultimately retains the power in this scenario. These are just some ways in which our higher values have begun to show signs of incoherence. Unlike our first step, this second step is no longer just a matter of us acting in line with our models while wrongly believing that they are reflections of what we ultimately value. If we could stop after the first step, there would still be a dim hope of redemption. If one can be shown the inconsistencies between their values and the actions of their party, it seems as though they can revise their mode of life. But the incoherence of the second step is far more deadly. Our higher values themselves are being changed; they are becoming muddled and losing intelligibility rapidly. Recommitting oneself to one’s values when faced with inconsistency is already exceptionally difficult but refashioning one’s values when faced with complete incoherence is even more demanding. Gun control is just one example of this, but these types of discussions all beg the same question: Are conservatives and liberals determining what their party stands for, or is it their parties that are deciding what the ideology stands for? It may be, in the words of Baudrillard, “no longer a question of imitation, nor duplication, nor even parody. It is a question of substituting the signs of the real for the real” (11). This Baudrillardian diagnosis of society is explained by many factors, but primary among them is the rise of media culture. Overwhelmingly, the types of media we consume has come to define what it means to be social in our culture. The interactions we have with friends, family members, significant others, strangers, all are determined by the media we absorb. Take romantic encounters, for instance. The ways in which we decide how we ought to act towards our partners, what sort of romantic gestures are considered socially acceptable, what kind of boundaries we set, are all largely, if not entirely, defined by what we have seen in social media, films, television, advertisements, and so on. One need look no further, Baudrillard says, than to observe that, “whoever is underexposed to the media is desocialized or virtually asocial” (12). Such a state of affairs would be fine, of course, if most forms of media faithfully represented and depicted our higher values, but the opposite seems to be the case. Consider the social phenomena commonly referred to as “virtue signaling” or “performative activism.” In particular, let us contemplate the cases in which one virtue signals without actually doing much to pursue that virtue. In cases like these, many remain unaware of their hypocrisy and nonetheless believe that they act virtuously when, in fact, they are merely presenting the facade of virtue. The mere posting of a black square on one’s Instagram account without any further action to support African American communities comes to mind as a relevant example of this. One might say that all individuals who engage in such signaling do so consciously—they are aware that they are “faking it” in order to achieve popularity, acceptance into a social group, or something of this nature. But this seems like an overly pessimistic claim, and I would characterize the phenomenology of such individuals differently. I would argue that most people that act in these ways genuinely believe that they are pursuing their ideal of a virtuous life. They do not recognize that their virtues (which are closely related to, if not synonymous with, their higher values) are not informing their actions. Rather, they are acting according to the media-warped model of what it means to instantiate that virtue. To make this more concrete, take the notion of equality to be a higher value or virtue that one strives towards. If equality was truly what was informing the behavior of the virtue signaling person, then such a person would seemingly recognize that their actions are not satisfying that higher value. Thus, it seems much more likely that what the virtue signaler is motivated by is not the pure higher value of equality, but rather an incoherent version of it altered by media culture. The people who post black squares on their Instagram and then go about their daily life feeling excellent about their stand against police brutality and institutionalized racism certainly feel as if they have higher values (e.g., equality, liberalism), but such values have been rendered incoherent. The proof of this incoherence is of course that their higher values are (even partially) satisfied by trivial actions that provide no substantive change in one’s way of life or the world. In addition, as referenced earlier, such people do not experience the tragic feelings that are meant to accompany conflict between higher values because they do not recognize that such conflict exists in the first place. We can perhaps judge from the outside that there seems to be an objective disconnect between these people’s purported higher values and their actions, but the growing incoherence of their values prevents the perpetrators themselves from coming to the same conclusion. At this juncture, one might object that if our higher values have become so vacuous that they can be fulfilled by such superficial action, then it is likely that they are not higher values at all anymore. In this regard, it would seem that we have ultimately returned to Nietzsche’s hypothesis and lost our higher values entirely. To this I would reply that these incoherent higher values may very well be vacuous, but they retain their status, nonetheless. Political ideology, for instance, still instantiates all the higher value criteria, as I have discussed. What this shows is that our immediate societal condition is distinct from that of the last man. We still have the capacity to cherish things in all the right ways and set goals for ourselves beyond immediate gratification, it is just that the things we cherish and the goals we set may be severely distorted. Now that we have touched on how our current situation is different from the last man, a question naturally arises: What would Nietzsche say about the state of our political ideology? When it comes to politics, Nietzsche is remarkably silent. Try as one might, it is rare to find Nietzsche discussing political ideology at great length. Though he is often found criticizing democracy as a “conspiracy of the whole herd against [its] shepherd,” this does not amount to much in the form of a distinct political structure (13). We also get some cryptic allusions to the merits of a natural order-based caste system in The Antichrist , but this discussion seems less about the desirability of the castes and more about how even this sort of ideology is preferable to the life-negating belief system that characterizes Christianity (14). Rather than focusing on political structures in service of the many, it seems like Nietzsche was more interested in particular individuals that could serve as paragons of vice or virtue. Napoleon is an oft-cited example of someone Nietzsche admired very much, going so far as to name him one of the “profound and largeminded men of [the] century” (15). But Nietzsche’s view of Napoleon as a higher man could justify an entire paper by itself, and such analysis is not particularly relevant to our discussion of higher values. Rather than present Nietzsche’s (scarce) ideas on political ideology, it seems more fruitful to examine how concepts like the death of God might have led to our current predicament. Nietzsche, of course, saw the loss of higher values as a direct result of the absence of a divine entity able to furnish our choices and goals with meaning. But what may be more potent than the loss of objective meaning is the loss of the structure installed by that divinity. Organized religion generally aims to provide a clear system concerning the fulfillment of our higher values. It lays out, for instance, what constitutes a sin, how to worship properly, and so on. Ergo, religion serves to enforce a uniformity between our actions and our values. It is fundamentally designed not to allow individuals to both violate their own higher values and escape with a morally sound conscience. But without religion, this necessity for consistency between our higher values and our behavior is damaged. There is no eternal damnation, no divine punishment, no karmic justice to threaten us to maintain such cohesion, and so we lose it. What all of these topics have in common, from virtue signaling to contradictory stances on gun control, is the apparent inconsistency in the higher values that allow such behaviors to take place. Ultimately, I would suggest that the path the individual in contemporary American society has taken is distinct from the condition of the last man that Nietzsche fears. Higher values persist, as I have endeavored to show, but the logical consistency required to fulfill them properly seems to be rapidly deteriorating. Nevertheless, if one wishes to remain compatible with Nietzsche’s theory, then we could perhaps frame the current state of society as merely one of the final steps on our inevitable trajectory to becoming last men. After all, it does seem plausible that the degeneration of the coherence of our highest values will eventually lead to the loss of them entirely. Such an understanding does raise some concerns, however, as discarding our higher values (“believing in their untenability” as Nietzsche puts it) seems to require one to be aware of their unintelligibility. Insofar as we have reached a state where our higher values no longer even need to be consistent in order for us to act on them, one can wonder whether we will ever collectively reach a position where we realize the inconsistencies exist so deeply in our higher values that they must be abandoned altogether. Still, there is certainly a Nietzschean argument to be made that there must be a limit to how incoherent our higher values can get before we rid ourselves of them in disgust. As it stands now, even though our higher values have garnered significant incoherence, they can still be said to represent us faithfully for the most part. For example, though issues like gun control demonstrate some glaring problems that require rectifying, I would argue American liberals and conservatives still tend to largely act on the values at the core of their ideology. Single-payer healthcare is a good instance of this: Liberals largely support it on the basis of their beliefs about equality and human rights, while conservatives largely do not because it would result in less individual freedom and greater taxes (16). Thus, though I have spent the majority of this paper painting quite a dismal picture, our higher values do not seem close to collapsing entirely. We may not have to resign ourselves to the fate of the fabled boiling frog, insofar as the coherence of our higher values continually gets worse without us noticing. One could certainly make a compelling case that when the incoherence gets to a stage where it overwhelms the proper functioning of our higher values, we will desert them. At such a juncture, it appears we would have no choice but to become last men. At any rate, if one is really committed to the Nietzschean hypothesis, one could call the state we are currently inhabiting that of the “penultimate man” (or better yet penultimate person, for the sake of inclusivity and alliteration). Endnotes 1 Friedrich Nietzsche, et al., Writings from the Late Notebooks , (Cambridge University Press, 2016), 205. 2 Friedrich Nietzsche and Walter Kaufmann, The Gay Science: With a Prelude in Rhymes and an Appendix of Songs: Translated, with Commentary by Walter Kaufmann, (Random: 1974), 343. 3 Friedrich Nietzsche, et al, Nietzsche: Thus Spoke Zarathustra , (Cambridge University Press, 2006), 129. 4 Ibid, 130. 5 Paul Katsafanas, “Fugitive Pleasure and the Meaningful Life: Nietzsche on Nihilism and Higher Values: Journal of the American Philosophical Association,” Cambridge Core , (Cambridge University Press, 2015), 9-11. 6 Jean Baudrillard and Sheila Faria Glaser, Simulacra and Simulation , (University of Michigan Press, 2019), 2. 7 Glenn Yeffeth, Taking the Red Pill: Science, Philosophy, and Religion in the Matrix , (Benbella Books, 2003), 74. 8 U.S. Foreign Aid to Israel , Congressional Research Service, 2020, fas.org/sgp/crs/mideast/RL33222.pdf. 9 “U.S. Public Has Favorable View of Israel's People, but Is Less Positive Toward Its Government,” Pew Research Center - U.S. Politics & Policy , 2020, www.pewresearch.org/politics/2019/04/24/u-s-public-has-favorable-view-of-israels-people-but-is-less-positive-toward-its-government/ . 10 Suzanne Gamboa, et al., “Why Are so Many Migrants Crossing the U.S. Border? It Often Starts with an Escape from Violence in Central America,” NBCNews.com , 2018, www.nbcnews.com/storyline/immigration-border-crisis/central-america-s-violence-turmoil-keeps-driving-families-u-s-n884956 . 11 Baudrillard andGlaser, Simulacra and Simulation , 2. 12 Ibid, 55. 13 Friedrich Nietzsche, The Antichrist, (Auckland, NZ: Floating Press, 2010), 67. 14 Ibid, 57. 15 Friedrich Nietzsche, Beyond Good and Evil , (New York, NY: Dover Publications, 1998), 256. 16 Bradley Jones, “Increasing Share of Americans Favor a Single Government Program to Provide Health Care Coverage,” Pew Research Center , 2020, www.pewresearch.org/fact-tank/2020/09/29/increasing-share-of-americans-favor-a-single-government-program-to-provide-health-care-coverage/ . Bibliography Baudrillard, Jean, and Sheila Faria Glaser. Simulacra and Simulation . University of Michigan Press, 2019. Gamboa, Suzanne, et al. “Why Are so Many Migrants Crossing the U.S. Border? It Often Starts with an Escape from Violence in Central America.” NBCNews.com , NBCUniversal News Group, 22 Oct. 2018, www.nbcnews.com/storyline/immigration-border-crisis/central-america-s-violence- turmoil-keeps-driving-families-u-s-n884956. Jones, Bradley. “Increasing Share of Americans Favor a Single Government Program to Provide Health Care Coverage.” Pew Research Center , Pew Research Center, 30 Sept. 2020, www.pewresearch.org/fact-tank/2020/09/29/increasing-share-of-americans-favor-a-single- government-program-to-provide-health-care-coverage/ . Katsafanas, Paul. “Fugitive Pleasure and the Meaningful Life: Nietzsche on Nihilism and Higher Values: Journal of the American Philosophical Association.” Cambridge Core , Cambridge University Press, 22 Sept. 2015, www.cambridge.org/core/journals/journal-of-the-american- philosophical-association/article/abs/fugitive-pleasure-and-the-meaningful-life-nietzsche-on- nihilism-and-higher-values/449B756CD8E5DC8139A701AC195F33F8. “Most Border Wall Opponents, Supporters Say Shutdown Concessions Are Unacceptable.” Pew Research Center - U.S. Politics & Policy , Pew Research Center, 21 Aug. 2020, www.pewresearch.org/politics/2019/01/16/most-border-wall-opponents-supporters-say- shutdown-concessions-are-unacceptable/. Nietzsche, Friedrich. Beyond Good and Evil . Dover Thrift Editions. New York, NY: Dover Publications, 1998. Nietzsche, Friedrich, and Walter Kaufmann. The Gay Science: With a Prelude in Rhymes and an Appendix of Songs: Translated, with Commentary by Walter Kaufmann . Random, 1974. Nietzsche, Friedrich, et al. Nietzsche: Thus Spoke Zarathustra . Cambridge University Press, 2006. Nietzsche, Friedrich, et al. Writings from the Late Notebooks . Cambridge University Press, 2016. Nietzsche, Friedrich Wilhelm. The Antichrist. Auckland, NZ. Floating Press, 2010. U.S. Foreign Aid to Israel . Congressional Research Service, 16 Nov. 2020, fas.org/sgp/crs/mideast/RL33222.pdf. “U.S. Public Has Favorable View of Israel's People, but Is Less Positive Toward Its Government.” Pew Research Center - U.S. Politics & Policy , Pew Research Center, 30 May 2020, www.pewresearch.org/politics/2019/04/24/u-s-public-has-favorable-view-of-israels-people-but- is-less-positive-toward-its-government/. Yeffeth, Glenn. Taking the Red Pill: Science, Philosophy, and Religion in the Matrix . Benbella Books, 2003. Previous Next

Editorial board Foreword Volume II Issue II Introducing the fourth issue of JPPE In recent years, inequality has been discussed at an increasing rate in academic and political spheres. There is a growing rate of inequality along every method of measurement. Within the United States, there is growing income and wealth inequality. On an international level, global inequality studies find that a large portion of the world’s wealth is held by a shockingly small portion of the world’s population. This problem has grabbed the attention of numerous academic and nongovernmental organizations. Inequality has come to the forefront of numerous 2020 US presidential campaigns. Within the Democratic primary, many candidates cited inequality as a central concern and offered a wide variety of solutions. Brown alum Andrew Yang introduced the concept of a Universal Basic Income plan to the global stage, while Senator Bernie Sanders has proposed a wealth tax as one part of his sweeping economic policy. This edition of the Brown Journal of Philosophy, Politics and Economics is intended to help contribute to the conversation on inequality through our feature interviews and submissions. In our conversations with Former Greek Minister of Finance Yanis Varoufakis and American Economist Paul Krugman, we discussed the prevalence of inequality and its potential causes. While we have some recurring themes in our issue, it is our hope that this issue holds something of interest for all its readers. The Brown Journal of Philosophy, Politics and Economics continues to discuss a wide variety of topics that are analyzed through the distinct yet complementary lenses of philosophy, politics and economics. Pieces like “John Taylor and Ben Bernanke on the Great Recession – Who Was Right About What Went Wrong?” examines historical events, while “Respect for the Smallest of Creatures: An Analysis of Human Respect for and Protection of Insects” applies the lens of PPE to the theoretical. We believe that the distinct topics examined, and the insights gleaned from them, are enhanced when combined

Schedule F And The Future Of Civil Service Protections Sasha Bonkowsky Author Abstract Civil service protections in the United States, such as merit-based hiring, employee tenure, and the dismissal appeal , have come under attack in recent years, most notably from former president Donald Trump’s proposed Schedule F that would strip those protections from many federal employees. Under Schedule F, thousands of federal positions would become political appointees who could be dismissed at-will. This paper examines the history and justifications for exempting positions from traditional civil-service protections, as well as the feasibility for Biden’s Office of Personnel Management to forestall Schedule F. I conclude that Schedule F would likely have negative effects on government performance and morale, but that the OPM may not be able to effectively prevent implementation of Schedule F in the event of Trump’s re-election. Word count: 4,059 Introduction Throughout President Donald Trump’s administration, he frequently attacked the federal bureaucracy for what he saw as its inefficiency or refusal to enact his policies. He was elected on promises of “draining the swamp” in American government; after the 2016 election, he repeatedly attacked a supposed “deep state” of insider operatives within federal agencies and departments who were ideologically opposed to him and used their positions in the bureaucracy, from which it was hard to dismiss them, to hamstring and block his agenda. Where Trump had appointment power, such as with agency heads or other political appointees, he was quick to remove those he saw as disloyal. However, many of his attacks were limited to mere invective. In the vast American civil service comprising more than two million employees, only 4,000 of those are political appointees that the president can remove at will. And in comparison to other democracies like the UK, France, or Japan, which all have similar civil service systems,, the US actually has many more political appointees. The rest are career employees. Career civil servants are usually hired using a merit-based, competitive examination system, in which all prospective employees are given the same exam, and those meeting or exceeding a particular score are hired. Once in the federal bureaucracy—and after a probationary period of several months to a year—employees usually cannot be dismissed unless they are found to be significantly derelict in their duties, and they can appeal a firing to the Merit Systems Protection Board (MSPB), which can investigate and reinstate an employee if they have been unlawfully dismissed. There are certain exceptions to this process, known as Schedules A through E, but they are only used when the usual processes are deemed “impractical.” In October 2020, Trump signed Executive Order 13957, which would have significantly increased the number of political appointees. It created a new category of positions within the federal bureaucracy—known as Schedule F positions—that would be exempted from regular civil service hiring procedures. Instead of the examination process, the president would be able to handpick employees for positions that fell under Schedule F and dismiss them at will without worrying about an appeal to the MSPB, as the Government Accountability Office (GAO) found in its analysis of the order. President Biden repealed the executive order during his first days in office, writing that it “undermined the foundations of the civil service and its merit system principles.” But such an action is hardly permanent—after all, another future president could easily reissue the executive order. To avoid that, the Office of Personnel Management (OPM) issued a proposed rule in late 2023 that would prevent career employees from being excepted under Schedule F or a similar order. The proposed rule also stated that any employee who was reclassified as political appointee would still possess the same protections from being fired and could appeal any dismissal to the MSPB. However, it’s unclear if this proposal will take effect before the 2024 election and a possible transition of power. This paper first examines civil service protections and common exemptions—especially those for current political appointees—in more detail, before turning to the possible effects of Schedule F and attempts to block it. Data from the past 10 years of OPM rulemaking demonstrates that, on average, rules take about a year to be finalized, meaning that if this civil service rule follows the usual timeline, it may be too late to go fully into effect before a Republican president or Republican Congress could repeal it. Civil Service Exceptions The US civil service already allows certain positions to be excepted from the competitive service in five categories: Schedules A, B, C, D, and E. Typically, prospective civil service employees must take a general exam, from which the highest scorers (and those with veteran’s preference) can be selected for hiring. However, this process can be slow, and does not cover specialized knowledge that an agency might require. Positions excepted under one of these schedules can be hired without this usual examination process when it is determined that the exam would make it impractical to recruit adequate numbers of students from qualifying institutions, (under Schedule D), when urgency is required (under Schedule A), or when selecting for particular experience (under Schedule B), among others. Only one schedule deals with political appointments—Schedule C—and it functions most similarly to the proposed Schedule F. Schedule C allows excepted hiring for “positions which are policy-determining or which involve a close and confidential working relationship with the head of an agency or other key appointed officials”. These are often positions like press secretaries for individual bureaus within agencies, White House liaisons, or confidential assistants to secretaries and undersecretaries. There are usually between 1,500 and 1,800 Schedule C appointments at any given time, with 1,725 at the end of the first Bush administration, 1,538 at the end of the Obama administration, and 1,566 at the end of the Trump administration. These political appointments within the civil service didn’t always exist, and like the present-day Schedule F, Schedule C was the subject of significant controversy when it was first carved out in 1956 under the Eisenhower administration. One Democratic senator decried Schedule C as “an attempt to turn the civil service into a Republican grab bag” on the Senate floor, and the Democratic Party platform of 1956 stated that the Eisenhower administration’s policies “reflect prejudices and excessive partisanship to the detriment of employee morale”. The director of the Civil Service Commission defended them in the New York Times , writing that “the American people in 1952 expected your Administration to put into effect your announced policies…it is of the most vital importance that…policy-determining officials should be subject to change with any change in political administration”. Yet despite this public criticism, the Democratic-controlled Congress passed no legislation curtailing or ending Schedule C, and presidents of both parties have made use of Schedule C’s hiring authority. Several restrictions are placed on Schedule C positions and the ways in which they can be assigned. There are no “vacant” Schedule C positions which may be filled at will by the President—instead, any Schedule C positions must be approved by the director of OPM, and OPM’s authorization for those positions is automatically revoked when an employee leaves. Additionally, when requesting Schedule C exception, the head of the requesting agency must submit a statement to OPM that the position was not created in order to detail the employee to the White House—that is, assign them to work in the White House while still being paid by their original agency. This requirement was added after a 1990 GAO report found that Schedule C appointees were being inappropriately detailed to the White House rather than performing the specified duties of their positions. Though Schedule F and Schedule C may appear similar in their creation of low-level, politically appointed positions, the proposed Schedule F category would carve out much broader exceptions to the competitive service. Schedule C restricts its exceptions to appointments of a “confidential or policy-determining” character; Schedule F would allow exceptions to the competitive service for positions of a “confidential, policy-determining, policy-making, or policy -advocating character.” Policy-making or policy-advocating are much broader terms than merely policy-determining, and their definitions are statutorily vague, meaning they could be applied to a much greater number of employees. The executive order drew its legal basis from Section 7511 of Title 5 of the US Code, which excludes employees “of a confidential, policy-determining, policy-making or policy-advocating character” from competitive examination procedures and protection from dismissal. Determination of whether an employee’s job fits these requirements are made by the President and required to be authorized by the head of OPM. This exception, however, had never been put into practice before. The effects of Schedule F implementation are unclear. The executive order was issued in late October 2020, directing that agencies should submit a list of positions that would fall under Schedule F and their reasons for selecting those positions within 90 days (on January 19, 2021). Agencies were also directed to submit petitions to the Federal Labor Relations Authority to determine whether excepted positions under Schedule F would also be excluded from collective bargaining authorities. Few agencies—15 in total, out of over 400 federal agencies—submitted information to OPM, many claiming that they needed more time. Of those, just four agencies submitted names and lists of positions for conversion: the International Boundary and Water Commission proposed converting just 5 employees of its 234, the Environmental Protection Agency proposed 579 employees of its 11,000, the Federal Energy Regulatory Commission proposed 836 of its 1,166 employees, and the Office of Management and Budget (OMB) proposed 436 of its 527 employees. One issue is these agencies are not particularly representative of the bureaucracy as a whole—the IBWC and FERC are independent commissions, and OMB is deeply embedded in the White House—and so it remains unclear exactly how many employees would be affected by a future implementation of Schedule F. However, the authors of Schedule F have definite intentions for its use and assumptions of how many employees it might affect. The executive order was largely crafted and written by James Sherk, a member of the Domestic Policy Council focusing on labor policy. In 2017, he submitted a memo entitled “Proposed Labor Reforms,” in which he argued for the possibility that “Article II executive power gives the president inherent authority to dismiss any federal employee. This implies civil service legislation,as well as other protections for federal employees, (such as preventing their dismissal for joining a union) are unconstitutional. If so, the President could issue an Executive Order outlining a streamlined new process for dismissing federal employees”. Three years later, he would see that executive order realized in the creation of Schedule F. At a panel discussion for the National Academy of Public Administration (NAPA) in 2023, he continued to argue in favor of this proposition, saying that “every federal employee should serve at the pleasure of the president”. Given the limited data submitted by agencies, there’s no set number of employees Schedule F might affect. Experts, and Sherk himself, have estimated around 50,000, although Sherk noted the number as a low estimate., In the same NAPA seminar, he said that “I think there's ways you could broaden the scope of the order…I think you could expand it beyond 50,000. Say to like, 200,000. 300,000.” Former Trump administration officials have reportedly “saved lists of previous appointees…as well as career officers they viewed as uncooperative and would seek to fire based on an executive order to weaken civil service protections”, although such lists have not been made public. But having the ability to fire employees, or doing so, doesn’t necessarily mean the administration would be able to fill the positions. The Trump administration was slower than other administrations to nominate officials to key positions, other civil servants rated Trump appointees as less competent than previous Republican administrations or career civil servants, and the Trump administration faced difficulties finding even officials to fill top-level positions. While the Trump administration was able to authorize and fill about as many Schedule C positions as previous administrations, that doesn’t necessarily mean they would be able to fill Schedule F positions given the vastly larger number of them. Besides the numerical scope of its effects, Schedule F was also defended as necessary to improve the efficiency of the federal bureaucracy. The text of the executive order itself cited “long delays and substandard-quality work for important agency projects” as part of its rationale, and stated “agencies need the flexibility to expeditiously remove poorly performing employees”. Many stakeholders that GAO interviewed acknowledged that the speed of federal hiring should be improved, and that Schedule F would streamline that process; one also told GAO that “employees in Schedule F positions should be…more motivated to quickly and effectively implement the President’s policy agenda”. Criticism of a slow-moving and unresponsive bureaucracy, in which onerous hiring procedures and strict removal protections hamstring the agencies themselves, has been long-standing. Presidents and agencies alike have bipartisanly seen problems in the hiring process and sought to reform it: the US National Performance Review in 1993 wrote that “hiring is complex and rule-bound” in the civil service; a Bush-era report from the Merit Systems Protection Board wrote in favor of reform that would “provide agencies the flexibilities they need to effectively manage” and recommended that OPM should “speed the process” of federal hiring; and the Obama administration in turn issued guidance on simplifying and overhauling the civil service hiring process. The picture is little better in terms of firing underperforming employees: it’s long been understood that civil protections reduce the power of incentives, such that employees in government see little connection between performance and job security. But Schedule F seems unlikely to accomplish these reforms in a way that benefits government performance. Several of the stakeholders which GAO spoke to said that Schedule F could make recruitment of federal employees more difficult, as potential applicants might be leery of taking a Schedule F position if they believed they could be removed after a change in administration or for other political reasons. This is in line with the theory advanced by Gailmard and Patty, which states that civil servants are incentivized to build expertise when tenure provides them the stability to make such an investment. David Lewis writes in his book The Politics of Presidential Appointments, drawing on the example of the OPM in the 1980s and 1990s, that, while “politicization helped change policy,” it came at the expense of “long-term agency capacity and reputation…experienced career professionals left the agency and it was hard to replace them [or] recruit bright young people to work in the agency.” New meta-analysis of the meritocratic civil services on government performances found that associated practices such as tenure or merit-based hiring are broadly associated with stronger government performance and lower corruption. With an eye towards a potential future reissuing of the executive order, authors conclude that “converting career employees to Schedule F and removing their civil service protections is likely to degrade government performance”. Rulemaking To Prevent the Reinstatement of Schedule F The Biden administration and Democrats more broadly share similar concerns about Schedule F’s potential impact on the federal government were it to be reinstated by Trump or another future administration. Congressional Democrats have attempted multiple times to pass bills which would prevent Schedule F’s reinstatement or add amendments blocking Schedule F to must-pass defense appropriation bills. However, their efforts have been blocked by Republicans. Bypassing the legislative method, Biden’s OPM released on September 18, 2023, a proposed rule entitled “Upholding Civil Service Protections and Merit Systems Principles,” aimed as a regulatory method to prevent future administrations from reissuing Schedule F. The rule would: allow employees moved from the competitive service to the excepted service to retain their civil service protections unless the employee voluntarily relinquishes them. redefine “confidential, policy-determining, policy-making, or policy-advocating”—the language which Sherk and the Trump White House relied on to craft the executive order—to mean only non-career, political appointees. allow employees moved from the competitive service to the excepted service to appeal the move to the MSPB. This would, in essence, cut out the heart of Schedule F: removing its legal basis and specifying that converted employees retain tenure protections, such that converting their positions to the excepted service does not make them at-will employees. OPM draws its authority to make these changes from Chapter 75 of Title 5 of the United States Code, specifically 5 U.S. Code § 7514 and 5 U.S. Code § 7504, both sections which give OPM broad discretion to regulate civil service protections for federal employees. OPM also asserts its authority based on 5 U.S.C. 1103(a)(5) and 5 U.S.C. 1302 to make specific regulations about the procedures of moving employees between the competitive and excepted service, pointing out that OPM has repeatedly exercised that authority in the past (and indeed, regulated that movement in the implementation of Schedule F). The proposed rule closed its 60-day comment period on November 17, 2023, during which time it received 4,096 comments. With the strong support of the Biden administration and the leadership of OPM behind it, the rule is expected to move forward. However, the proposed rule has been the target of criticism by Republicans and people associated with the Trump 2024 campaign—which gives OPM a potential impending deadline. Almost certainly, if Trump wins the 2024 election and the rule is not finalized by his inauguration, he will direct the OPM to drop it; and even a finalized rule could be subject to overturning by a potential Republican Congress under the Congressional Review Act. The Congressional Review Act (CRA) is a tool that Congress can use to overturn federal regulatory actions, which was enacted as part of the Small Business Regulatory Enforcement Fairness Act in 1996. The CRA requires that agencies submit finalized rules to Congress and the GAO 60 legislative days before they take effect: if Congress passes a resolution of disapproval of the rule within that time period and the President signs it, or if Congress passes such a resolution over a presidential veto, then the rule cannot go into effect. Because of the threat (and exercise) of presidential veto power, rules have been overturned under the CRA only immediately following a change in presidential administration, in 2001, 2017, and 2021. However, the deadline for finalized rules to avoid CRA review by a potentially hostile Congress or President is not just 60 days before a new president could be inaugurated (that is, late November). Congress has 60 legislative days to consider rules—and if Congress adjourns sine die during that period, the 60-day period resets in its entirety beginning on the 15th day of the new legislative session, in what’s known as a “lookback” period. In 2017, that meant that the Republican Congress was able to disapprove of rules finalized as far back as May 2016. Thus, in order to be certain that it will go into effect, OPM must finalize its rule by mid-2024. But the question is if it will be able to do so by then. In the 2023 Fall Unified Agenda, published by the Office of Information and Regulatory Affairs (OIRA), OPM specified that it is targeting April 2024 for publication of a final rule. Based on historical precedent, this would provide the rule enough time to avoid reconsideration and potential disapproval from the next Congress. But OPM’s projected timeline may be overly optimistic, given its past timelines in publishing final rules. I collected data on finalized OPM rules between 2023 and 2013 in the Federal Register and examined how long it took between publication of the proposed rule and publication of the finalized rule. Since OPM’s proposed rule at hand of upholding civil-service protections has been defined as “significant” under Executive Order 12866 (likely due to its potential to “raise novel legal or policy issues arising out of legal mandates [or] the President’s priorities”), I restricted my search to only those rules which were similarly deemed significant, as they require a full review by OIRA that lengthens the rulemaking process. I also did not include OPM rules that were issued only as interim final rules rather than undergoing a full notice-and-comment period. The full list of all OPM rules meeting these criteria and their timelines can be found in Appendix A. Below are the summarized results: FIGURE 1: OPM RULEMAKING AVERAGE TIMELINE Notes: The timeline of OPM rulemaking is defined as the number of days between OPM’s publication of a proposed rule and the publication of a final rule. Several outlier rules took more than three years to be finalized. Data sourced from the Federal Register, 2013-2023. FIGURE 2. OPM RULEMAKING TIMELINE BY YEAR Notes: OPM published no significant final rules in 2017. Data sourced from the Federal Register 2013-2023. On average, it took 473 days between OPM issuing a proposed rule and OPM issuing a final rule. Even after eliminating the major outlier rule that took nearly 6 years to finalize, the data still suggests that it generally takes over a year to finalize a rule after it is proposed. Though the timeline varies slightly year by year, there is no clear pattern that would allow us to infer that the OPM of 2023-2024 finalizes rules significantly faster or slower than the OPM of, say, 2013-2014. If this timeline holds for OPM’s rule undercutting Schedule F, we can project that OPM will finalize the rule sometime in December 2024—too late to avoid a potential disapproval under the CRA. However, one case study of similar civil-service rulemaking demonstrates that potential CRA review is not the same as certain CRA review. On September 17, 2019, the OPM under Trump issued a proposed rule that would more strictly enforce the probationary period before employees were accepted to a competitive service position and sought to streamline civil service removal procedures. In many ways, this rule was a precursor to Schedule F, drawing on the same language and reasoning about an ineffective federal government that couldn’t remove underperforming employees. The rule was finalized on October 16, 2020, a timeline which would have allowed the 117th Congress under unified Democratic control to review and disapprove it. They didn’t. It’s not entirely clear why not: congressional disapproval of rules cannot be filibustered in the Senate, and 20 days after their proposal can be discharged for a floor vote by a minority of 30 Senators. More likely, the Democratic Congress preferred to let rollback occur through the agency processes: there were only three rule disapprovals in total in 2021 of Trump-era rules, but many more were overturned by agencies’ new leaders. But that process takes time, and so it was only in November 2022 when OPM finalized its rollback, meaning the Trump-era changes were in place for almost two full years of the Biden administration. The OPM’s proposed anti-Schedule F rule would likely follow a similar track. An OPM under Trump would certainly seek to undo it, even if the rule is successfully finalized and put into effect without disapproval—but as in the case above, it would likely take them months or years to do so. A rule undoing this one would also be open to legal challenges that an executive order would not be, and the Trump administration faced significant challenges in successful rulemaking. Previous administrations succeeded in roughly 70% of challenges to agency actions, while the Trump administration had a dismal 23% success rate in legal challenges due to bypassing procedural requirements, providing incomplete analyses of policy effects, or taking action which exceeded an agency’s statutory authority. Conclusion Whether or not OPM manages to finalize its rule and put it into effect successfully, the fight over the structure and protections of the civil service is unlikely to end in 2024 or beyond. In recent years, long-held civil service practices of non-politicization and tenure protections that were largely taken as established have come under increasing attack, largely from Republican officials and presidential candidates. In recent years, it’s the executive branch which has been most involved in determining the structure of federal civil service, from the Schedule F executive order to OPM’s proposed rulemaking, and attempts for similar legislation have been blocked or stalled out before making major progress, and research has largely focused on the president’s and agencies’ influence. But Congress has historically been the instrument of major changes to the civil service, from the Pendleton Act to the Civil Service Reform Act of 1978—and it’s only recently that Congress has ceded that power to the executive. While research such as this examining the direction, scope, and timing of executive influence over civil service is certainly beneficial given the political context, one potential direction for further research could be an examination of Congress’ role in civil service in the past, and what potential legislative actions would be beneficial in future. 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Tables Table 1: OPM Significant Rules, 2013-2023 Rule Name Date Finalized Date Proposed Time Passed (Days) Appointment of Current and Former Land Management Employees 12/6/23 5/15/20 1300 Fair Chance to Compete For Jobs 9/1/23 4/27/22 492 Federal Employees' Retirement System; Present Value Conversion Factors for Spouses of Deceased Separated Employees 9/28/23 7/14/23 76 Retirement: Members of Congress and Congressional Employees 5/17/23 11/16/22 182 Access to Federal Employees Health Benefits (FEHB) for Employees of Certain Tribally Controlled Schools 4/13/22 9/3/21 222 Enhancing Stability and Flexibility for the Federal Long Term Care Insurance Program (FLTCIP)-Abbreviated Underwriting, Applications for FLTCIP Coverage, and Technical Corrections 11/16/22 6/3/22 166 Probation on Initial Appointment to a Competitive Position, Performance-Based Reduction in Grade and Removal Actions and Adverse Actions (repeal) 11/10/22 1/4/22 310 Temporary and Term Employment 12/1/22 9/14/20 808 Opportunities To Enroll and Change Enrollment in the FEHB Program During a Lapse in Appropriations; Continuation of Certain Insurance Benefits During a Lapse in Appropriations 4/2/21 7/20/20 256 Promotion and Internal Placement 6/8/21 12/16/19 540 Representative Payees Under the Civil Service Retirement System and Federal Employees' Retirement System 10/8/21 3/8/21 214 Federal Employees Health Benefits Acquisition Regulations: Self Plus One and Contract Matrix Update 3/25/20 4/2/19 358 Federal Employees' Group Life Insurance Program: Clarifying Annual Rates of Pay and Amending the Employment Status of Judges of the United States Court of Appeals for Veterans Claims 9/24/20 6/29/18 818 Probation on Initial Appointment to a Competitive Position, Performance-Based Reduction in Grade and Removal Actions and Adverse Actions 10/16/20 9/17/19 395 Compensatory Time Off for Religious Observances and Other Miscellaneous Changes 4/29/19 8/30/13 2068 Examining System 5/3/19 10/29/18 186 Federal Employees Dental and Vision Insurance Program: Extension of Eligibility to Certain TRICARE-Eligible Individuals; Effective Date of Enrollment 6/7/19 11/19/18 200 Federal Employees' Retirement System; Present Value Conversion Factors for Spouses of Deceased Separated Employees 9/23/19 5/28/19 118 Federal Employees Health Benefits Program Flexibilities 4/27/18 12/19/17 129 Federal Employees Health Benefits Program: Removal of Eligible and Ineligible Individuals From Existing Enrollments 1/23/18 12/1/16 418 General Schedule Locality Pay Areas 12/7/18 7/9/18 151 Veterans' Preference 12/7/18 12/27/16 710 Weather and Safety Leave 4/10/18 7/13/17 271 Career and Career-Conditional Employment 12/8/16 1/6/14 1067 Family and Medical Leave Act; Definition of Spouse 4/8/16 6/23/14 655 Access to Federal Employees Health Benefits (FEHB) for Employees of Certain Indian Tribal Employers 12/28/16 8/31/16 119 Special Rights for Transferred Employees Under the Dodd-Frank Act Regarding Federal Employees' Group Life Insurance 9/1/16 1/6/14 969 Personnel Management in Agencies 12/12/16 2/8/16 308 Recruitment, Selection, and Placement (General) and Suitability 12/1/16 5/2/16 213 Designation of National Security Positions in the Competitive Service, and Related Matters 6/5/15 12/4/10 1644 Federal Employees Health Benefits Program Self Plus One Enrollment Type 9/17/15 12/2/14 289 Federal Employees Health Benefits Program: Enrollment Options Following the Termination of a Plan or Plan Option 10/8/15 1/7/15 274 Federal Employees Health Benefits Program: FEHB Plan Performance Assessment System 6/30/15 12/15/14 197 Federal Employees Health Benefits Program; Subrogation and Reimbursement Recovery 5/21/15 1/7/15 134 Federal Long Term Care Insurance Program Eligibility Changes 10/30/15 11/13/14 351 Managing Senior Executive Performance 9/25/15 12/10/14 289 Solicitation of Federal Civilian and Uniformed Service Personnel for Contributions to Private Voluntary Organizations 10/23/15 8/17/15 67 Collection by Offset From Indebted Government Employees 1/6/14 5/2/11 980 Nondiscrimination Provisions 7/29/14 9/4/13 328 Phased Retirement 8/8/14 6/5/13 429 Electronic Retirement Processing 11/18/13 3/5/13 258 Excepted Service-Appointment of Persons With Intellectual Disabilities, Severe Physical Disabilities, and Psychiatric Disabilities 2/22/13 2/7/12 381 Garnishment of Accounts Containing Federal Benefit Payments 5/29/13 4/19/10 1136 Federal Employees Health Benefits Program: Members of Congress and Congressional Staff 10/2/13 8/8/13 55 Expanding Coverage of Children; Federal Flexible Benefits Plan: Pre-Tax Payment of Health Benefits Premiums: Conforming Amendments 10/30/13 7/20/12 467 General Schedule Locality Pay Areas 1/24/13 11/26/12 59 Programs for Specific Positions and Examinations (Miscellaneous) 12/2/13 9/7/10 1182 AVERAGE: 473 days

Not Paying Income Tax Timely Leads to Significant Financial Losses for the governments. What Design Changes Could Be Made to Tax Collection Policy to Minimize These Delays? Aryan Midha Author Maxwell Robinson Vittorio Nazzi Matthew Wong Editors Abstract Behavioral economics challenges the notion that humans are always rational and capable of making good decisions. Humans often rely on various heuristics under uncertainty making them irrational at times. Heuristics is a mental shortcut or rule of thumb that simplifies decision-making and problem-solving. In this paper, we discuss the use of behavioral economics in improving tax policies by considering the status-quo bias, framing, and conformity heuristics. Status-quo bias causes taxpayers to stick to their default condition (i.e tax non-payment.) Framing refers to the formulation of the problem and how the information is presented to the decision maker. Further, conformity encourages taxpayers to pay their taxes by appealing to personal and social norms. Using these heuristics, I will explore how tax collection policies can be refined to minimize financial losses for the government. I. Introduction Einstein said, “The hardest thing in the world to understand is the income tax, ” which remains relevant today as tax computation and the payment process remain complicated. This leads to procrastination and non-payment, creating detrimental financial losses for the government. For example, In the US, between 2014 to 2016, the tax gap, the difference between true tax liability and amount paid on time, was $496 billion (IRS, 2022). The tax liability increased by more than 23% between the two periods, 2011-2013 and 2014-2016 indicating a need to change the tax policy. Studies show that tax policies that implement behavioral economics are more impactful and efficient compared to traditional tax policies (World Bank Group, 2018; Behavioral Insights Team, 2012; OECD, 2021). Behavioral economics assumes that humans have limited capability to compute large amounts of data at once. The World Bank splits the tax-paying process into four stages: understanding, deciding, declaring, and paying (World Bank Group, 2008). Behavioral policies can improve compliance at each stage by addressing systematic errors which are “cognitive biases or heuristics that consumers use to make pragmatic choices that are not rational or optimal ”(Kahneman, 2011). This paper will explore three main biases, namely Framing, Status quo, and Conformity, and take them into account to create a viable tax policy that targets the four stages mentioned above. Every year, more than 170 million taxpayers have to file taxes in the US. With the tax code becoming increasingly complex, taxpayers have to spend a significant amount of time filling out the 1040 form, various schedules and keeping records of their transactions. This leads to some individuals failing to pay taxes in a timely manner or take up benefits such as the Earned Income Tax Credit (EITC). II. Framing Kahneman and Tversky define framing as the formulation of the problem and how the information is presented to the decision maker (Kahneman and Tversky, 1981). This shows how information is presented impacts the decision-making process. Framing is indeed a bias, as it leads to decision-makers making different choices with identical information. Their choices are not uniform. Governments can use this to their advantage by presenting income tax letters in a way that encourages taxpayers to pay their accurate tax amount on time hence improving compliance. A study by Jones (2017) further found that at least 30% of the extra revenue accrued to the government from overwithholding arises from loss-averse behavioral response. He claims it is possible to manipulate a taxpayer’s perception of what constitutes a gain or a loss—potentially through relatively cheap manipulations to phrasing or presentation. Loss framing could be induced to increase the take-up rate of a specific tax-based incentive in targeted populations. Gain framing could be induced to reduce evasion motives among traditionally non-compliant groups, potentially in a cost-effective manner when compared to audits. Hard Tone vs Soft Tone A study in Poland (World Bank Group, 2018) showed the effect of using a hard tone versus a soft tone on tax compliance. To do so, they created two types of letters: public good positive and public good negative , where both letters informed the taxpayer how the tax revenue would be used to provide public goods such as preschools, schools, roads, and safety. The public good positive treatment creates a perception of the taxpayer as a responsible member of their community who is helping provide public goods by paying their taxes. This appeals to the taxpayer on a very personal level making them aware of the public benefitting infrastructure provided by the government, which encourages them to pay on time. The public good negative treatment frames non-payment as an implicit threat where all the municipal benefits currently enjoyed would be lost without sufficient tax revenue. It uses the principle of loss aversion to motivate taxpayers to pay. The reaction of the taxpayer, as a result, will be to pay taxes to avoid losses. Loss aversion is defined as: “changes that make things worse (losses) loom larger than improvements or gains ” (Kahneman, Knetsch, and Thaler, 1991). The key contrast between both approaches is the “inability of the government to continue providing ” vis-à-vis “potential losses suffered by the individual in the future ”. These treatments are considered soft tones as they do not mention any form of punishment for non-payment. To create a comparison, “hard tone” was also used to clearly understand what encourages taxpayers the most to pay taxes on time. The World Bank used four different hard tone samples, including: deterrence, deterrence with an execution order attached, omission, and omission combined with deterrence together. These treatments explored the different effects of using a harsher tone. In the deterrence treatment, actions such as blocking bank accounts and salaries could be implemented as a punishment. Furthermore, payment of any execution expenses that arise must be covered by the non-complier. The deterrence with execution order treatment had the same contents as the deterrence letter however a sample execution order form was attracted to the letter. This evokes guilt and fear of the possible consequences of delayed payments. Taxpayers are illuminated to the harshness of the consequences. In an omission model the government chooses to see the non-payment of taxes as accidental and gives the benefit of the doubt to the defaulter. This method of framing is used to overcome status-quo bias, which will be explored in detail later in this paper. The effectiveness of the hard and soft-tone letters was compared in three parts: payment rate, payment amount, and outstanding tax liability. The payment rate is the percentage of the tax-paying population that pays their tax on time. The control group received an official enforcement letter called a dunning letter. Of this group, 40.2% made on-time tax payments. On average, the soft-tone letter increased payment rate to 43.8% while the hard-tone letter raised payments to 46.9% with p=0.01. This suggests that proper framing can increase payment rates and that overall hard tone is the most effective choice. Additionally, the use of hard-tone and soft-tone letters increased the payment amount received per letter sent. In the control group, taxpayers paid on average 1,122.7 PLN (Polish Zloty), the soft-tone letters yielded 1278.0 PLN ($341 USD), while the hard-tone letters yielded 1368.3 PLN ($365 USD). The increase in payment received is significant as the total revenue collected increases greatly with the average payment. Lastly, the use of different tones reduced the overall tax liability. The dunning letter group had an average of 6.26% in tax liability, while behavioral letters had a tax liability of 6.17% for soft-tone and 6.10% for hard-tone letters. This shows that more people were filing their taxes and the number of short fillers was reduced giving the government valuable insight on the methods to use to increase tax compliance. Lastly, this study delved deeper into how different taxpayers react to give a more insightful result. Letters reveal that taxpayers in their mid-40s are most responsive, with responsiveness decreasing afterwards. The hard-tone messages (omission commission + deterrence) perform best among those in their 50s, while softer messages reduce compliance, especially among older taxpayers. Younger taxpayers (20–29) respond positively to soft, public good messages, but these same messages have a negative impact on those aged 50–64, likely because older taxpayers don't benefit directly from services like schools. The 5.2pp difference in response is statistically significant. Customizing messages by emphasizing relevant public goods for each age group could improve tax compliance. Both men and women’s highest paying rate from all the treatments was in the hard-tone treatment showing both genders respond more to the hard-tone letters. However, a difference emerges between parents and non-parent taxpayers. Parents were not very responsive to any of the treatments and the behavioral letter was the most effective. Conversely, all the hard-tone letters performed better than soft-tone and the behavioral letters showing hard-tone messages work on non- parents, but not on parents. Given these differences in effects across groups, a targeting system could be used to send out appropriate toned messages to increase tax compliance. These studies concluded that hard-tone letters were the most effective in increasing tax compliance payments over outstanding debts. This does not negate that using soft-tone letters was also beneficial. The efficacy of these different tones depends on the individual characteristics of the taxpayer, such as age, gender, and parental status. Complexities Another major reason for tax noncompliance is the excessive use of legal jargon that impedes taxpayers’ understanding and ability to pay (Alm 2012, p.53). Fatigue and lethargy often influence an individual’s decision when a choice depends on a large amount of data as they are often unwilling to spend too much time or energy on that decision. Blumenthal and Slemrod (1992) found that, on average, taxpayers spent 27 hours recording and reporting their taxable activities. This leads people to employ heuristics such as intuition in decision-making. Thaler and Sunstein (2008) found that humans have two systems for making decisions: an "automatic system" that quickly finds a solution and a "reflective system" that logically reasons out the problem. The use of intuition falls in the realm of “automatic systems.” Most of the time, the “automatic system” comes up with the same solutions as the reflective system, which uses logic, but sometimes it does not due to the usage of heuristics. As mentioned earlier, the tax payment process has four steps: understanding, decision to pay, declaration, and payment. Complexities can be present in the “understanding” or “declaration” phase. Taxpayers have to individually compute the total value of taxes, a process which may be tedious due to inexperience or a lack of clarity regarding current tax laws. Additional problems arise during payment. Technology is constantly improving, thus, paying taxes has become much more simple. At times, too many options and related guidelines confuse and frustrate the taxpayer, causing them to abandon the process midway. Lastly, the complexity of the system makes the taxes seem unfair due to the lack of transparency in the income tax process which makes the taxpayer reluctant to pay their taxes on time or in full. Economic models have customarily recognized three costs which might deter the take-up of tax benefits which are: the transaction costs of applying for a benefit, the costs of learning about eligibility and application rules, and lastly, the stigma associated with enrollment (Currie 2006). These concerns could be a consequence of confusion regarding program eligibility or incentives (e.g., Liebman and Zeckhauser 2004), inattention (e.g., Karlan et al. 2015), or psychological aversion to program complexity or the small “hassles” often involved in claiming (e.g., Bertrand, Mullainathan, and Shafir 2006). This reflects a failure of policy to deliver benefits to those who most need them. As a case study, the United Kingdom released simplified letters to test whether they would increase tax compliance among dentists and doctors (Behavioural Insights Team, 2012). The simplified letters contained three short and easy-to-read sentences, outlining the actions and procedures required for compliance. This treatment saw a 15-30% higher response rate than other types of messaging, which shows that even highly skilled and well-educated people can be influenced to pay their taxes on time by simplifying the process. Furthermore, in Belgium, different methods were tested to overcome complexities in tax payment (Spinnewijn, Tsankova, and Luts, 2019). They simplified the tax letter by shortening the length of words, reducing the information overload, and highlighting the action-relevant information. This led to an increase in compliance by 10 percentage points (pp)(23% of the control mean). Moreover, late payers from the previous year were 2.6 pp more likely to file their taxes on time. Complexities affect individuals in developed countries and underdeveloped countries similarly. Taxpayers in low and middle-income countries are also particularly adversely affected, due to lower literacy rates and a lack of trained accountants. This causes difficulty in accurately maintaining records, filing returns, and comprehending tax laws, resulting in partial filing, late filing or non-filing making them partial or non-compliant. This backs the findings of Gangl (Gangl et al., 2015b) where perceived fairness and legitimacy lead to deliberate trust in the tax authorities. By removing these complexities, taxpayers can understand how much they are paying and how it is calculated, building trust and improving compliance. Complexities can lead to notable inefficiencies in government-run programs such as the Earned Income Tax Credit (EITC). Simplifying the tax system and reducing compliance burdens could increase benefit take-up, reduce forgone benefits, and enhance revenue collection. The EITC, initially designed as an incentive for low-income individuals to work, demonstrates the barriers taxpayers face in claiming available benefits. Studies estimate a program take-up rate of 75% (Plueger 2009). A substantial portion of non-participation stems from informational barriers, with 16% of eligible individuals not filing taxes and 9% failing to claim the credit despite filing. This highlights the need for clarity in tax communication and simplification of claim procedures. Experimental evidence further underscores the sensitivity of benefit take-up to reduced informational complexity. Simplified notices, shorter worksheets, and enhanced salience of benefits through targeted messaging have demonstrably increased EITC claims, with a field study resulting in $4 million in claimed benefits out of $26 million identified as unclaimed (Manoli, 2015). Moreover, over-withholding demonstrates how simplifying processes can benefit both taxpayers and the government. Employers withholding excess taxes reduces taxpayers' need for year-end adjustments, leveraging loss-averse behavior to generate 42% more revenue than expected from interest costs alone. Simplification strategies can similarly mitigate tax manipulation, increase voluntary compliance, and maximize revenue efficiency. Governments can reduce complexities in tax policy to increase the legitimacy and perceived fairness of tax administration. Simpler tax systems will increase compliance and reduce the opportunity for tax evasion and avoidance by making the steps of paying taxes easier and reducing the mental computation required of taxpayers. III. Conformity Conformity refers to individuals changing their beliefs, attitudes, behaviors, or perceptions to complement the beliefs of a group to which they want to belong, and so they yield to group pressures (Crutchfield, 1955). Herbert C Kelman, an American psychologist, analyzed this behavior and distinguished three different forms of conformity: compliance, internalization, and identification (Kelman, 1958). For this paper, compliance and internalization are relevant. Compliance refers to “when an individual accepts influence [...] to gain specific rewards or approval and avoid specific punishment (Kelman, 1958, p. 53). This is a heuristic as many people become irrational and fall in without considering the benefits and drawbacks of their decision. According to an analysis (Zafar, 2011) people conform to groups because they are uncertain about their beliefs and believe that the group is more likely to be correct, a pattern denoted descriptive conformity . The second category is internalization which happens “when an individual accepts influence because the content of the induced behavior - the ideas and actions of which it is composed - is intrinsically rewarding. They adopt the induced behavior because it is congruent with their value system ” (Kelman, 1958, p. 53) which is also considered injunctive conformity. In this form of conformity, the group’s beliefs become part of the individual’s belief system and the behavioral change is permanent. Examples of personal norms could include the individual desire to live a healthy lifestyle or help in social causes. The World Bank tested conformity bias in Latvia where The informal economy was estimated at 20.3% of the GDP in 2016 (World Bank, 2019). The shadow economy refers to people who operate entirely outside the tax and regulatory system (US Treasury). The World Bank intervened by sending out tax letters which incorporate behavioral changes in this case social norms. These modified letters are called behavioral letters. There is a social norm to return favors where people feel obligated toward those who have done something for them. This is called reciprocity. The social norms letter boosted timely tax filing compared to the control group by 5% (3.2pp). Social norms messages also generated the maximum number of tax declaration submissions as compared to other methods like simple reminders and an omission/commission letter when given to non-compliers. This experiment further showed that the social norms messages had a greater impact on women than men as women responded to the messages by 3.0 pp more when compared to the control group. This coincides with the findings of Cross (Cross, 2017) where women are more likely than men to conform to social norms. The social norms letter even increased the average amount paid per taxpayer by $13.97 (210% increase from control group). The field experiment in Latvia concludes that using social norms improves tax punctuality and increases the payment amount. In Poland, The World Bank tested the use of social norms (World Bank, 2017). The payment rate for the dunning letter was 40.2% while payment rates increased to 43.7%, the average payment amount increased from 1,123 PLN to 1,300 PLN, and outstanding liability was reduced from 6.26% to 6.17% where letters mentioning social norms were used. This experiment corroborates the findings of the Latvia experiment. According to an OECD report (OECD, 2010) on small and medium-sized enterprises (SMEs), SME compliance is highly influenced by personal norms. Phrases such as “Doing the right thing,” “Because it is the law,” and “Presumption from Revenue that you have been honest,” are indicated as having a strong influence on compliance. Social norms affect these SMEs less compared to personal ones as the owner's personal norms may be more prominent. Personal norms are feelings of moral obligations to do “the right thing” (Schwartz & Howard, 1981). The owner can also easily implement changes based on their prioritized heuristics . Social norms may not play a crucial role in the taxpayer's mind as the owner would want to be unique compared to larger firms. Therefore when the government tries to evoke conformity by using other firms as an example small businesses might not be encouraged to pay taxes. Responses related to personal norms are therefore stronger from a compliance perspective. Hence,it would be much more beneficial for the government to use personal norms on SMEs to improve tax compliance. A field experiment in the UK (Behavioural Insights Team, 2012) examined the effect of various types of norms on taxpayers who had declared their income but had yet to pay their taxes. Three norm statements were used: “Nine out of ten people pay their tax on time” (basic norm); “Nine out of ten people in the UK pay their tax on time” (country norm); “Nine out of ten people in the UK pay their tax on time. You are currently in the very small minority of people who have not paid us yet” (minority norm). Upon receiving the responses the economists learned that the basic norm statement produces a treatment effect of 1.3%, and the country norm statement produces a treatment effect of 2.1%. If these letters were sent to the entire tax-paying population there would be a £623,000 and £980,000 increase in total taxes paid within 23 days. In comparison, the minority norm statement had a much greater impact of 5.1%, which would represent a £2.367 million increase in taxes paid within 23 days. This underscores the highly effective method of using the conformity bias to improve tax payments. A follow-up experiment was done to replicate the most effective treatment from the first experiment to increase credibility. The effect of descriptive (what others do) and injunctive (what others think should be done) norms were also compared. Results showed that reminder letters with the norm framings have a 7.1-7.8% effect on payment. Letters with norm statements motivate people to pay their taxes, especially when a minority norm frame is used. This boosts overall tax compliance. Moreover, when comparing descriptive and injunctive, the data indicates that the descriptive treatment group has a 1.44% larger effect on payment than injunctive norms. Furthermore, this work reinforces wider evidence that descriptive norms are most effective when they can be targeted at a specific population or group, which in this case was achieved by referencing their local area. Applying successful messages throughout HMRC’s (UK's tax, payments, and customs authority) debt management practices led to £210 million being brought forward in the 2012/13 financial year alone. This would benefit the government greatly as they can use this revenue to provide subsidies and provide fiscal stimulus to the economy when needed. By using social norms, taxpayers gain a sense of fairness, knowing that their neighbors and fellow citizens are held to the same standards. This creates transparency between the government and taxpayers. Taxpayers are more willing to file taxes on time when they have faith in their government (Jimenez, Iyer, 2016). To inform taxpayers and foster healthy personal norms, tax administrations may attempt to communicate messages that emphasize the significance of compliance. Engaging with young professionals can have an impact on their beliefs, which improves long-term tax compliance. Individuals are less likely to avoid their taxes if there is a sense that tax evasion is rare and the bulk of people are compliant. People frequently assume that disobedience is more common than it is. Therefore, dispelling misconceptions about the extent of evasion strengthens compliance and has a marginal cost for the policymaker. This increases tax compliance and reduces financial losses for the government. IV. Status Quo Status quo bias refers to the tendency to stick to one's current situation (Samuelson and Zeckhauser, 1998). Most decisions have a status-quo option and studies show that individuals tend to unjustifiably stick with the status quo (Samuelson and Zeckhauser (1988); Anderson (2003)). People are often unwilling to change primarily because of the effort it takes to understand other available options or the lack of awareness about the alternatives. Christopher J. Anderson researched status quo bias and characterized this behavior as “conservation of energy” (Anderson, 2008) where humans do not decide unless a deadline is coming. In terms of income tax, this can be seen as taxpayers continuing to avoid paying taxes as they have already done so for an extended period. Not paying taxes has become the status quo of these taxpayers. Now there are many methods of filing taxes that are faster and more efficient, however, taxpayers seem to stick to the older methods. This could cause financial losses for the government as they don’t receive the full tax amount they are expected to collect. There also could be incomplete taking up of tax benefits such as Earned Income Tax Credit (EITC), Standard Deductions or Itemized Deductions in the USA when that is not their status quo. People tend to favor minimal changes and choose the default option (Kahneman, 1991). Even if there are better options, they will not change their actions or choices. Most real-world decisions have the status quo option. That is, do nothing and keep the current or previous state showing the significant influence default choices have on behavior. The World Bank (World Bank Group, 2018; World Bank Group, 2019; World Bank Group, 2020), experimented with status-quo bias and its societal prevalence. They used a deliberate choice method to overcome the bias wherein non-compliance was considered a deliberate choice. This technique is intended to eliminate omission that serves as an excuse for non-compliance. Taxpayers unknowingly evade taxes by following the status quo. When they received letters they were made aware of their status quo so that lack of information can no longer be the reason for non-payment. Framing noncompliance as intentional minimizes uncertainty regarding inaction, heightens moral duties to take action and boosts the perception of deterrence. For instance, the deliberate decision letter in Guatemala (World Bank Group, 2020) contributed to an increase of $17.95 (269% increase compared to no letter) in the average amount paid per taxpayer. Taxpayers in Guatemala who received the behavioral letters in the first year paid four times as much in taxes. Over time, these gains have been maintained. The intentional choice letter, when received, raises the average amount paid by $23.05, according to local average treatment effects (LATE). If this letter was sent to all the sampled tax-payers an estimate of US$757,837 of extra tax revenue could be generated in 11 weeks compared to when no letter was sent. This is over 35 times the cost of sending the letters highlighting the benefit to the government. The experiment with the status quo made use of framing as well. The phrase also exempts the taxpayer from failing to declare previously, which introduces a concept of reciprocity as the taxpayer is driven to feel he has been offered a favor. The wording suggests that the taxpayer's actions are being closely monitored, which heightens the feeling that noncompliance will result in penalties. In Guatemala, the deliberate choice letter, social norm letter, national pride letter, and behavioral letter were tested. Out of them, the deliberate choice letter was the most effective letter for improving declaration rates, boosting declarations by 5.4 pp (46% increase) compared to the control group. The average amount paid conditionally on payment grew by 38.5 percent, and the payment rate increased significantly by 1.4% points. Further, the average unconditional amount increased from US$6.70 the control group average to US$17.95 showing an increase of US$11.25 in tax revenue for each letter sent. The average cost of sending behavioral letters lowers as the rate of payment and payment amount increases. Omission is the failure to fulfill a moral obligation, in this case, taxes. The World Bank used 3 different behavioral designs to overcome the status quo in Poland (World Bank Group, 2018), the treatments were "Omission + Deterrence", "Omission vs Commission" and "Omission Taxpayer-Perspective". These letters all suggested that the government had given the taxpayers the benefit of the doubt, presuming that non-compliance had been due to oversight and not dishonesty. The letters inform the taxpayer about non-compliance and the potential consequences of non-compliance in the future Upon analysis, it was found that the letter combining omission and deterrence messages was the most effective. It resulted in a 48.6% payment rate (8.37% increase) and increased taxpayer payments by 25.9%. The "omission + deterrence" letter also had the most significant reduction in outstanding tax liability, 19.3%. The use of only a deterrence message does not improve the standard behavioral letter as the standard behavioral letter had a payment rate of 46.3% compared to 44.8% for only deterrence. However, there is a significant gain when paired with the omission letter as payment rates jump from 44.8% to 48.6%. The other omission letters, which offer an excuse for noncompliance, do not yield a significant improvement in payment amounts over the standard behavioral message, despite increasing the compliance rate. The "omission + deterrence" letter was found to be the most effective out of the 3 categories of letter design and was always in the top 4 in increasing tax revenue. The omission letters also performed better overall than the behavioral letters suggesting that the omission message encourages payment mostly among tax- payers with a smaller liability; combining it with the threat (omission + deterrence) is very effective for taxpayers who owe more. In Latvia (World Bank Group, 2019), an experiment using a simple reminder, a social norms letter, and an omission/commission treatment was done. The omission/commission treatment was found to be most effective in increasing compliance with taxpayer filing deadlines and the annual income statement (AID) process. It led to a 9.4% higher filing rate than the control group, a statistically significant improvement. It can be inferred that including social norms is not as effective as using omission in improving tax compliance as the omission/commission treatment increases compliance with taxpayers following deadlines. Another experiment in the UK (Behavioural Insights Team, 2012) related to reducing the cost or inconvenience of filling out forms to pay taxes was done. Initially, only a simple letter with details of the payment form attached, was sent which achieved a response rate of 19%. Subsequently, this letter was updated to include the tax timelines and a link to the online system as well as contact information in case of questions. This significantly reduced the effort of the taxpayers. The simplification of the process helped many taxpayers overcome the status quo as they could start the tax filing process by just clicking on the link. This resulted in an improved response rate to 23%. This reduction in work aligns with Anderson's research, which suggests that individuals tend to default to the status quo as a way of conserving energy. Online tax calculators could also be made more readily available so taxpayers can calculate the total tax they need to pay. This can help avoid delays due to dependence on tax accountants and overcome the status quo bias of relying on the accountant completely. The benefits of simplification and digitalization are transferable over different aspects of a tax structure. In the USA taxpayers have two options to reduce their taxable income: standard deduction or itemized deduction. The standard deduction is a fixed amount that reduces taxable income without requiring documentation, while itemized deductions allow taxpayers to subtract specific expenses (e.g., medical costs, mortgage interest) if they exceed the standard deduction, though it requires detailed record-keeping and filing. Most taxpayers opt for the standard deduction due to its simplicity. This decision to itemize deductions versus claiming the standard deduction provides another lens into how complexity influences taxpayer behavior. While itemizing can result in larger deductions, it imposes higher compliance costs, including meticulous record-keeping and additional forms. Revealed preference analysis suggests taxpayers perceive the burden of itemizing as equivalent to 19 hours of regular work or approximately $617, deterring many from pursuing this option (Benzarti, 2015). Consequently, two-thirds of taxpayers opt for the standard deduction, potentially leaving money on the table. This highlights another aspect of the tax system that is often overlooked by taxpayers and sticks with the status quo. If information was more readily available and digitalization of calculating deductions itemized income could be implemented, it could nudge taxpayers to choose the options with greatest savings. Throughout the year, individuals make taxable income and make payments based on anticipated liabilities. On tax day, any discrepancy between total taxes owed and payments made is refunded, resulting in either a "loss" (balance due) or a "gain" (refund)(Jones, 2017). Kahneman and Tversky (1979) demonstrated that the perceived value of a marginal dollar declines sharply as a taxpayer moves from losses to gains. This loss aversion drives taxpayers facing a balance due to manipulate their liabilities more aggressively. Empirical analysis done by Jones of the 1979–90 IRS Statistics of Income Panel of Individual Returns, revealed significant shifts in the balance due distribution consistent with higher manipulation in the loss domain. Individuals facing a loss pursue an additional $34 of tax reductions above and beyond what would be pursued if they faced a gain. This highlights how taxpayers allocate more value to perceived losses and are more likely to change their behavior by changing their status quo to minimize their losses. This is particularly pronounced among high-income earners, underscoring how loss aversion exacerbates tax manipulation, ultimately depriving the government of revenues that would otherwise have been collected. It was estimated that if tax filers owning a payment were as motivated to manipulate as those facing a refund, 1.4 billion dollars of additional tax revenue would be collected. Addressing this behavior by incentivizing over-withholding or reducing opportunities for manipulation could mitigate these losses and enhance revenue stability. V. Possible tax policy With the help of these field experiments, we realize that status quo, conformity, and framing biases play a pivotal role in tax revenue collection. These biases are often used by taxpayers to make their lives easier by doing what others do or sticking to their original choice. Governments should implement these behavioral findings into their current tax policies. By doing so, overall tax compliance from taxpayers would increase and cause less financial loss for the government as seen from the above case studies. They can successfully plan and fund projects and schemes that benefit the country's citizens. Below is a proposed framework outlining plausible policies and strategies that can be implemented to overcome the aforementioned biases. The use of hard-tone language in tax letters, such as deterrence messages and execution letters, can increase tax compliance. Field experiments in Poland show that hard-tone letters were more successful in mobilizing payments and reducing tax debt compared to soft-tone letters. This method is particularly effective for older working age groups, who need a greater nudge. They have been paying taxes for a long period and have developed lethargy regarding this continuous and tedious process. Soft-tone letters were also found to be effective in improving compliance rates, but not as impactful as hard-tone. In most cases, only hard-tone should be used throughout the letter to make the need to pay taxes seem more urgent and prevent defaults. However, to increase tax compliance overall, governments should use a soft tone in letters to certain taxpayers based on their social identities. For example, hard-tone letters may not be effective with taxpayers who do not support the party in control. Soft-tone letters could also be used for younger taxpayers (ages 20-30) who may be more willing to comply with rules and regulations. Additionally, using a soft tone in letters to taxpayers with school-going children may be effective as they may be more willing to pay taxes to support the public education system. A hard-tone could be used for older taxpayers (50+) as they are more receptive to the hard-tone than the soft-tone. Moreover, the hard-tone can be implemented on non-parents as they need to be nudged more as they have lesser responsibilities (no children). Simplifying the tax letter by removing legal jargon and providing clear steps to follow for tax paying will expedite the process and will increase tax revenue. This can overcome status quo bias and reduce the complexity of decision-making. Evidence from the UK and Belgium shows a positive correlation between clear and concise tax letters and compliance rates. Simplification also reduces the reliance on automatic systems and encourages timely payments from both late filers and payers. The government can take advantage of the status quo bias by making tax deductions from employee salaries by the company the default choice. The company can pay the income tax collected directly to the government along with its corporate taxes. This is called an opt-in policy as the status quo is to opt in. Most employees would prefer to stay with the status quo as it reduces hassles for them. Another opt-in policy could be where the government directly estimates how much the employee has to pay. At the end of the financial year, the taxpayer can compare how much tax was estimated and collected by the government compared to how much they need to pay. This works on similar principles of advanced taxes where the employee estimates his payable tax amount and pays it to the government quarterly. This solves the problem of how to pay taxes for the taxpayer as the government is doing it automatically for them and helps them overcome their status quo. The use of social norms was also greatly experimented with in Latvia, Guatemala, Poland, and the UK. This underlines the importance of social norms in tax policies. It was found that personal norms hold a higher value than social norms in individuals and small and medium enterprises. Governments can use these findings to implement personal norms. These can be simple pieces of information regarding an individual's belief systems. Descriptive norms were found to be more impactful than injunctive norms in the UK. Governments should use personal norms when distributing tax letters to small-scale companies but use descriptive norms in the letters they send to individuals. Lastly, along with these norms described above the government can club it with a minority norm. This puts a spotlight on defaulting taxpayers who feel like they are not part of the desired group encouraging them to file their taxes. This will make the most efficient use of the conformity bias. Using a "worst offenders" list will also be effective as there would be a perceived social consequence to being on the list. People will increase their tax compliance so that they are not the exceptions. This phenomenon of feeling uncomfortable when not conforming is called the “spotlight effect” (Gilovich, 2000). The Australian tax office's real-time analytics initiative sends customized prompts to taxpayers filing annual tax returns (OECD, 2021). For example, a taxpayer may see a pop-up notifying them that they have reported work-related expenses unusually high and prompting them to confirm their entries. The initiative prompted 25% of taxpayers to voluntarily amend their tax returns, generating approximately AUD$ 22.4 million in revenue from 2018 to 2019. This method can also be used so that tax filings are honest and accurate. Along with these customized prompts, Another small change that can be implemented to the tax filing website is subtle environmental cues such as smiling faces and a friendly telephone voice. These small nudges can stimulate cooperation among taxpayers and overcome the status quo of not paying taxes or partial payment of taxes. Similarly, this also implements a soft tone to gently nudge taxpayers to be honest with their tax fillings. 5.1 How does behavioral economics advance cost-effectiveness as opposed to traditional economics? Behavioral interventions are extremely effective while having minimal additional costs as compared to the original tax letters. The average revenue collected is more than the average cost, hence highlighting that this method is extremely cost-effective for the government. The field study conducted in Guatemala (World Bank Group, 2020) helped increase revenue generated but at the same time was particularly cost-effective. It was estimated that the deliberate choice message would have generated revenues of USD 778,927 at a cost of $21,090 if sent to the entire sample of 43,387 taxpayers. This equates to 36 times the return on investment for tax authorities. It was estimated that $303,366 in revenue was generated and declared a profit of $288,301 for the Guatemalan Tax Authority showing it is beneficial to apply behavioral changes. Moreover, since there are no statistically significant differences in delivery method outcomes, the option of sending reminders by regular mail can simplify execution procedures in Poland without affecting revenue collection. However, for tax payments, tax authorities can use existing technology, such as websites and smartphones, to facilitate compliance on a modest budget. In Kosovo (World Bank Group, 2019) emails and SMS messages were used to send out behavioral tax letters instead of paper mail. This slightly reduces the overall costs resulting in increased tax revenue. The only major cost would be incurred while setting up the infrastructure. In years to come only small maintenance costs would be incurred making it a cost-effective solution in the long run. The government can make these design changes to its tax policies and use these biases to its advantage and work towards effectively increasing its tax revenue. These changes are uncomplicated, cost-effective, easily implementable, and have achieved a positive impact worldwide. Hence it is the best possible solution available to limit the financial loss currently being sustained by the government due to non-payment of taxes. VI. Conclusion The World Bank Group has extensively researched how to successfully implement behavioral changes to tax policies. Behavioral changes are very helpful as they increase tax revenues and receiving correct tax amounts on time helps reduce financial losses for the government. They have run field experiments in various countries, like Guatemala, Poland, and Kosovo, and have found compelling evidence on how to nudge taxpayers to be more compliant. The 3 biases explored in this paper are only a few, many other biases and heuristics such as availability and loss aversion are present in the tax-paying process which also negatively affect the government. 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Author Name < Back Against the Mainstream: How Modern Monetary Theory and the Myth of Millionaire Tax Flight Challenge Conventional Wisdom Justin Lee Introduction Changing entrenched beliefs about economics is a difficult task, for it is challenging to distill fragmented facts into prudent judgements. As economic theories rely heavily on assumptions and macroeconomic statistics, a critical divergence exists between ideas most persuasive to the mainstream and those best supported by logic and empirical evidence. In this paper, I will analyze the central tenets of the modern monetary theory (MMT), a recent proposal that governments with sovereign currencies, rather than domestic taxpayers, solely finance all public spending. Furthermore, I will relate the misconceptions about public spending, which MMT rebuts, to the idea of millionaire tax flight, a novel refutation against claims of the severity of debt crises. I will demonstrate parallels in the history of reception and ideological grounds of these two concepts where epistemic and social structures preclude the acceptance of such arguments among “mainstream” economic ideas. Lastly, I will provide an overview of the possible groups that not only have vested interests in blocking these ideas but have also created certain inhibitive barriers to them. This report will use evidence to advocate on the two arguments’ behalf and will identify their shared characteristics that make them distinct from other contemporary policy issues. Background President Ronald Reagan once proclaimed: “We don’t have a trillion-dollar debt because we haven’t taxed enough; we have a trillion-dollar debt because we spend too much.” Such conventional wisdom forms when the vast majority of people come to accept a group of ideas as fact. The misconception that the federal government cannot “spend beyond its means” and that millionaires flee high-tax areas by any means necessary has been propagated through numerous channels - most notably, media outlets such as Fox News - over the years by combining both personal experience and “common sense.” What happens, however, when there is new data presented that goes against the stream of ideas already established? What if these novel ideas rely upon an entirely different logical foundation for their support? What if the “common sense” originally used as the basis for prior justifications was incomplete or even flawed? An idea does not become “conventional wisdom” and gain “acceptance into the mainstream” for its proven veracity; rather, it becomes accepted as an absolute truth through its promotion by influential media outlets and politicians. Recent history has taught us that some “plausible ideas” should not deserve their wide acceptance as scientific inquiry demands. Since the 1980s, for example, the concept of a non-accelerating inflation rate of unemployment (NAIRU) has been prominently accepted as an influential theory among most economists. A NAIRU is the unemployment rate of an economy associated with a constant rate of inflation; a rise in unemployment is associated with a decrease in inflation, whereas a decline in unemployment causes an increase. Despite the success of Milton Friedman's explanation for the “natural” rate of unemployment throughout most of the 1970s and 1980s, economic data in the years since the mid-1990s have weakened Friedman’s case. The US economy has seen low unemployment and low changes in inflation as well as high unemployment and high changes in inflation. In fact, Robert Gordon pointed out the external supply shocks caused during the early 1970s in an effort to display “inflation initiated not by excess demand but by commodity shortages,” circumstances that are quite noticeable in the fluctuating consumption patterns and supply chain issues during the COVID-19 pandemic. In spite of these recent developments and their implications on Friedman’s original hypothesis, the NAIRU remains “an important building block of business cycle theory.” Figure 1: Unemployment Rate and the Percent Change in the CPI since 1950 Routinely, little efforts have been made to temper an “inflation equals bad” mentality that plagues the public in the United States every few years. Similar futile simplifications are made about raising taxes for the rich as politicians claim that the wealthy will flee in droves, causing large drops in tax revenue – a claim that relies largely on hypothetical posturing rather than definitive evidence in its favor. The resolution of these two policy problems requires the reversal of hardened opinions among the general public and hard-nosed experts alike. Rising prices can be inconvenient for many – businesses may need to change their “sticker” prices while workers may not be able to renegotiate with their employers for higher wages until the end of their current contracts. Likewise, most Americans are neither millionaires nor billionaires and may often have an incomplete perception of what their life decisions would be like if they were not burdened by personal financial pressures. Such misunderstandings include failing to account for one’s close network of friends, family members, neighbors, and co-workers that shapes one’s decisions to move. These circumstances are what make it so difficult to propose ideas that run counter to what many have grown to accept as convention. Analysis Perception versus reality Misconceptions about both MMT and millionaire tax flight stem from fundamental differences between public perceptions of the two phenomena and their true implications. The media is partly to blame for this misalignment. From deficit hawks in Congress to political pundits on talk shows, the term “government deficit” is commonly used as a pejorative to counter any argument in favor of increased public spending. While prominent public figures, including billionaire Elon Musk, may perceive the government budget as identical to the personal spending habits of everyday Americans or even small, local businesses, the reality is that the United States federal government – specifically the Treasury Department and the Federal Reserve – is the only entity that retains the right to issue dollars. As a nation with a sovereign currency, the United States has complete discretion over its money supply and interest rates; it can also issue intergenerational debt. This could not be further from the truth for a household, which relies upon income to buy goods and services, or a business, which uses profits to fund production, investment in inventories, and innovation. As I will examine in further detail in a later section, the fallacies underlying perceptions of the federal budget reverberate across the political spectrum, ranging from cries for a smaller government during the Reagan/Thatcher era to proclamations of “tightening belts” by President Obama in his 2010 State of the Union Address. “Crowding out,” the idea that economic activity contracts with deficit-financed expenditures, is one of the most common rebuttals to increased public spending. The neoliberal view of the crowding out effect entails the government competing with private entrepreneurs for capital to finance public spending. However, proponents of the idea that private investment will be “crowded out” if a government spends “beyond its means” fail to consider that the United States is an issuer of its own sovereign currency. Any amount of public spending that exceeds tax revenue is merely printed and issued by the US Treasury. The purpose of selling bonds after an increase in government expenditures is not necessarily to finance these payments but rather to “prevent a large infusion of reserves from pushing the overnight interest rate below the Fed’s target level.” When the federal government chooses to increase deficit spending, US Treasuries take the place of the reserve balances and maintain the aggregate quantity of reserves in the financial system. In other words, “Uncle Sam [does not] enter the market in competition with other borrowers,” such as Citigroup or Morgan Stanley. We see a similar divide between perception and reality for the myth of the millionaire tax flight. According to the Global Wealth Report of 2021, only eight percent of Americans are considered millionaires, those presumably most knowledgeable about millionaire migration. However, the perception that millionaires will definitely flee their well-nested homes for lower tax regions lingers in a large segment of the non-millionaire population. In reality, while 47% of millionaire migrations in the United States from 1999 to 2011 were from high-tax to low-tax states, roughly 32% of such migrations occurred in the opposite direction. While this result is not insignificant, there is no discernible causal relationship in which a tax hike will dramatically force millionaires to states that have lower taxes - a prospect state governments may fear will drive down local tax revenues. Figure 2: Percent of US population migrating An interesting case study is seen in the counties that border the states of Oregon and Washington, all of which are located in a region with the highest relative difference in income taxes between bordering states. Logically, one would expect more millionaires to live in the state with relatively low income taxes – Washington – rather than the state with relatively high income taxes – Oregon. However, the data shows that millionaires tend to cluster in Oregon rather than Washington even after considering tax codes that have been in place for many years. While the story of the Oregon-Washington border is unusual – most data indicates that in other border regions, millionaires “tend to cluster on the low-tax side overall” – there is no evidence that outlines a significant causal relationship between areas of greater taxation and areas with higher rates of millionaire migration. Figure 3: Counties bordering Washington and Oregon Doomsday is coming! When new public spending measures are proposed to combat a recession, cries about the “debt ceiling” from fear-mongering politicians usually arise. Other figures, such as former New Jersey Governor Chris Christie, flirt with the fallacy of cratering tax revenues caused by millionaire migration. If the rift between perception and reality presented earlier can be attributed to a lack of detailed economic expertise among the general public, then the parallels between MMT and the myth of millionaire tax flight presented here demonstrate how reality has been warped into shaping false narratives about the potential for drastic economic reform. Recent data indicating that unemployment and inflation do not perfectly align with the NAIRU theory presented in the background section may signal the dogmatic nature of academics within the field of economics. To illustrate this point, it is worth scrutinizing academic discourse relating to the 2008 financial crisis. For instance, “too big to fail” was a common platitude offered by economic “experts” in the early 2000s as a way to divert public scrutiny from concerning behavior among Wall Street banks, such as the rising number of mergers and increasingly predatory loans. However, once an impending economic disaster loomed and the federal government stepped in to rescue Wall Street, these same experts responded with confusion over where their models had gone severely wrong. As Nobel laureate Paul Krugman writes, “more important [than economists’ predictive failure] was the profession’s blindness to the very possibility of catastrophic failures in a market economy.” Meanwhile, the Troubled Asset Relief Program was welcomed with open arms by financial institutions seeking to rid their balance sheets of illiquid assets. Yet when it came to increasing public expenditure to support low- and middle-income Americans affected by the subprime mortgage crisis, academics such as then Treasury Secretary Larry Summers deemed public spending to be excessive and costly. This 180-degree shift in tone lies at the core of the MMT argument; the federal government had the ability to both provide greater fiscal stimulus and purchase Wall Street’s toxic assets because the United States is an issuer of its own sovereign currency. Figure 4: How MMT accounts for market/government interactions on taxation and public spending Likewise, politicians have boldly proclaimed that tax hikes on millionaires will lead to their disastrous departure. Using data from the same study presented earlier on millionaire migrations between 1999 and 2011, we see that overall migration patterns among millionaires tend to be very subtle with only 2.4% of them choosing to migrate. Only a small portion – just 0.3% – of the total millionaire population chose to migrate from a high-tax state to a low-tax state. Beyond ignoring the clear evidence that makes the millionaire tax flight argument dubious, politicians also downplay the importance of location as a crucial form of social capital. Figure 5: Migration Rates by Age, for Different Levels of Education While there are numerous interpersonal factors that contribute to a person’s decision to move, the strongest drivers of migration include the prospect of greater economic opportunity or an immediate danger that threatens personal safety, neither of which are of particular concern for the average superstar athlete or hedge fund manager. For a person who has attained a certain level of “elite income,” interpersonal relationships and connections are “immobile” factors that influence this person’s wellbeing far beyond their marginal tax bracket. Such considerations, which are undoubtedly important to the social interactions of any group of people, are conveniently left out in the propagation of the myth of millionaire tax flight. Like the challenges that proponents of MMT face, these obstacles prevent substantial reforms towards more equitable taxation laws. The bulwarks against change Contemporary discourse on public spending conveniently fails to acknowledge the ability for the Federal Reserve to curb massive inflation through their control of interest rates and untapped potential revenues from higher taxes on the ultra-wealthy. As discussed, deficit-averse politicians use fear-mongering and scare tactics to deter support for these ideas. Their adamance reveals a similarity between those who stand to lose if such policies are enacted. MMT economists view public spending as a way to stimulate a lagging economy and use their novel theory as a means to justify higher expenditures in areas such as social welfare, healthcare benefits, and infrastructure investments. The beneficiaries of such programs include the elderly, the poor, and the sick – more generally the non-millionaire/billionaire class. Since the start of neoliberalism’s grip on Washington in the 1980s, deficit hawks have decried the prospect of increased government spending on social programs. Yet, these same government officials openly endorsed the $8 trillion “War on Terror” as well as the allocation of billions of dollars in discretionary spending to the Pentagon every year. On the flip side of the deficit debate, tax reform has been on the legislative agenda for years, but in recent decades, such reforms have been more regressive than ones made in the past. Any effort to stymie raising taxes on millionaires has brought about a constant propagation of the myth of the millionaire tax flight by politicians and academics alike. Harvard economist Martin Feldstein claims that higher state taxes on the wealthy have little effect on redistributing income and merely lead to greater migration by the wealthy. Such misrepresentations of government finance and migration trends may originate from the entrenched view of such matters within economics. However, it is certain that political lobbying, particularly in the years after the Supreme Court’s Citizens United v. Federal Election Commission decision, has allowed the interests of the wealthy to be overrepresented in legislative decisions on public spending and tax reform. We often see that these obstacles prevent substantive action for other policy problems as well, such as combating climate change, dismantling the prison industrial complex, or engaging in international trade wars. In all of these instances, the vested interests of the donor class take charge. MMT and the myth of millionaire tax flight occupy unique positions among these challenging policy problems due to their potential for dramatic economic change among the benefiting stakeholders. It is even possible to create a parallel between the two ideas, as MMT views progressive taxation as a means to promote a more equitable society rather than as a hindrance for public programs. Consequently, it should come as no surprise that America’s millionaires use arguments such as the myth of millionaire tax flight to prevent higher taxation on the wealthy and the alarmism over deficits in order to curtail social spending. The rhetoric of politics Appealing to conventional wisdom is often a politically convenient argument to employ. Explaining every minute aspect of government finance takes time and effort and is – more importantly – unrelatable for most voters. The stagnation of real wages since the 1970s has forced middle- and lower-income households to grow accustomed to restricting their spending habits. Listening to rhetoric of their elected officials “wasting away” their hard-earned tax dollars can incite ire among constituents, making ideas such as modern monetary theory appear far-fetched. One study conducted by Kendall, Nannicini, and Trebbi indicates that such rhetoric has a meaningful impact on politicians’ public perceptions. This is perhaps the reason why the politicians mentioned in (Section A) were unanimous in agreement over concerns about the fiscal deficit. While the degree of this agreement varies between politicians, there appears to be a reluctance to take the MMT perspective on this issue. Perhaps the word “deficit” being written in big, red letters on the minds of voters on Election Day is political suicide for anyone who dares to be portrayed as a proponent of reckless spending. The convenience of political arguments against higher taxes on the rich is similar to that of arguments echoed in the debate against higher corporate taxes – that the wealthy and resourceful create jobs for others and therefore require lower tax rates to create opportunities for wealth that “trickle down” to the rest of the population. These long-established views have become entrenched in the common sense of the public and have rendered idiosyncratic ideas incapable of breaking into the mainstream. Conclusions and a Way Forward Both ideas examined in this paper rely upon very basic truths – (1) no one outside of the US Treasury and the Federal Reserve can issue US dollars, and (2) millionaires, no matter how much wealthier they may be than the average American, rely upon and seek to maintain their established social networks. Accepting these two statements as facts can drastically alter policy discussions on both public spending and taxation on a federal level. Time is arguably the most critical component to changing public perceptions of social spending and equitable tax reform. Even Stephanie Kelton, one of the leading experts on MMT, admits that she herself was skeptical upon her first encounter with the theory. The benefit of hindsight has revealed the shortcomings of the global economic order, especially in the aftermath of the Great Recession. The crisis presented itself as an opportunity for decisive action in a new direction, but instead, haste and imprudence allowed fiscal austerity to captivate the minds of leaders and economists around the world. While MMT is far from a panacea for all economic uncertainties, even economists who are more supportive of the traditional view on fiscal deficits, such as N. Gregory Mankiw, have recognized that MMT provides some useful insights that the traditional view may have historically overlooked. The COVID-19 pandemic may serve as an inflection point for a more active role of governments in markets as countries around the world have increased their public spending to avoid recessions. It is here, however, that an important limiting rule of MMT must be mentioned - inflation. In the event of large spikes in prices - as is the case at the time of this writing in Spring 2022 - using MMT as a blank check to drive up public spending would not be prudent and would likely make the inflationary crisis worse. During such times, coordination between fiscal and monetary authorities to adjust interest rates and temper expectations of future inflation is vital. Despite these limitations, circumstantial anomalies should not render the entire idea invalid. To truly tackle challenging policy problems, we must look to audacious economic ideas such as Modern Monetary Theory and refute arcane, baseless ones such as the myth of millionaire tax flight. 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Journal Features Online Features & Interviews Vol. IV | Issue II JPPE Interview Geoff Mulgan Vol. IV | Issue II Foreword Editoral Board Vol. IV | Issue II Vol. IV | Issue I JPPE Interview Danielle Bainbridge Vol. IV | Issue I Vol. III | Issue II Mark Carney The Road to Glasgow is Paved with Data Vol. III | Issue II Douglas Beal The Financial Case for Nations and Corporations to Put People and the Planet First Vol. III | Issue II Vol. II | Issue II JPPE Interview Steven Pinker Vol. II | Issue II JPPE Interview Yanis Varoufakis Vol. II | Issue II JPPE Interview Paul Krugman Vol. II | Issue II Foreword Editorial Board Vol. II | Issue II Vol. II | Issue I Sheldon Whitehouse United States Senator from Rhode Island Vol. II | Issue I Foreword Editorial Board Vol. II | Issue I Vol. I | Issue II Nicola Sturgeon First Minister of Scotland Vol. I | Issue II John R. Allen President of the Brookings Institution Vol. I | Issue II Foreword Editorial Board Vol. I | Issue II Vol. I | Issue I Jorge O. Elorza Mayor of Providence, Rhode Island Vol. I | Issue I Greg Fischer Mayor of Louisville, Kentucky Vol. I | Issue I Foreword Editorial Board Vol. I | Issue I

Mark Carney The Road to Glasgow is Paved with Data Mark Carney In a little over a year, the world will converge physically and virtually on Glasgow for COP26 hosted the United Kingdom in partnership with Italy. It will then be six years after the landmark Paris Accord, and the stakes could not be higher. Despite prolonged lockdowns of large swathes of the global economy, the earth’s car- bon budget continues to be rapidly depleted, the physical risks of climate change continue to mount, and the sixth mass extinction continues to progress. Paris was a triumph of commitment and process. Commitment by [193] governments to limit temperature rises to below 2 degrees, with a stretch target of 1.5 degrees. Process in the innovation of Nationally Determined Contributions, whereby countries set their own pledges, and the world transparently added them up to see whether those efforts did the job. That calculation, 2.8 degrees of warm- ing even if all countries fulfilled their pledges, was as sobering as it was disciplined. And it set the tone on the road to Glasgow: climate policy in the public and private spheres would be driven by data and data analytics because slogans won’t solve an existential crisis. In the event, many countries have fallen short of their pledges, and the IPCC estimates that the world is on course for up to 4 degree warming by the end of the century. At current rates of emissions, we have less than a decade left to stay within the carbon budget that keeps temperature rises below 1.5 degrees with 50% probability. Getting back on track will require a redoubling of public efforts and a quantum change in private investment. The IEA estimates that the low-carbon transition could require $3.5trn in energy sector investments every year for decades – twice the rate at present. Under their scenario, in order for carbon to stabilise by 2050, nearly 95% of electricity supply will need to be low carbon, 70% of new cars electric, and the CO2 intensity of the building sector will need to fall by 80%. For private markets to anticipate and smooth the transition to a net zero world, they need the right reporting, risk management, return optimisation. Our objective for Glasgow is to build these frameworks so that there is a new financial system in which every decision takes climate change into account. This requires a fundamental reordering of the financial system so that all aspects of finance— investments, loans, derivatives, insurance products, whole markets—view climate change as much a determinant of value as creditworthiness, interest rates or technology. A world in which the impact of an activity on climate change is a new vector, a new determinant, of value. Doing so requires new data sets and new analytic techniques. The challenges are enormous and the timescales tight, but the prize are protecting the planet while seizing the greatest commercial opportunity of our time. In order to bring climate risks and resilience into the heart of financial decision making, climate disclosure ( reporting ) must become comprehensive; climate risk management must be transformed, and sustainable investing ( returns ) must go mainstream. Reporting Catalysed by the G20 and created by the private sector, the Task Force on Cli- mate-related Financial Disclosures (TCFD) is a comprehensive, practical and flexible framework for corporate disclosure of climate-related risks and opportunities. Since the TCFD set out its recommendations for climate-related disclosures, there has been a step change in both demand and supply of climate reporting. The demand for TCFD disclosure is now enormous. Current supporters control balance sheets totaling $140 trillion and include the world’s top banks, asset managers, pension funds, insurers, credit rating agencies, accounting firms and shareholder advisory services. The supply of disclosure is responding, with four fifths of the top 1100 G20 companies now disclosing climate-related financial risks in line with some of the TCFD recommendations. Suitable for use by all companies that raise capital, the TCFD recommendations include a mixture of objective, subjective and forward-looking metrics: - Include disclosure of governance , strategy and risk management ; - Establish consistent and comparable metrics applicable across all sectors, as well as specific metrics for the most carbon-intense sectors; and - Encourage use of scenario analysis so as to consider dynamically the potential impact of the risks and opportunities of the transition to a low carbon economy on strategy and financial planning. The TCFD will call on new skills from measuring Scope 3 emissions to assessing strategy, risk and performance under different climate pathways. The next step is to make these disclosures mandatory through initiatives by national authorities, regulators and international standard setters. Understanding and using such forward-looking impact disclosure will become a core skill across the private financial sector. Risk management The providers of capital—banks, insurers, asset managers—and those who supervise them all need to improve their understanding and management of climate-related financial risks. Changes in climate policies, new technologies and growing physical risks will prompt a reassessment of the value of virtually every financial asset. Firms that align their business models to the transition to a net zero world will be rewarded handsomely. Those that fail to adapt will cease to exist. The longer meaningful adjustment is delayed, the greater the disruption will be. Climate risks differ from conventional risks in several critical respects, including: Their unprecedented nature. Past experience and historical data are not good predictors of the probabilities in the future. Indeed, as the insurance industry has learned, yesterday’s tail event is becoming today’s central scenario. Their breadth and magnitude . They will affect every customer, in every sec- tor in every country. Their impact will likely be correlated, non-linear, irreversible, and subject to tipping points. They will therefore occur on a much greater scale than the other risks financial institutions are used to managing. That they are both foreseeable , in the sense that we know some combination of physical and transition risk will occur, and uncertain , in that the timing and scale is path dependent. Although the time horizons for physical risks are long - not the usual 3-5-year business planning horizon, but over decades— addressing major climate risks tomorrow requires action today . Indeed, actions over the next decade—prob- ably in the next three to five years—will be critical to determining the size and balance of future risks (1). It is self-evident that the financial system cannot diversify its way out of this risk. As the pandemic has revealed, the interconnections between the real economy and the financial system run deep. And just like Covid-19, climate change is a far-reaching, system-wide risk that affects the whole economy, from which the financial system is not immune and indeed cannot hide. As the CEO of Morgan Stanley remarked to Congress, “It’s hard to have financial stability if you don’t have a planet.” So if financial risk is to be reduced, then the underlying climate risks in the real economy must be managed. And fixing this collective action problem is a shared responsibility across financial institutions and regulators. The public and private sectors need to work together to solve it, and that means developing the necessary risk management expertise rapidly. That expertise is needed because it is challenging to assess financial risks in the normal way. As emphasised by the TCFD, it means that disclosures need to go beyond the static (what a company’s emissions are today) to the strategic (what their plans are for their emissions tomorrow). That means assessing the resilience of firms’ strategies to transition risks. This will be the principle focus of the new climate stress testing regime of central banks. At present, led by the Banque de France, the Nederlands Bank and the Bank of England, 16 central banks and supervisors will stress test their systems against different climate scenarios for a smooth transition to net zero to business-as-usual hothouse earth. Returns Financial participants increasingly recognise that sustainable investment brings enormous opportunities ranging from transforming energy to reinventing protein. While green investment products, such as green, sustainable and transition bonds are important catalysts to developing a new financial system, they will not be sufficient to finance the transition to a low carbon future. We need to mobilise mainstream finance to help support all companies in the economy to adjust business models to align with net zero pathways. Value will be driven by identifying the leaders and laggards, as well as the most important general-purpose technologies that will overcome choke points in the transition. That means having a more sophisticated understanding of how companies are working to transition from brown to green, not just where they are at a single point in time. Thus far, the approaches to doing so have been inadequate. Scores that combine E, S and G to give a single ESG metric—while worthy—are dominated by the S and the G. Carbon footprints are not forward-looking. And the impact of shareholder engagement is hard to measure. Moreover, a whole economy transition isn’t about funding only deep green activities or blacklisting dark brown ones. We need fifty shades of green to catalyse and support all companies towards net zero and be able to assess collectively whether we’re “Paris aligned.” That means investors must be able to assess the credibility of company transition plans. Transition planning is nascent and of varying quality among companies. Some have a stated net zero objective, but are yet to set out a credible strategy or tactics to achieving it. Others have fully integrated climate strategies, governance and investments. Emerging best practice transition plans include: - Defining net zero objective in terms of Scope 1, 2 and 3 emissions; - Outlining clear short term milestones and metrics that senior management uses to monitor progress and gauge success; - Board level governance; and - Embedding metrics in executive compensation. Schemes such as the Science Based Targets Initiative and Transition Pathway Initiative are already supporting companies to develop transition plans and certifying them when they meet appropriate thresholds. An emerging differentiator in the investment community will need to make these critical judgments. Over time, investors will not just judge company transition plans, they too shall be judged. Investors should be obliged to alignment of their portfolios with the transition and disclose their position in a readily understandable and impactful manner. There are several ways to do this. At the most basic end of the spectrum, investors could calculate the percentage of assets that have a net zero target. However, as disclosures improve in the real economy, a more sophisticated option is to calculate the degree warming potential of assets in a portfolio. A “warming potential” calculation – or Implied Temperature Rise – estimates the global temperature rise associated with emissions by the companies in an investment portfolio. For example, one of the world’s largest insurers, AXA, estimates that its assets are currently consistent with a 3.1 degree path, and it has developed an innovative climate Value-at-Risk model to measure the opportunities as well as risks from the climate-related exposures of its investments. Rating the warming potential of assets and portfolios has a number of ancillary benefits, including signaling to governments the transition path of the economy, and therefore the effectiveness of their policies; and empowering consumers to give them more choice in how to invest to support the transition. After all, with our citizens, particularly the young, demanding climate action, it is becoming essential for asset owners to disclose the extent to which their clients’ money is being invest- ed in line with their values. Conclusion A financial market in the transition to a 1.5 degree world is being built, but we need to accelerate the pace on the road to Glasgow. Now is the time for a step change to bring the reporting, risk management and return optimisation of sustainable finance into everyday financial decision making. This will require new data sets from scope 3 emissions to exposures to climate transition risk, and new financial skills from scenario analysis to assessing implied temperature warming. The common theme will be determining who is on the right and wrong side of climate history. In that way, private finance can bend the arc of that history towards climate justice. Endnote 1 UNEP Emissions Gap Report, 2019. Previous Next