Matthew C. Weinzierl

After decades of centralized control of economic activity in space, NASA and US policymakers have begun to cede the direction of human activities in space to commercial companies. The shift from public to private priorities in space is especially significant because a widely shared goal among commercial space’s leaders is the achievement of a large-scale, largely self-sufficient, developed space economy. In this article, I provide an analytical framework—based on classic economic analysis of the role of government in market economies—for understanding and managing the development of the space economy. That framework has three components: 1) establishing the market through decentralization of decision making and financing for human space activities; 2) refining the market through policies that address market failures and ensure a healthy market structure; and 3) tempering the market through regulation in pursuit of social objectives.

My academic research centers on uncovering and closing gaps between the theory and reality of tax policy. My main contribution has been to identify and address a mismatch between the goals for taxation typically assumed in theory and the goals the public and policymakers endorse in reality. In brief, in the academic literature tax policy is evaluated solely by where we all end up, but in reality people also care about how we get there. To narrow this gap I have developed an approach to tax research I call Positive Optimal Taxation. This approach includes three steps: 1) gathering evidence that the goals for taxation assumed in standard theory fit poorly with real-world views; 2) identifying alternative goals—and the philosophical principles behind them—that better describe those real-world views; 3) incorporating those alternative goals into formal modern tax theory and demonstrating that doing so enables us to better explain, and inform, policy.

Consider, for example, the debate over how much to tax the rich. My research has shown that most people think the rich should pay more in taxes not only (and perhaps not even primarily) because a dollar is worth less in the hands of someone with more, the reason assumed in modern tax theory. Instead, they think the rich should pay more also because that's how the rich pay their fair share of the costs of a functioning society or because the rich have benefited more from that society's functioning, views consistent with the Equal Sacrifice principle of taxation that was endorsed by John Stuart Mill and the Classical Benefit-Based Taxation principle put forth by Adam Smith.

Most people, in fact, see merit in a range of potential views on this question and use a mixture of principles when making their judgments, an approach I call “normative diversity.” That approach strikes most of us as a good description of real-world moral reasoning, especially in a democracy, but it is sharply at odds with the standard approach in tax theory. My research shows not only that this conflict exists but also that it can be overcome. That is, modern tax theory can be adjusted to include normative diversity, and the payoff from doing so—in terms of the theory’s power to help us understand actual policy choices—is real.

In the end, I hope that this research succeeds in making my fellow tax theorists think differently about what they assume are the goals of tax policy, changing how tax theory is done and what impact it can have.

Additional strands of my academic research share the same motivation: to bring the study of tax policy into closer contact with practice. I have shown how taking into account differences in preferences across people—which public debates over taxes have always included but which modern research largely assumes away—brings theoretical policy recommendations more in line with existing policy. And, I have shown how to use complex modern theory to suggest simple reforms and guidelines for taxation and fiscal policy, rather than the intricate and sometimes impractical proposals those models most directly imply.

Like my academic research, my course development work for HBS helps us to understand why societies choose the economic policies they do, and how they might do better. Most of this work is included in my elective course: The Role of Government in Market Economies (RoGME). RoGME follows in the tradition of decades of pedagogy at HBS, providing the nuanced perspective on the role of government that is essential for the future leaders we train to maximize the positive difference they will make in the world. Whether the topic is reform of public education, coordination on climate change, management of the national debt, regulation of immigration, or the design of taxes, we find our way to a discussion of not only what the key tradeoffs are but also how to think about making them. In the end, aided by the unique power of the case method to make abstract questions tangible and fundamental disagreements plain, RoGME students come to see debates over specific policy issues as examples of a deeper, more analytically useful tension between competing views of the proper role of the government.

Business, Government, and the International Economy is a course about how the world works. More specifically, BGIE (pronounced “biggie”) is a course of study through which we seek to understand better the economic, political, and historical forces that determine the environment in which businesses, and private sector institutions more generally, operate. Throughout their careers, business leaders are asked to formulate and lead their firms’ responses to the external environment.  They may also have the chance to shape that environment by influencing government policies.

Course Objective

The objective of the BGIE course is for students to acquire and practice applying the analytical tools, contextual knowledge, habits of critical thinking, judgment, and—crucially—intellectual humility necessary for rigorously understanding, intelligently reacting to, and responsibly shaping public policy and the environment of business.

HBS graduates report that they use what they learned in BGIE differently at different points in their careers.  Many students use what they learned about macroeconomic statistics and theory, political competition, and the state-of-play in major countries and the global economy as soon as they graduate. As they advance in their careers, they draw increasingly on what BGIE teaches about the operation of global institutions, the examples set by political leaders, and the historical and philosophical underpinnings of major policy debates. Many HBS graduates find that, as prominent leaders, their opinions on the issues we address in BGIE are in demand and may have significant influence on policy; some HBS graduates have become senior policymakers and taken on direct responsibility for setting policy. Whatever roles and responsibilities they take on, students acquire insights in BGIE that improve their ability to lead and make a difference in the world.

Curriculum: The BGIE Twenty

In keeping with its unconventional nature, BGIE uses a unique intellectual framework—The BGIE Twenty—to structure its curriculum. Each year, the BGIE faculty decide on the twenty “ideas” that we believe are the most important for students to study in pursuit of the course’s objective. As scholars of economics, history, and political science, we bring an interdisciplinary approach to constructing and revising The BGIE Twenty, and we intend for it to have pedagogical and intellectual impact beyond our classrooms. Each element of the BGIE Twenty is highlighted during at least one case discussion and elaborated upon in a separate technical note. We also provide suggested supplemental readings to facilitate deeper study by interested students. Thus, when students complete the BGIE course, they have engaged with a curated selection of ideas that their faculty have found most valuable in analyzing how the world works.

RoGME is about one question: What is the proper role of government in market economies? We study the role of government as it plays out in the real world, using case studies to examine policies of current interest and importance. We align these cases with a rigorous theoretical framework that clarifies the circumstances under which government intervention in the market can improve outcomes. And we look beyond that textbook framework, mining the richness of the cases for additional layers of insight. Key to this effort is a focus on perhaps RoGME’s central lesson: to really understand a policy, you must know what its objective really is.