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.

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.

Space is a place of unparalleled possibility for humanity, and it is in the midst of a revolution. In this course, we will learn about this revolution and the companies, such as SpaceX, Blue Origin, Axiom, Planet, and more. We will be joined by leaders in the industry, including alumni, eager to help you join them in building a new space age with the private sector as its engine. We will learn about the history of civilian space agencies like NASA and of the military in space, and we will debate their role in the future. We will study the economics underlying the sector, where public-private linkages are deep and essential. And we will ask ourselves, and our guests, what animates our interest in space and justifies devoting time, effort, and resources to it. The course curriculum is based around Space to Grow: Unlocking the Final Economic Frontier, a book authored by Prof. Weinzierl and his former research associate (and this course’s inaugural teaching fellow) Brendan Rosseau.

Course Objectives

• Develop an informed view on the history of and recent dramatic changes in how the space sector functions, including the evolving relationship between public and private actors.
• Consider and evaluate different forecasts for the further development of the space sector, including space-for-earth and space-for-space activities in LEO, cislunar, Mars, and other areas of operation.
• Identify feasible ways of regulating and governing decentralized space activities, including the establishment of property rights, through existing or new institutions.
• Understand one’s own vision for space and be able to explain why it is worth pursuing.