Spending to reach more economic equality

Edward Kleinbard at the lectern
Edward Kleinbard at the lectern

by Justine Dodgen

Last week, the Bedrosian Center hosted Professor Edward Kleinbard of Gould Law School to discuss his new book, We Are Better Than This: How Government Should Spend our Money. In our conversation, Kleinbard, students, and fellow faculty discussed the themes of federal government spending and how fiscal policy could be implemented more effectively.

Kleinbard argues in his book that the United States needs a more “muscular” government because evidence shows that markets are inevitably incomplete in managing our economy. For proof, he says, look no further than America’s growing economic inequality. “There’s no country in the OECD that… rivals us in the difference between rich and poor in this county. Similarly, we accept more poverty that any other OECD country.”

What a muscular government can do to help, he suggests, is to increase spending and investment in order to create greater equality of opportunity. “There is no equality of opportunity in the real world without a muscular government,” Kleinbard says. “It is desirable to imagine a more muscular government because government investment and government insurance, if well designed, are complementary to private markets… with [government] spending, the national economic pie gets bigger.”

One of the major recommendations of Kleinbard’s book is that we should invest in ourselves as human capital by increasing spending on education. By investing in education, we create greater equality of opportunity, which he believes will ultimately help reduce America’s economic inequality. Kleinbard urges policymakers to think about how more government investment in human capital is not redistributing wealth, but actually growing the economic pie available to everyone.

Kleinbard is also adamant in noting that more government spending does not mean we need a more progressive tax system. We spend too much time debating taxation when we should be focusing on spending, he says. “What we don’t know very much about are the returns to spending… and very little work is being done on the net of taxes and spending.”

For a tax policy specialist, Kleinbard isn’t without a sense of humor. About his book, he says, “It is some original research and a lot of reprimands. The book has the tone of a very minor Old Testament prophet who’s pissed off about having been left out of the Old Testament.”

Professor Bostic also noted his appreciation that this event represented a cross-university enterprise. “I think there are very few people in the [Price] school that are really aware of the things going on at [Gould] law school… I’m happy to lift this up and make it accessible to a broader audience.” You can watch the recording of our conversation with Kleinbard below.