Question

Suppose we have another revolution, and I am named as the benevolent dictator of the new country (the US is now named the United States of the Chicago Cubs). Given this opportunity, I design a new economic system in which I own all physical and intellectual property, everyone else (citizens, permanent residents, and even temporary visitors) is provided a universal basic income of $40,000 per year, and I let people use my things (e.g., homes, cars, cell phones, etc.) if they ask nicely. Please evaluate the economic prospects of the new country based on potential GDP growth, incentives for capital investments, and equality of income distribution

Answer 1

Suppose we have another revolution, and I am named as the benevolent dictator of the new country (the US is now named the United States of the Chicago Cubs). Given this opportunity, I design a new economic system in which I own all physical and intellectual property, everyone else (citizens, permanent residents, and even temporary visitors) is provided a universal basic income of $40,000 per year, and I let people use my things (e.g., homes, cars, cell phones, etc.) if they ask nicely.

If this happens the potential GDP growth of the country will go down over time. This is because if all the people gets basic income without work and also goods and services to use no one will want to work and hence the overall production i.e. the real GDP will ho down over the years.

Since all the resources will be owned by me the Dictator, so there will not be any incentives for the private investors for capital investment. They will not want to invest any capital whose return will be taken off by someone else. So, though the dictator will invest in different sectors but the overall incentive to invest by the private sector will go down over the time.

There will be perfect equality of income distribution this is because everyone will get an equal basic income of $40,000 per year.