In some real economic sense the money is gone, though. Think for a moment of money not as some abstract numbers, but a representation of a claim on actual, real resources and suppose for example you go for a haircut, stop at a cafe on the way back, have a coffee and a pastry, all in the local economy. The resources you've consumed - the coffee and food, the workers' time, the space in the cafe and barbers - all those are gone, they don't recirculate. When that money gets spent, the person spending it is claiming a whole new set of resources with (in a sense) new money created through the process of it circulating within the economy.

One interesting corollary of this is that speeding up the recirculation of money increases the money supply and slowing it down decreases it, just as though some central bank was actually printing or destroying money. This is particularly relevant right now, when a lot of countries seem to be running the metaphorical money printers flat out and the circulation of money has been temporarily impaired by extremely limited things to spend it on.

>The thing about government programs that hand out cash is that the money will be circulated back into the local economy most of the time, which is a net benefit

How is taxing the local economy to spend in the local economy (and some abroad) a net benefit? That's just transfer payments with some friction loss.

> How is taxing the local economy to spend in the local economy (and some abroad) a net benefit?

Taxing the rich, who have a lower marginal propensity to consume and consume locally, and transferring to the poor, who have a higher marginal propensity to consume and to do so locally, increases the local velocity of money.

that increases the consumption of resources while reducing the incentive to create more.

What do you think rich people do with the money they don't use to consume with?

Taxing the national economy, with distribution locally.

IE, tax a wealthy NYer, transfer to a poor Appalachian, and the Appalachian economy sees a small boost.

... with the added friction of a UBI system. In most Western countries, you'll also have plenty of transfers to other countries, recent immigrants supporting their families, buying properties in "the old country" etc. Being able to do just that is a major incentive for immigration, both within Europe and from outside Europe.

That's development aid with extra steps then. Granted, you might argue that it's more efficient than regular development aid since it's bottoms up, not top down, but still. It's not going to re-circulate in the same economy that it's taxed out of.

The argument is generally that a single UBI system has lower friction than many disparate social support programs.

The goal is to remove food stamps, income insurance (the dole, welfare, whatever you want to call it), rent subsidies, etc. All replaced with a single cash payment. Fewer programs, no income validation, no enforcement action after the fact, etc.

This also has the benefit of reducing friction on the consumption side. No need to exchange food stamps for cash at 50% face value in order to by beer, just take some of the cash and buy beer. Empower individuals to live how they want.

Yeah, but that'll only go so far, because we have very different social programs, e.g. somebody with severe disabilities receives far more (and means-tested) than somebody who just doesn't want to work. That won't change with UBI, so we'll mostly just replace welfare/rent subsidies (which are, at least in Germany, handled by the same agency and are essentially the same thing, only some will only get rent subsidies but no cash). There's obviously some overhead, but it's not a lot, and it's nowhere near enough where not having to spend it would make a dent in the UBI costs; it's not like we spend 2 euros in administrative cost for every euro we pay out.

> No need to exchange food stamps for cash at 50% face value in order to by beer, just take some of the cash and buy beer. Empower individuals to live how they want.

It's been that way for quite a long time in Germany, cash is the default, vouchers are only a thing in rare cases where the cash component (~400Euros/month; rent, healthcare, utilities etc are paid directly) is reduced by more than 30% due to penalties so people can still buy food. Generally, people get cash and are free to spend it as they see fit.

A large problem with "cash only" (e.g. rent etc not paid directly) is that there's a significant number of people who are unable to handle money. I know, because I live next to some of them. If you give them 1100 euros instead of 400 in cash + 700 in rent and healthcare payments, you'll get plenty of people who spend their 1100 euros on things other than rent. And in that case, you'll either have to accept that they'll become homeless (and we won't accept that), or you have to still pay their rent directly, on top of whatever cash you give them.

I would like to see a source for that if you could provide one :)

If I was working full-time and could live comfortably off that plus extra UBI, I think the majority of people would spend it on more luxurious goods (phones, laptops, drugs, etc.) which are mostly ran by/on outside/blackmarket economies...

We're not sure of the magic number/ratio between "person will use UBI for basic, locally-sourced needs" vs. "person will use UBI for 'wants', sourced elsewhere" and I think there's so many factors that it will be hard (almost impossible) to come up with a palpable answer.

Source? Reality. Look at the savings and investment rates for the poor. Where do you think the money is going? Most people still source their large purchases locally, even if it's at a store chain, which keeps the local economy going because there are plenty of services used at those stores that are local.

A guy who goes and buys a nice new luxury TV from a local Best Buy is still supporting local businesses indirectly because that Best Buy is going to have multiple contracts with local businesses for services.