Universal Basic Income

[wufwugy]

The introduced funds in the experiment in Kenya function as export. An export is when outside resources in terms of money are exchanged for inside resources in terms of goods/services. In the Kenya example, outside resources in terms of money are exchanged for essentially nothing, which makes those outside resources function as a near cost-free source of new resources to the village economy.

If welfare functioned like this, it would be good. And more of it would be better. In fact, getting as much of it as possible would be best. It would be equivalent to discovering new resources that didn't exist before, like if an angel came down from heaven and magic wand'd a whole bunch more wheat or RAM or Lexus's.

Welfare, like UBI, doesn't function like this. It's resource redistribution, not resource introduction. If a new law passes that says employers must pay employees $100 more per week, that isn't going to change GDP by the aggregation of those $100 because employers will cut an approximately equivalent quantity elsewhere. I say approximately because it wouldn't be exact because incentives would change, which would change efficiencies, which would make the amount cut elsewhere either more, the same, or less than the amount increased in wage.

This brings us to the usual requirement: evaluate an economic proposal by what it does to incentives to produce.