Generally the macroeconomics are somewhat in uncharted territory here, which is what makes it interesting. While the transfer of payments insures everyone has _some_ ability to function in the economy, it does not change ordinary capitalist incentives (if you work you get more money, if you work well you can get a lot more money). But proponents suggest that it moderates missapplication of economic output because you aren't spending tax money on welfare offices and rules and hearings etc. You have a valid citizenship card and every month, regardless of who you are, you can walk into the BI office and pick up your stipend check.

The first useful question is, what does this do to the quantity demanded of goods in the economy? One answer is that it does nothing, people wanted food before, they want it now, except that now they have a bit of money to allocate to food. If you raise the price of your soup because anyone can buy it now, you still lose out in your soup sales to a competitor who will sell for the old price. Unlike establishing price floors as things like the farm subsidies do and which encourage over production of unneeded goods, you continue to have market forces which dictate the goods that come to market.

The second question that people toy with is the question of productivity. If everyone is getting a check every couple of weeks for doing nothing, won't they just stay home and sleep all day? Why would they even take minimum wage jobs?

The challenge there is endemic to the current welfare system that is popular in the US which reduces welfare payments in proportion to earned income. This creates an inversion layer where the first 20 - 30 hours per week of work do nothing to change their monthly take home pay. With a BI system every hour worked is additional money in your pocket at the end of the month. Working 20 hours a week in a minimum wage job not converts living at the resident hotel into living in a small studio apartment. Which is to say it has a direct impact on the quality of life experienced by the individual.

And the software engineer making six figures? She might take here bi-weekly BI check and help others, or go out to dinner at a fancy restaurant, or save it for a durable goods purchase. For her, its like "free money" so its easy to spend (which also helps the economy).

Screw the Military budget, The FED has pumped trillions into the economy with its quantitative easing strategy. Which was characterized as "dropping money out of helicopters". Had they in fact dropped money out of helicopters, the experience of the cash for clunkers program suggests the economy would grow much more quickly than it has, and more effectively because it would grow by new workers entering the workforce, transfer payments which would land directly into the 'cilia' or outer layers of the domestic economy like rents, food, clothes, and durable goods.

This idea sounds stupid when you first hear it. I certainly thought it was, but I've been researching the questions above and looking at things (like cash for clunkers) which might provide some insights into the possible effects, and it is definitely not Marxism or pure socialism. It's something different than that, and it is made possible by the fact that individuals in the US economy generate more output than in any previous time.