Subsistence Spending and the Hood Economic Multiplier

A person choosing not to work would necessarily spend every penny of UBI just to stay above the poverty line. Almost none of that would go out of the neighborhood. Even bus fare to the MegaMall is not figured into the poverty line.  Since poverty economies are generally cash economies, and the savings rate is essentially zero at the poverty line, the economic multiplier of each external dollar to the community is huge. Whether that external dollar comes from UBI, street vending, busking, or graft, that dollar supports many local businesses most of which buy locally. with cash.

A good lay explanation of the multiplier effect can be found here: http://economicsonline.co.uk/Managing_the_economy/The_multiplier_effect.html

1/18/17