With a guaranteed income defined not in dollars but in goods, the government could automate (much of) the welfare of these people. "You get 10 loaves of bread, 3 cheese, and 1 elective per month." for example.
Then people wouldnt complain about the big screen tvs, etc. that they think the poor spend the welfare money on.
We had that. "Government cheese" was not always a metaphor. Neither were "food stamps".
As it turns out: it's better to just give people cash and let them make their own determinations and let the free market and substitution do its thing, than maintain a huge parallel infrastructure just to avoid hurt feelings over the idea that someone somewhere may buy a non-necessity with welfare dollars.
It costs the taxpayer less, people get better results, they have a better opportunity to learn and improve, etc. Some will abuse it, but some sold their government cheese and food stamps to buy non-essentials as well.
People complaining about the big screen TVs are flat-out disingenuous. They're either outright ignorant of history and/or of the specifics at hand [1], or they're lying to effect a policy change they couldn't justify with the truth.
[1] Studies have been done. The "welfare queen" and "strapping young bucks buying steak dinners" do not actually exist. Exceptions do, but they've never amounted to significant quantities of waste. And we already do search for, and ferret these people out.
The only problem with the "free market" thing is that the current market isn't really all that free, and a totally free market is full of externalities and wrong incentives (incentives for A and B to collude to the detriment of C) .
As a convinced capitalist, I find myself agreeing with you (although you leave out things like toothpaste, shoes, etc).
In economic terms giving anything but money is less efficient, but in practice it would save massive amounts of money, prevent starving people in the streets and give them an incentive to work themselfs up.
I think you've re-invented the Roman welfare system. Probably less vulnerable to abuse than currency-based welfare, but in the end it had sustainability problems.
Then people wouldnt complain about the big screen tvs, etc. that they think the poor spend the welfare money on.