The primary benefits to it as seen from the evolutionary libertarian perspective (and other perspectives, but this is to explain why the Friedmans and Johnsons see value in the idea) are for one thing you can do away with a lot of dead weight costs from the bureaucracy. The current system is a bunch of different programs, all with their own rules, regulators, investigators, processors, etc. Under one of these other systems you would mostly just have a department to send out checks/prebates/whatever. The idea being to use made up numbers that in the current system any money that comes into a welfare program 75% goes to pay for the overhead costs and then 25% gets out to the needy, whereas one of these systems might reverse that.
Another is seen from freeing from those rigid programs is the flexibility you started to talk about and Mandark mentioned. Currently with many of these programs there are restrictions involved, you can only buy certain things or you have only set amounts that you have to spend or you lose it or if you make one dollar too much in income or something else you can lose half or all of the benefits. Whereas under a system where it's mostly no-strings attached money you can have people who don't need say $500 a month in food spending that under another program they might have incentive to spend because it's use it or lose it, now they can maybe save money or pay for classes or invest in some other manner as what they see as in their best interests.
The knowledge that some people WILL just spend it on drugs and alcohol and Xbones and spend all day writing horrible music or painting terrible art is offset by the notion that there are people trapped in the current system who cannot escape it without tremendous immediate costs to themselves that make them worse off by "bettering themselves" and these more streamlined and flexible systems would avoid. Plus, the current system doesn't stop a lot of this "bad" behavior and has the aforementioned dead weight on top.
I think it's a political non-starter because there's too many interests aligned against it. The bureaucracy that manages the existing and potential other programs doesn't want to lose their jobs/money/power/etc. Voters would be upset, as they often are currently, because those fucking free loaders aren't spending on the RIGHT THINGS* like Bibles and GRAINS. And like say, the tax code or the rest of the regulatory system, there's the loss of power that comes from the ability to reward various interests that you get in more complex and opaque systems along with any freeing of dependencies that helps let you be seen as the giver of the plenty.
Of course, it's still theft so
*Which if you ever look at your state's say WIC allowances they aren't always doing in the first place. Michigan for example only in the last decade really started to shift away from basically letting parents buy as much cereal and similar as they want but limiting to like one snacks worth of fruits and vegetables and eggs. Now you can buy so many fucking eggs with WIC you'll have Bane for a kid in no time.
