Establishing a Universal Basic Income would overheat the economy, generate an overwhelming demand, and spike hyper-inflation – at best, the plan generates negative perceptions and triggering fears of inflation

Of course, the UBI detractors would most likely chime in and respond that it is not the upward pressure on wages, per se, that is problematic, but rather the potential that increasing wages could overheat the economy by creating greater demand than supply, which is the principle driver of inflation. Paying higher wages to workers, combined with the infusion of unearned cash (and here the term “unearned” is solely meant to indicate that it is not tied to paid labor) in the form of a universal guaranteed basic income to all citizens regardless of their employment status, would, most likely, move more cash into the hands of those most likely to spend it, for both would disproportionately be allocated to those who find themselves on the lower rungs of the country’s income distribution continuum. And putting more cash in the hands of those most likely to spend it, that is not accompanied by an economy proportionately increasing the production of those goods and services a newly moneyed class is demanding, will most likely place an upward pressure on prices, which, of course, summons fears of inflation.

However, whether or not a UBI causes hyper-inflation to some extent will depend on the level at which it is set. Even the most ardent supporters might agree that giving everyone $100,000 annually will most likely jolt the economy into a tailspin of inflation or even stagflation as production grounds to a near-halt and the country turns to imports to satisfy its demand for goods and services. Hardly any proposals set the proposed UBI levels that high. At minimal levels (the lowest proposal I’ve seen is $2,000 annually), a UBI is unlikely to have much impact at all, other than providing emergency funds to the most destitute. And at a modest level—not too big, not too small—a “Goldilocks” UBI might have great benefits not just generally, but for workers specifically. Such a UBI is most likely to benefit individuals who currently feel trapped in jobs paying minimum wage or lower, or in jobs that are unsafe, or in jobs in which they are mistreated, in addition, of course, to those who are not employed and living on the brink. One additional group of workers who might benefit are the altruistic labor force—those workers who, but for the need to make an adequate wage, would prefer to work in those sectors of the labor market that contribute to the public good but offer minimal compensation, if any. How many more individuals would switch to coaching little league, cleaning public parks, staffing public libraries, feeding the homeless, or creating public art, if only they could afford to do so. Perhaps the more appropriate question to ask, then, is at what level could society reap the positive effects of a UBI without the economy entering into an inflationary tailspin; surely, there is such a level.