UBI doesn’t cause any more inflation than anything else

There is, however, widespread belief that any monetary intervention stimulates hyper-inflation of the form found in 1920s Germany, 1990s Argentina and 2000s Zimbabwe. This is because people believe giving consumers more money to spend leads to businesses charging higher prices to take advantage of increased purchasing power, creating a cycle in which employees demand higher wages to buy commodities, increasing the cost of production, cancelling out any benefit from the monetary intervention and actually reducing the standard of living overall.

UBI is a redistributive economic policy that can be funded by taxing those resources that contribute little to society: wealth and passive income from shares as well as income at the very top end of society

There is little evidence to support this view. UBI is no more or less inflationary than anything else that raises incomes – its impact would depend on whether the economy is at full employment, whether taxes are raised to pay for the scheme and various other factors.

Where hyperinflation has occurred, it has been because essential goods are scarce, raising their value overall, and debt has been held in foreign currencies and paid in currencies declining in value by virtue of countries’ domestic production being disrupted or declining. Our current levels of inflation are caused by similar pressures as those in the 1970s: war leading to an increase in the cost of fossil fuels.

If the logic behind objecting to a UBI on the basis of inflation were correct, then there ought to be absolutely no attempt to introduce new jobs or increase wages, as both increase purchasing power. If inflation is our sole concern, governments ought to slash wages and massively increase taxes. The point is that nobody wants either of those options because, even if they did reduce inflation, people would not want to have their wages reduced.

UBI is a redistributive economic policy that can be funded by taxing those resources that contribute little to society: wealth and passive income from shares as well as income at the very top end of society.

The resources of the rich are generally off-shored and contribute little to a country’s financial wellbeing. Analysis of the distributive impacts of UBI in the UK suggest its introduction would shift resources to those people and areas that need the investment most. That may increase the cost of housing and other goods in parts of countries that have been left behind, but this is a central means of enhancing community wealth and ‘Levelling Up’.

It is also a means of developing entrepreneurship and production within areas that have been deindustrialised. This support for production is, again, an essential means of supporting a bulwark against hyperinflation.

Given that we live in market societies, the fear this will lead to unchecked inflation is counterintuitive, as competition is supported by rising purchasing power and serves to check price increases. The alternative is simply to leave all but the metropolitan centres to wither away and to be dependent on the whims of finance.