A UBI will increase inflation – increased income without increased production drives inflation and undermines the value of wages
Rajwanshi, 2020 – writer for The Berkeley Economic Review [Yash “Unboxing Universal Basic Income” February 25, Berkeley Economic Review Editors: Alex Cheng & Andreas Maass https://econreview.berkeley.edu/unboxing-universal-basic-income/ Acc 6/14/23 TA]
The final argument to consider is the inflationary effects of this policy. A fundamental concept here is the separation between production and income. Economists argue that income is earned by people because they are essentially selling their labor on the labor market as a contribution to the production of goods and services for the economy. Increases in income that aren’t directly related to correlating increases in production tend to result in higher prices so the two sides of the equation can balance. For this reason, many argue that income and economical production can’t be separated without dispatching macroeconomic effects for the whole country. In this case, the particular concern is that UBI will increase the inflation rate, which would lead to workers’ wages being valued even lower than in a pre-UBI world. Interestingly, if the participation in the workforce actually decreases, this inflation would be compounded and be even more detrimental for the country.