I will write the same thing I write, in response, to every article about UBI — It won’t work…
Jerry Jordan
345

It doesn’t actually work like that, Jerry. If the government puts extra money into the economy by spending more, be it on infrastructure, public employee pay or social security, that in itself does not cause inflation. It is true that all spending, whether government sector or private sector, carries an inflation risk, but only if there is insufficient capacity in the nation for manufacturers and service providers to respond to the increased spending by producing more. That capacity consists of unemployed workers, unused raw materials and idle plant and machinery. The point about Weimar and Zimbabwe was that there was a collapse in productive capacity so there was too much money chasing too few goods. The inflation was supply side driven. In the case of UBI (which by the way I do not support) it would only replace existing levels of social security, but the important differences would be that everyone would get it whether they were working or not and the removal of the complex system of various different benefits and administration of them. However, UBI would effectively be progressively withdrawn as recipients’ income increased by way of taxation. The two advantages would be that there would no longer be a cliff edge between working and not working which in the current regime is a disincentive for the unemployed to seek work. The UBI in itself would not be inflationary.

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