Seems like you are making same binary assumption that people either work or they don't. The important question is probably how well/hard do people work. Lower productivity means people that work produce less so prices rise. Many make mistake thinking only about having money, but forget the supply part of the equation. If productivity is lower, there are literally less things available to everyone. And these equations are not linear. Look at the current RAM situation for example.

But the major issue is that the progress slows down. Effects of slower progress accumulate with time. At first you are only a few years behind, then you are a few decades behind etc. Imagine inventions, cures being available decades or hundreds of years later (depending on what timescale we look at).

I think UBI sounds nice, but is far from an optimal solution. Wouldn't be better, if we could solve same issues UBI promises to solve in a more efficient way (with less negative side effects)? UBI is just throwing money at the problem, hoping it will solve itself.