>Over the long term it harms them

Yes, but not for the reasons you state. It harms them because we have an zero desire as a society to effectively combat inflation, which negates any benefits we can give people who receive the basic income.

The powers-that-be don't take action to make sure the people who get basic income can actually use it to improve their lives. Food prices rapidly inflate, education costs skyrocket, medical costs increase exponentially almost overnight.

Much like how the government backstopping student loans basically got university costs to jump, promising to give people a basic income while not addressing the root causes of inequality and wealth disparity just makes things worse.

If you want basic income to truly work, you have to engage in some activities in the short term that are inherently un-capitalistic, although if done correctly, actually improve capitalism as a whole for society. Price controls and freezes, slashing executive pay, increasing taxes on the wealthiest, etc.