Japan hopes coupons clip consumers' stingy ways
TOKYO — This is, quite literally, pocketbook politics.
Japan's government has come up with a plan to ensure that tightfisted consumers and their money are soon parted: It's giving them coupons worth nearly $200 each.
The aim is to snap consumers out of their slump, get them to spend money instead of save it, and stimulate the economy.
Critics - and there are scores - call the plan impractical. "This is a very stupid idea," economist Haruo Shimada says flatly. "Consumers aren't spending, not because they don't have money, but because they're worried about the future. Even if the government gives them more money, they won't spend what they don't need to spend."
Housewife Hisae Izuka is the perfect example. Strolling along a downtown Tokyo street with her dimpled kindergartner, she says she has no plans to spend more, coupons or no coupons. "My kids are all small," she says. "My spending habits won't change for a couple of years."
The coupons belong to an $163 billion stimulus package the government is set to approve today. And while the public and pundits seem to think this venture will fail, a previous test was successful. In September, coupons worth about $5 were sold for around $4 in a Tokyo neighborhood and snapped up quickly.
But the new plan, which goes into effect in January, is on an unprecedented scale. The government will spend over $5 billion on coupons. They'll be issued to every family with adults over 65, children 15 and under, and to people on public welfare.
Dubbed "Hometown Coupons," they are valid for six months and can only be used for shopping. They will not be redeemable for cash, and stores will not give change on purchases.
Past attempts to stimulate the economy through tax cuts have flopped because consumers have just saved the money. The coupons are supposed to be "save proof," but critics say consumers will just use them for goods they plan to buy anyway.
Others say the coupons will stimulate more counterfeiting than spending. "This will make criminals very happy," predicts political analyst Minoru Morita.
The bottom line, say economists: The coupons aren't enough. Mr. Shimada says the economy needs corporate, income, and housing tax cuts, plus massive public works spending. "The government isn't in a position to be taking this very low-key, strange policy."