Free money

Japan is handing out money to every resident of Japan on other than a tourist or student visa, in a bid to stimulate consumer spending and help get us out of this recession.

If you were born before 1945 or after 1989, you get 20,000 yen; otherwise you get 12,000 yen. My family is getting 64,000 yen (currently equivalent to about US $675).

My wife told me she plans to stick the whole thing in the bank. Which just goes to show that in a nation of savers, you don't encourage spending by giving people money; you encourage spending by making consumption more attractive. For example, they could have set the consumption tax lower by a percent or two for a while.

Of course, this is assuming that the intent of the giveaway is to stimulate spending, and not to stimulate good feelings for the currently very unpopular prime minister (who is also facing an election soon).

3 comments to Free money

  • Zac

    Its a real pain to change the consumption tax because shops have to update labels and systems. They did it in the UK recently (from a shocking 17.5% to 15%) and there was no end of uproar about it.

    Handing out this cash in Japan just created a nightmare for the local city offices, let’s see if it helped the economy in another 6 weeks from now when everyone will have received the cash and had time to spend it.

  • @Zac

    Good point about the hassle of a switch, especially temporary. Still, handing out cash can’t be the best way to get the Japanese to spend more. It would work perfectly for Americans, though. 🙂

  • Zac

    I really struggle to see the logic of the decision to give out free money.

    They tried it before (I think less than 10 years ago) and it didn’t work, so why would it work now? The Japanese are known as being savers.

    I think a lot of the time the government just want to be look like they are doing something. Anything will do, so long as it is some action. Bad action is better than no action. This is something I see often in the workplace too (Not limited only to Japanese colleagues by the way).

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