Too thrifty for economic good

SUN JOURNAL

Coupons: A Japanese government plan to spur spending with $6 billion worth of certificates is being undermined by practicality.

April 13, 1999|By Hilary Hinds Kitasei | Hilary Hinds Kitasei,SPECIAL TO THE SUN

TOKYO -- The idea was simple: Shower the Japanese with free shopping coupons and they would spend some life into the economy.

Not cash, which could be stashed under a futon. Not a tax cut, which would only end up in savings banks.

Local shopping coupons worth $6 billion would be good for virtually anything but securities or sex. Every man, woman and child over 65 or under 15 would be given 20 coupons in easy-to-fritter denominations of 1,000 yen -- about $8.

This was the opening round of the Liberal Democratic Party's grand economic stimulus package announced last fall to rekindle the consumer demand that has gone cold as this country plods through its nearly decade-long recession.

The theory, as articulated by Massachusetts Institute of Technology economist Paul Krugman, is to stir up a little inflation. Keep those printing presses rolling and the free money will get consumers and investors spending and cure Japan's economic sluggishness, he says. But in the event, government largess is no match for consumer thrift.

With local election campaigns in full swing and schools closed for the spring holiday, local governments from Hokkaido to Okinawa notified their constituents last month that the coupons were ready to be picked up. Policy makers and shopkeepers watched to see what they would do with the bait.

The response was as heated as a fried egg in a Tokyo hotel.

Eight days after the vouchers had been issued in Tokyo's Minato Ward, fewer than half of the lucky recipients had bothered to pick them up. Reporters sent out to cover a weekend shopping spree found themselves on a snipe hunt.

More inquiries came from foreigners who were confused about the criteria for eligibility. One household received a set of coupons for one half-Japanese child but none for the non-Japanese children.

The most excitement may have been stirred up at a Tokyo middle school the week before when children who had been kept in the dark about the government distribution learned about it from friends.

Parents complained that their children were coming home telling them that they were "entitled to the money."

But if the government expected that coupons for children might spark consumer demand for computer games, digital cameras, CDs and videos, they were apparently wrong.

According to a nationwide survey by the Asahi newspaper, 64 percent of the households plan to "spend them on the whole family," a foreboding sign of practicality. If they were spending them on the children, it was to replace outgrown clothing, surely not what their children had in mind.

"Emi and Miki thought it was their money," says Mrs. Horiae, a mother of daughters aged 11 and 13 who lives in Higashimurayama, a western suburb. "No, no, I said. This is for us because we raise you."

She used some to buy tampons on sale at a convenience store, and then exchanged some others for rice coupons at a rice store, which will take care of an obligatory gift for her landlord. Her husband used some to put gas in the car and the rest to pay the electric bill.

"We wouldn't have been so rash about them if we weren't leaving the country in two weeks," says Horiae. "If I'd had more time, I could have spent them carefully, probably for food."

Half the survey respondents said supermarkets were where they planned to spend their coupons, too. This will not serve the government's plan to use the coupons to boost small businesses.

How about the elderly Japanese, many of whom subsist on interest from their savings -- now drawing less than 1 percent? There was no sign of pent-up demand from them on the first weekend either. The Miki chain of eye-wear superstores offered anyone who used coupons a 10 percent discount on top of a half-price sale, but saw no extra business as a result.

What the oil crisis did for Japan's manufacturing industry in the 1970s, the recession is doing for its consumers in the 1990s: making them the leanest, smartest, most competitive in the world. In this overwhelmingly middle-class society, keeping up with the Tanakas has been replaced with a race to the bottom. The "economical life," whose virtues and pleasures have all but disappeared in the United States, has become a national pursuit in Japan.

A best-seller promises "You Too Can Save 60,000 Yen a Month." A magazine features "336 Money-Saving Tips." Television shows demonstrate how to prepare gorgeous and healthy meals for a family of four for the equivalent of $8 or construct solar heating devices on your roof. All help unemployed housewives with the education and time to squeeze extra value from the household budgets they traditionally control. With 2.2 percent less disposable income last year, they wrestled household spending down 4.1 percent.

Food, which accounts for a far higher portion of Japanese than American expenditures (23 percent vs. 14 percent), yields greater savings as well.

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