What are they good for, anyway?
Last year, among other measures to mitigate the economic impact of the pandemic, the Japanese government made a single 100,000 yen payment to all residents of Japan. This was not means tested nor was it restricted in any way in how it could be used.
Recently there has been a renewed interest in this kind of payment because the election is coming up and many of the opposition parties are promising to make additional payments.
The government estimates that only 30% of the people that received the 100,000 yen actually spent it, while the others saved or invested it. Obviously this is not ideal.
The point of this kind of stimulus payment is to help people who are struggling financially, but also to stimulate the economy. If people spend the money, ideally there will be some kind of multiplier effect.
For example, if you buy a bento, the bento shop stays in business, and they pay their staff and suppliers. Those staff and suppliers then go on to spend the same money, and so on. The further the money goes in terms of people using and reusing it, the greater the multiplier effect.
However, if you just save the money or invest it into the stock market, this will not have the same effect on the local economy, even if it helps you.
The Poll
I did a poll on Twitter yesterday, and it seems the English-speaking Twitter community was more prone to contributing to the economy last year.
Interesting to see that 7 people didn’t take the money. I respect this kind of decision, but don’t share it (we invested our stimulus in low-cost world stock mutual funds).
From the news reports I saw, it seems as though future stimulus payments will be targeted at people in economic difficulties, or in the form of vouchers, etc. like the Go To campaigns from last year. There is also this Komeito proposal to give 100,000 yen to all children up to the age of 18.
How about you? What did you do with your 100,000 yen? Do you think we will see more stimulus payments?
I find the question of “how did you spend *this particular* 100k” pretty hard to make sense of. My family’s annual savings for 2020 certainly didn’t increase by 300k over the previous year, so I guess in that sense we must have spent it.
I’m a big supporter of the “no means-testing” route and glad Komeito was able to steer the government there. I think means testing just introduces too many obstacles & inefficiencies in cases like this where the need for immediate broad financial support to the population was obvious. I agree that ideally, people who need the money more should get more than those who don’t. Simply making the stimulus payments taxable would achieve this, although I can see this being a bit complicated to implement.
I wouldn’t be opposed to additional means-tested support, although in an ideal Japan, the standard social welfare programs would be sufficient. I can’t help but wonder whether a certain amount of classism is involved when people who have become needy due to the pandemic are considered deserving of additional support compared to people who have become needy for the usual reasons.
I spent the money at small (non-chain) stores in the neighborhood, often buying things that are slightly more expensive than from the big retailers or items that are discretionary (packages of sweets, locally roasted coffee, Japan-crafted implements). It was a lot of fun. I kept a separate budget for the spending to make sure we knew where it went so we would appreciate the small extravagances. It probably won’t have a material impact on the long-term survival of the stores but figured it couldn’t hurt.
… re: your survey, option 5: paid back short-term debt for living expenses, and/or cleared unpaid bill or two, say, electricity, rent etc.etc. And what if you had surveyed specifically long-term part-timers. would their responses confirm that only 30% DID spend the money, I wonder.
I would count paying bills as spending, at least for the purpose of the survey.
Some people surely did a combination of save and spend
Yeah
It would be good to see some more comprehensive stats on the effects of this handout. My personal view is that it was embarrassingly meaningless. Too little, too late but better than nothing at all. It shows a complete lack of understanding of how irrelevant such a payment is for people whose service job was destroyed at the whim of the so-called “authorities” for forcing everyone home at 8 pm every night (for no substantiated reason), to join all the old farts who live such a life anyway (and therefore are little affected by such regulations) but provide a majority of voters for the incumbent party. Remember that the pensioners were the first to be vaccinated. Although vulnerable, pensioners are the least affected by requirements to stay home. Far better to have vaccinated first the working age groups and then let them back to work and play ASAP, to keep the economy (especially service industries) going. For the govt., the 100k was just a shallow and embarrassing investment in the next term of office. For those of us who did not lose our income or accommodation through pandemic-related layoffs, it was just shameful extra play money (“investing in low-cost world stock mutual funds”). Any effects on the economy were probably a minor blip. People in real trouble were not meaningfully helped by it. Shame and reality-check time, folks.
To be fair there were other programs intended to help people last year, including rent support, interest-free loans, and grants to small business owners (as well as the normal seikatsu hogo welfare system).
The stimulus was intended to be just that, a stimulus, although I’m guessing for many families it was a real life-saver. I agree it could have been distributed quicker.
Thankfully vaccinations are now where I would have liked them to be several months ago, and it seems Japan is going to end up as one of the more vaccinated countries. Personally, I am more optimistic now (but still amazed that, almost two years on, we are still in the midst of the pandemic).
“more prone to contributing to the economy last year.” might be a stretch in interpretation. English speaking people might just be more prone to spending than saving, regardless of their intentions to contribute to the economy. Unless you meant over-all effect and not their primary intention then maybe it could have more sense.
Perhaps an expiry date on spending the 100K (say via coupons, vouchers) would have provided their intended effect
That’s what I meant 🙂
I’m guessing English speakers active on Twitter are likely to be younger and less well-off than the average Japanese resident, and therefore more likely to spend a windfall.
Sure, I spent it. Who can save anything these days?
The stimulus came right in time for me. I was teaching online, and my suddenly my old computer could not handle the new Zoom updates. I used the stimulus for a new computer. Without it, I would have been teaching on my iPhone. I do not know about future stimulus payments, but if they happen, I like the idea of giving them equally, maybe up to a certain income level.
No need for means testing if taxation is progressive.
I actually gave it to a younger relative overseas who has been suffering due to Covid related work issues to help with childcare costs. Was glad to help someone though I suppose I should have spent it here! I suppose it’s administratively complicated to means test these payments. The latest ones I see as electioneering froth and wish the government was more serious about narrowing the widening wealth gap, but their style is to reward those who don’t need it at the expense of those who need a lot more, while the market for luxury goods reportedly thrives.
I use it to pay my unpaid nenkin contribution. Is that count as spending or investing?
Hah! That would seem to tick both boxes 😉