Beginning from the end of March, each person residing in Japan (including foreigners who are registered with their ward office) will be receiving a stimulus check in the mail from 8,000 to 12,000 yen. This is a part of PM Aso’s highly criticized 5 trillion yen (51 billion dollar) stimulus plan, the bulk of which will be delivered to us by check. But will it really have as big of effect as the government hopes for?
When I received my $300 stimulus check back in early 2008 from my country’s government, I am ashamed to say that I put that money straight into my savings account. Only after feeling a little bit guilty for receiving money which was supposed to be used to stimulate the economy, i.e. retail therapy, I decided to spend $70 of it on an online CD store. When I asked Japanese people what they would do with their stimulus checks from the Japanese Government, most of them replied that they would save it or use it for other bills. No one said they would go out and buy a new pair of shoes. Or CDs.
When Japan had an economic slump in the 90’s, the government spent a lot of money on infrastructure programs. The thought was that by spending money on big construction projects, they would be able to create new jobs. However, the effect was small and many places are still riddled with debt from projects that just didn’t make any money.
So in order to not repeat past mistakes, this time the package consists of stimulus checks, tax cuts, highway toll reductions, and increased loans to small businesses. However, economists are skeptical that this will turn things around for Japan.
So, do your part for Japan. Go buy those new shoes. Or CDs.