Money To Burn

[rffrydr]

Asian cash handouts

Published: April 3 2009 09:18 | Last updated: April 3 2009 16:54

The helicopters have arrived in Asia- Pacific. Some $9bn of cash handouts began spraying down on Australians last month. Japan’s choppers, moving at a more sedate pace, started to dispense $20bn of cash, with giveaways to residents of two villages in Hokkaido and Aomori a month ago. Tokyoites have a longer wait. Next up are low-income South Koreans, who are to receive more than $3bn in cash and coupons from their government.

Cash handouts are controversial. Miss anyone out and the howls drown out the chugga-chugga of rotating blades. Dispense the largesse equally and protests are almost as loud: do the rich really need more? Effectiveness is also questionable. Handouts can as easily be stashed in banks as spent, in spite of retailers’ ever more ingenious ways to encourage beneficiaries to spend. Japanese are being courted with everything from onsen hot springs trips to special meals, all priced to match the per capita Y12,000 bounty. Down under, those with designs on individual handouts worth about A$900 include entrepreneurial Sydney brothels offering promotions.

Nowhere are these charges more resonant than in Asia, home to some of the world’s biggest household savings pools and where thrift is imbibed along with mothers’ milk. Japanese households, for example, need spend only 0.2 per cent of their accumulated savings to match the entire government handout.

Savvier states are trying to circumvent their citizens’ innate propensity to save. Taiwan, for example, is using vouchers that expire, and Korea is making payments by instalments. Still, a sense of futility lingers. At best, a small amount of government cash will trickle back to shops. But the big stock of savings will be untouched, habits unchanged, and Asian domestic consumption as anaemic as ever.
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