Are Coupons Japan’s Ticket to Prosperity?

TOKYO — Here’s an idea to get Japan’s tightfisted consumers to finally start spending: Give away $250 to every man, woman and child in the country.

Sounds easy, foolproof. Send everyone off on a huge spending spree and Japan is back in the pink, drinking the bubbly and strutting its stuff on the global stage.

That’s the scheme now making its way through parliament. But Japan’s leaders have discovered that giving away up to $35 billion to tens of millions of people is pretty complicated, especially if you’re looking for a system that is fair, secure and still has a snowball’s chance in hell of jump-starting Japan’s economy.

Consider the money itself. If you just drop all those crispy bills in people’s palms, Japan’s prodigious savers will probably just sock them away. Saving may be a virtue, but not in a recession when you want that money on steroids, zipping about and creating jobs, putting the hum back in the Honda plants.

So Japan’s minority Komeito Party has come up with the idea of shopping vouchers. Why not dish out some coupons with short-term expiration dates?

This fringe idea recently edged into the mainstream after Japan’s ruling Liberal Democratic Party vowed its support. So Japan could soon be awash in coupons, a giant gift-certificate melee in the world’s second-largest economy.

Which brings up a second problem: How to make it fair. Almost any strategy disadvantages one group or another. Even throwing money from helicopters leaves some people upwind and empty-handed.

Give vouchers to everyone and you squander public money on the well-heeled. Give them to folks on hand-to-mouth budgets and you’re more likely to get your economic bang--but in status-conscious Japan, will people be too ashamed to spend the social equivalent of welfare vouchers?

Then there’s forgery. To prevent anyone with a color copier from being able to reproduce them, the vouchers need to be of near-currency quality, replete with fancy watermarks, holograms, serial numbers and, of course, some pretty pictures. There’ll be more work involved in trying to find banks and clearinghouses willing to count, exchange, monitor and handle this Fuji-sized mountain of dead trees--roughly 6 billion slips of paper. (Japan doesn’t have a paperwork reduction act.)

And since it’s a government program, you’ll need lots of rules. Should the vouchers be spent on electricity bills, which won’t spur any new spending? What about gambling parlors, liquor stores and hostess bars? And how will you deliver the coupons? If you hand them out in person, you could be working well into the next century. Stick them in the mail and you’ll run into sticky fingers, even in famously honest Japan.

More fundamentally, will it work? Will this massive mound of Monopoly money revive consumer confidence and restore Japan’s economic pulse? Tax cuts announced in April haven’t done a whisper of good, after all.

“This program is so stupid,” said Hachiro Fujunaka, a retiree getting on his motor scooter in Tokyo’s Ginza shopping district. “The whole world is going to laugh at us with this coupon idea.”

Chiaki Yamaguchi, a consumer behavior specialist at Dentsu, Japan’s largest ad agency, rattles off a host of statistics before edging toward a conclusion: It probably won’t work.

Others say it’s a quick fix that doesn’t address Japan’s real problems. “It’s such an immature idea,” said Masaru Takagi, economics professor at Meiji University. “We’re being treated like children receiving our cash envelopes from grown-ups at New Year.”

Supporters say one advantage of using coupons over tax cuts is that it puts money in the hands of people who don’t make enough to get taxed and are most likely to spend it. Another is that the expiration date serves as a call to action: Use it or lose it.

But critics counter that consumers will just sell them at discount shops and bank the cash, or use them in lieu of cash, making it an economic wash. “It just saves you from going to the ATM for a week,” said Garry Evans, strategist with HSBC Securities.

Japan has a few things going for it, however, in this rather unusual experiment--which its architects say is loosely modeled on the U.S. food stamp program and a 1970s Ford administration $50 tax rebate.

To enable it to monitor the program, Japan already has a system that tracks almost everyone in the country. Coupons are also familiar here, with more than 3,000 types in use for everything from travel and general spending to rice and beer.

A few local wards and villages already give away money. Taito ward in Tokyo started a voucher program in 1997 that gives $25 to each elderly person in the district once a year. Iwase Kiyoshi, a Taito official, said 93% of the coupons were used last year.

Out on the street, however, shopkeepers have a more measured view. Masaaki Hirikiri, chairman of the Yanaka-Ginza Shopping Assn., said small shops tend to accept the coupons but busier stores often refuse, which can embarrass coupon-holders.

But some Japanese, as well as outsiders, applaud the unorthodox approach. “It’s nice to see the Japanese finally thinking laterally,” said Russell Jones, chief economist with Lehman Bros. Japan.

Katsuyuki Hikasa, an upper house legislator from the Komeito party, strongly backs the idea. Japan is in a crisis, he said, and has run out of workable policies. “If there’s a better idea other than this one, we’ll consider it.”

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Etsuko Kawase of The Times’ Tokyo Bureau contributed to this report.