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Japan's stimulus bonanza cheats future generations

To tackle the huge economic impact of the coronavirus, Japan has been distributing trillions of yen to its citizens

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Japan's stimulus bonanza cheats future generations

The Olympic rings are reinstalled at the waterfront in Tokyo on Dec. 1. The Games were postponed this year due to the Covid-19 pandemic. (Photo: AFP)

When reminded of the US national debt, Ronald Reagan used to disarm political adversaries with humor: "The debt is big enough to take care of itself."

Japan seems to have learned something from the sarcastic remark made by the former American president but, as often happens on these extreme eastern shores, it got lost in translation. Reagan's comment was meant to be a witticism, not a recommendation. 

To tackle the huge impact of the coronavirus on the economy, Japan has been distributing trillions of yen — in the form of ready-to-spend cash or huge discounts — to its elated citizens. From Oct. 1, Tokyo was added to the "Go To Travel" campaign, which was meant to stimulate consumption in the tourism industry depressed by the temporary ban on foreigners. Japanese people have been able to stay in the most exclusive ryokan (traditional hotels) for half-price. What a deal.

But the bonanza wasn’t over. Authorities also kick-started the "Go To Eat" campaign, which supports restaurants affected by Covid: points (as good as plain currency) can be redeemed through reservation sites. I personally met owners of high-end eateries who thanks to this plan saw their waiting lists swollen like a pufferfish.  

In addition, Japan has also declared that a Covid-19 vaccine will be readily distributed and will be entirely free.

Every Japanese in recent months (at least those with time on their hands) has been able to travel for half the cost, eat a once-in-a-lifetime bargain and soon they will get a free vaccine. It must have felt like every day was Christmas.

Even now, you can scroll through the mainstream news and it's all about food and travel and pushing even more people to grab this rare opportunity to go out and spend what they don’t have. Not a single news item about how much all this “free money” will actually cost. Why spoil the fun with boring reality? 

A national newspaper has gently put it this way: "The countermeasure costs will be largely shouldered by the national government." Great, the average reader will think. Someone is taking care of this.

Not a single word on taxes or debt. And so is no surprise that by the end of this year we discover that the Japanese public debt will reach an astounding 250 percent of GDP. A mere US$12.2 trillion. In absolute terms, it is over half the total amount of the debt of the US whose economy is four times the size.

Japan's debt swarmed out of its cradle during the 1990s when the bubble burst and real estate prices felt like an anchor in mid-ocean.

Then the “stimulus packages” were injected, which also included a push for health care due to the aging population. The debt hit 100 percent of GDP in 1997 and then doubled in size in just over 10 years, passing 200 percent in 2009. 

Tax education doesn't seem to be a concern in Japan even though every family has to deal with it, but even if regular people do not understand the detailed mechanism of a country’s budget, they can certainly understand the plain logic in their heads.

Who is going to pay for all this given we all agree it won’t be coming from Santa Claus? Of course, the Japanese people are. They also know it but they tend not to be reminded often.

It doesn't take an AI-clever individual to understand that to avoid going bankrupt over an unsustainable deficit, a government can either increase taxes or cut public spending. The latter, we all know, will never happen as it is incredibly inconvenient for any politician who seeks to be re-elected.

Ever noticed why nobody runs a campaign on reducing the debt but instead focuses on the more appealing universal income? It is good to remember that in the last Tokyo election someone — with good winning odds — even suggested canceling the Olympics and distributing the money directly to the people. Free money again!  

An honest government should have explained the "Go To Travel" measures this way: imagine going to travel with your kids ... and they will be footing the bill. How many families would have chosen to actually go?

What’s more bewildering is that just recently a resolution was passed by the lower house of parliament that aims at raising awareness among businesses, local governments and citizens about the actions to take to stop global warming.

The global warming rhetoric has always been associated with the claim that it is a moral obligation for the sake of future generations: they are the real victims if we don’t act soon. We have heard it a thousand times.

Do you get the irony? When we see how future Japanese generations are being cheated, the political hypocrisy stands out starkly.

The views expressed in this article are those of the author and do not necessarily reflect the official editorial position of UCA News.

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