It is the ultimate election giveaway. With at most five months to go before he must call elections, Japanese prime minister Taro Aso is throwing cash at disenchanted voters. No one can query his need to curry favour or prime the pump. He has a 10 per cent approval rating, meagre support in parliament and an economy on its back. But will another big cheque do the trick?
Japan, which has more experience than most with fiscal stimuli, is at the front of the global pack. Local reports put the new package at $150bn, bringing the total pledged since Mr Aso took office in September to $270bn. At about 5 per cent of gross domestic product, that is more than twice the level recommended by the International Monetary Fund. The latest plan is also more innovative and, probably, more effective than its predecessors. Rather than relying on Japan's thrifty consumers to spend government handouts, there will be subsidies to buy energy-efficient appliances. Buyers will be given “eco point” rebates that can be traded in for other electronic goods – so boosting both consumption and the green agenda. Carmakers will also be tossed a bone, with those who trade in old cars given cash, albeit $660 less per vehicle than under Germany's “cash for clunkers” scheme.
The headline figures probably flatter the true amount to be spent, however. Cars have to be at least 13 years old to qualify for the scheme. Such relics are a rare sight on Tokyo freeways. Extra billions of dollars are also going to guarantee company loans. But, if the use of funds already earmarked for similar purposes is anything to go by, take-up will be low. The biggest concern of all, though, is how the rich world's most indebted country will foot the bill. That is highly unlikely to be Mr Aso's problem.