Free Lunch Isn’t For Everyone, Ask Japan

Pundits have long debated about why and how Japan’s policies (e.g. ZIRP, Quantitative Easing, Infrastructure spending, etc…) have failed to “reinflate” its economy following the bubble bust in 1990s, which eventually led to “the lost decade”.

Naturally there won’t be one single or simplified answer to a complex problem, although it is just our thought that this article just may have provided one important clue.

This excerpt from Washington Post’s article entitled “Free Money? In Japan, Most Say They Will Pass”.

All highlight mine.

Japan is having trouble giving away a free lunch.

To perk up the fast-shrinking economy, Prime Minister Taro Aso announced late last month that his government would give everybody money. A family of four would get $600.

Then the trouble -- and the confusion -- started.

Should rich people get it? How rich is rich? Who decides who is rich, and how long will it take to decide?

Aso, who came to power in September and within a year must call a national election that polls show he may well lose, declared initially that everyone, rich and poor, would get the money.

Then Kaoru Yosano, the minister for economic and fiscal policy, said that perhaps the rich should not get any money. He noted that such a giveaway could be viewed as an unseemly attempt by the prime minister and his ruling Liberal Democratic Party to curry favor with voters.

Aso found that to be a reasonable argument and said an income cap would probably be a good idea.

Then his finance minister, Shoichi Nakagawa, said that figuring out who is too rich for a handout would create an excessive workload for local governments. He also said it would delay the distribution of money, which Aso wants to get into people's pockets by March.

Aso found this, too, to be a reasonable argument and said on Monday, "No income cap will be implemented."

Now it turns out that voters do not want the money.

Sixty-three percent said they think that a handout is unnecessary, according to a poll published Wednesday in the Asahi, a national daily. Every age group opposes it, as does a majority in Aso's ruling party, the poll found.

One answer is C-U-L-T-U-R-E.

The Japanese are such fanatical savers that they are the reigning titlist as the world’s biggest savers, which according to aol.com, ``boast nearly $15 trillion in domestic household financial assets, about half of which sit in bank deposit accounts.”

So with so much money stashed in the banks, obviously there isn’t any urgency for most of the Japanese for free lunches in the same way most of the world drools over such opportunity.

The other dilemma clearly emphasized by the article is how noble intentions dreamt or conjured up by regulators and egalitarians get cluttered with the argument over classifications, conflict of interest and the unintended consequence of bureaucratic nightmare.

The morals of the story:

Since everyone would have different set of values, you simply can’t please everybody.

There is no single "regulatory" solution to the problems of mankind.