Large Cash Handouts One Option to Bolster Economy: Economist

Tokyo, March 13 (Jiji Press)--The government must come up with
major policy surprises to spur Japan's weak private consumption, such as
giving each 400,000 yen in cash, Takuro Morinaga, economics professor at
Dokkyo University, said in a recent interview with Jiji Press.
Morinaga said worries about the future have been driving everyone
to limit their personal consumption and capital expenditures, even when
average incomes edged up in price-adjusted real terms in October-December.
The Japanese economy "is sick in mind, not in the body," Morinaga
said.
Morinaga said cash handouts of 400,000 yen per person could
"bolster slack sentiment." "What's needed is shock therapy," he explained.
He pointed out that only the government can stop people's worries
from hurting consumption and investment but that its responses have been
"unthinkably slow."
The Japanese government's 75-trillion-yen economic stimulus
packages since last summer involve direct fiscal spending of only 12
trillion yen, which is almost "nothing compared to economy boosting programs
by the United States and China," he said.
He also criticized the Bank of Japan for doing nothing to actually
increase the monetary base.
"The Japanese economic downturn is a man-made disaster," he said.
To improve sentiment, the government should consider cash handouts
and tax breaks, which would benefit all people, not public works spending,
which is often associated with vested interests, he said.
Morinaga said that 50 trillion yen of additional economic measures
should be sufficient and that the issuance of government bills would be one
option to finance the steps, he added.