For over a decade before I married, I did all my Christmas shopping in the manner of many other young men: I bought everybody gift vouchers.
Each year as the shopping season peaked, I’d brave Dublin city centre for one visit only. All around me, more thoughtful men darted between shops with fear and panic in their eyes, arms weighed down with coffee-table books and Yves Saint-Laurent perfume sets that nobody would ever use.
Instead, I'd smugly congratulate myself for my ruthless efficiency as I slalomed between the panic buyers down Henry Street. Usually I'd end up in the Arnotts department store. I'd count up how many family members and friends I had left, buy the corresponding number of vouchers in one beautifully calm transaction, and then go back to my life.
Paschal Donohoe, the Minister for Finance, was probably a thoughtful gift buyer as a younger, single man. But as the Government casts about for ways to revive the consumer economy once Covid-19 passes, he, or his impending successor, should consider embracing the wisdom of vouchers.
Gift buyers chide us devotees to vouchers. We are bland or lazy or devoid of ideas. “You may as well give them cash,” they sneer.
That isn’t true. Cash rarely feels like a true gift. Gift your sibling a €50 note, and the chances are they will throw it into their wallet or bank account with their other cash. Maybe they’ll put it towards their next diesel fill or, more likely, forget it’s there.
But give them an equivalent voucher for a department store and, well, they have to spend it on something nice for themselves, don’t they?
The full extent of the wisdom of gifting Christmas vouchers became apparent the following February or March. That clunky hardback book of aerial shots of the Amazon that you reckoned your sister-in-law would appreciate was, by now, probably keeping down a carpet dog ear in her spare room.
As for the thoughtless voucher? She’d have it clasped it in her hands as she flitted between the Arnotts cosmetic counters like a hummingbird, delighted to be making a truly discretionary purchase funded by someone else.
Discretionary spending
That is the power of vouchers. They are time-limited, so must be spent before expiration. You also tend to use them for something discretionary, a treat. And vouchers get people out on to shopping streets where, in all the excitement, they might even top it up with their own cash and use the lot to fund a bigger-ticket purchase that otherwise might not have happened.
Attention in recent weeks has centred on central banks potentially funding post-Covid-19 stimulus programmes using “helicopter money”. That mean effectively printing cash and depositing it directly into citizens’ bank accounts. In the United States, they plumped for $1,200 per head for adults and $500 per child.
In a time of fear and loathing, if someone put cash in my bank account, personally I’d leave it there while I waited to see what happened with the economy. I don’t think I’d rush straight out the door to spend it in shops and restaurants.
And the shuttered shops, bars, restaurants and other SMEs that are taking the brunt of the economic punishment for this public health crisis are exactly where we should want that cash to go. Just ask their proprietors, haunted in recent weeks by the shock of the crash and the potential insolvency hanging over their heads like the Sword of Damocles.
You can spend cash on anything. I could spend it by the pool in Majorca after all this, which would defeat the purpose. Or I could just admire it in my bank account, which only serves to shore up the bank’s finances.
Or the State could instead just give us all vouchers with a short expiration date, usable at local shops, hospitality outlets and other consumer businesses, which could help to sharpen the focus of any stimulus programme.
What could we call them , these funny money gift vouchers?
Donohoe may no longer be finance minister after the next government is formed but if he claims the idea now, I vote we call them Paschalbonds. If Micheál Martin becomes taoiseach, then Leo Varadkar, as leader of Fine Gael, could shift to finance. Leobonds sounds just as good.
In Asia, where citizen coupons have been used repeatedly by governments to spur consumer spending, they often call them consumption vouchers. Local governments in China started printing them this week. The name seems oddly appropriate, given that an alternative connotation of “consumption” is as a lung disease, not terribly unlike Covid-19.
But I much prefer Paschalbonds.
Although the scheme might be initially awkward to conceive, the cost would be manageable. The State has about 4.7 million residents. To give a cache of, say, €250 worth of Paschalbonds to every man, woman and child would cost less than €1.2 billion before the costs of administering the scheme itself. That would give the average family of four €1,000 to spend in local businesses.
Voucher programmes are not a panacea, of course. There are obvious difficulties in their implementation. And as Japan found in 1999, if they are not sufficiently well targeted, they may just displace other spending.
Helicopter money tends to be deposited in bank accounts for good reason: it is simple, quick and efficient. But if you’re trying to give everybody time-limited vouchers for a short, sharp targeted fillip in consumer spending, the problem is how to get them physically into people’s hands.
In the pre-digital days, we would have simply printed acres of Paschalbonds and made everybody line up outside post offices with their passports to collect them. It would have been horrendously inefficient, but great craic in the queue.
You could post them to every household, but that seems rather insecure. You'd have Dick Turpins waiting under every bridge for the post van to pass. You could download them from a website using PPS numbers and print them off. But then how could shops and restaurants tell they weren't fakes?
Macau last month gave every resident voucher cards, similar to most retail store vouchers, which could be topped up by authorities if another stimulus is required. In China, they load it on to digital payment platforms such as Alipay.
There would be obstacles, although not insurmountable ones – Ireland is a global leader in fintech and payments with companies such as Stripe. And there would be inevitable anomalies and complaints.
But a spending spree fuelled by Paschalbonds could be just the sort of thing that the consumer economy needs once we’ve beaten this virus.
