China’s One-Child Policy and Unintended Consequences

In 1978 Chinese authorities limited couples to one child each in order to slow the growth of the country’s massive population. And like most serious government interventions in citizens’ lives, this policy threatens to unleash far-reaching societal changes far beyond the scope of the original plans.  We call such effects unintended consequences.

More than most social scientists, economists believe it crucial to consider the likely unintended consequences of government actions.  Often this is a lot easier than it sounds. With a little common sense, people can predict some ways a population might react to certain policies. For example, if a company raised overtime wages from 150% to triple the normal wage, many employees would undoubtedly try to work more slowly to scoop up more of this lucrative overtime pay. It’s human nature. If the government mandated a “living wage” of $50K per year, many low paid workers would be fired. And businesses unable to raise prices enough to cover higher salaries would suffer financially, with some going under.

The impacts of China’s policy are mentioned in today’s Washington Times article.  Anyone who understands China’s culture knows that parents value boys far more than girls.  They should have realized millions of people would abort pregnancies when they found their only baby would be female.  Now China has a severe female shortage.  There are not enough potential brides for Chinese men.  This has also spurred a thriving sex slave business.

Because the Chinese succeeded in dramatically slowing the birth rate, they created a demographic time bomb:  a rapidly graying population that will be difficult to support by a much smaller group of working young people.  Contrary to popular belief, China is essentially a 3rd world country.  It’s an economic powerhouse solely due to the size of its population.  Its 2008 GDP per person ranked roughly 100th in the world at less than $3300/person.  The average Chinese citizen would need to see his production rise 20% to catch up with his counterpart in Ecuador. The government has massive currency reserves, but they wouldn’t go very far if they had to support hundreds of millions of gray panthers (or pandas).

It isn’t just totalitarian regimes that ignore unintended consequences. Politicians in western democratic nations see no reason to restrain their proposals by considering long-term consequences. They just want to tout the goodies they’re giving their favored constituencies, and hope most of us don’t realize the potential unintended consequences of their schemes. This pattern is unlikely to change until voters embrace a “use your brain” movement that demands politicians consider the implications of their policies.

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