I was at the grocery store today and noticed the following sign:
Indeed, the sign’s warning was true. Half a dozen eggs, which I paid $0.99 just a few months ago, were now selling for $2. What’s also interesting is the egg beaters and egg substitutes were running low.
This little anecdote of a grocery store in New Hampshire is a snapshot to the rationing power of the price mechanism. A shortage of a commodity caused its price to rise, making it relatively more expensive. Conversely, substitutes were now relatively less expensive. This change in the price ratio caused some people to choose substitutes over eggs, thus leaving eggs for those who still valued them at the higher price. In fact, people’s actions have adjusted to take into account the shortage as if they were guided by an invisible hand…
After nearly 40 years, China is ending its one child policy. I praise this move (although I wish it was a complete repeal rather than just changing the quota). China is facing an aging population, and aging populations are less productive.
It is also important to remember that an increase in population is not just another mouth to feed, but also another creative mind, another pair of working hands, another input for growing the economic pie.
This fact is often lost upon the immigration restrictionists (protectionists?). When immigrants enter a nation, economically speaking it is no different from a child being born or a person graduating college. By increasing the amount of labor (a resource), it helps increase the size of the economic pie.
I suspect China’s actions to allow two children per family will help lift its growth and bring more people out of poverty in the long run. Likewise, increased immigration will help lift economic growth and bring more people out of poverty.