Population Growth and Its Implications

 

The world’s population is growing at an unprecedented rate. While some argue that population increases can be a good thing, others favor the idea that the world’s sources are not enough to match such an increase.

The proponents of population growth claim that the more people there are, the higher the production rate in a country. As productivity goes up, the total output in the economy goes up as well. Economic growth, in turn, enables people to access goods and services more comfortably, promoting improved living standards. Population growth will also hint at increasing demand for goods and services, which will signal producers to produce more.

What if the increase in population cannot be diverted to higher productivity like we mentioned above? There will be more people searching for work than there are available vacancies. The surplus labor that has come to exist because of population growth will have difficulty accessing jobs. Since these people will still need to be fed, there will be excess demand in the economy that cannot be met with increases in the supply side of the economy. This would mean supply falling short of demand, causing prices to increase.

Those who oppose population growth pose that the world’s natural resources are already scarce and will never be sufficient if population growth does not slow down. Energy, oil, and food prices will hike, leading to starvation and deprivation on a global scale. Wars will break out.

As a result, population growth can be a good thing if it is converted into productivity. If not, it will only mean poverty.

Government Spending: Good or Bad

 

The government is involved in the economy in many ways. It sets the rules and regulations that any endeavor must adhere to. However, the government’s most discernible involvement comes in the form of spending. How the government spends its money directly influences economic parameters. The government can create jobs by increasing expenditures in times when unemployment is widespread. It can cut down on expenditures to cool down the economy in times of high inflation.

Spending can have huge implications for any economy since government budgets have the capacity to fund even the largest of projects. Building a dam or a highway system costs so much that only the government can invest in those projects and finish them in the foreseeable future.

Governments often use this instrument to tinker with the economic outlook, which economists call "fiscal policy". Fighting economic evils like unemployment and inflation in bad times while helping the demand boom when total output does not seem to hit its potential.

However, there are some downsides to such interventions, which can prove detrimental to the nation’s economy in the long run. Spending by the government is financed by taxes. Therefore, governments need to increase their revenue by levying more taxes on citizens. Another negative aspect would be the higher inflation scenario that occurs if the government chooses to finance its spending by printing money instead of taxes. Excess money circulating in the economy does have inflationary effects, which spoil citizens’ welfare.

Government spending is a valuable tool if it is used wisely by the authorities. Handling it improperly has fatal implications.