Fucking Christ, incest.
Even discounting children, incest should always be a crime and forbidden. Sex isn't just about sticking pegs into holes. The psychological factor will always be there, and there's no way to disentangle the damage caused by mixing sexual acts with the psychology and dynamics of family, not just for yourself, but for everyone around you. Even in cases where those involved aren't related biologically, it's horrible. Remember Soon-Yi? Think of the horrific trauma Woody Allen inflicted not just on a woman who by all rights is his daughter, but upon Mia Farrow and every member of her family in turn.
This is about more than the law. Incest is a sin and outright evil no matter how it's dressed up and walked around.
That said, I'm not talking about cousins and shit like that. I think it's clannish and backwards, but it really shouldn't be illegal or seen on the level of what Woody Allen did.
It worked because parents did not want to have to pay for the services for a second child that would have been provided for free by the state to the first child, likewise incestuous couples would be able to raise their inbred children but they would need to pay for all the medical and educational costs themselves and they won't get childcare tax benefits
China's One Child Policy -- in addition to being a horrendous assault upon human rights -- was not needed to cause a decline in population growth. You'll find just as low population growth figures in Japan, Taiwan, Singapore, Korea, pretty much every country in Europe, and now it's even being seen in the US and certain Mid-East countries.
It's a part of biology. When areas get overcrowded, childrearing becomes difficult, and infant mortality rates are low, people just stop having kids. Hell, maybe this is the reason why there's been a rise in people who exclusively engage in homosexuality. Living in a world at capacity might be triggering people's subconscious to avoid the rat race and seek sexual release via other avenues.