As we learned in class, the Kuznets curve is the graphical depiction of Simon Kuznets' hypothesis that economic inequality increases over time while a country is developing, and then after a certain average income is attained, inequality begins to decrease. In class we saw that the Kuznets curve suggested that income inequality rose from the founding of the country up until the last 19th century, when inequality began to decline sharply until 1940. Kuzent argued that this decline was caused by government intervention in the form of income redistribution and the provision of education. From 1970 till present day however, the United States and other developed countries have experienced huge increases in inequalities levels. Many people believe that we are currently in a “second stage” of the Kuznet cycle and that inequality will begin to decrease once governments decide to do more to redistribute wealth. Even so, the recent financial crises may have limited the government’s ability to respond. A new report by the OECD demonstrates that the gap between rich and poor has grown ever wider in wealthy countries over the past three decades. The question therefore is not whether or not we are in a period of rising inequality, but rather how long and severe it will be.
Ricardo Johnson
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