From his analysis, Kuznets offers the cautious hypothesis that one might assume a long swing in the inequality characterising the secular income structure:
Migeru: GDP emerged out of the work of Simon Kuznets in the 1920's, I believe. Back then it was called National Income. In a way, from the point of view of tax base, replacing the hard to measure National Wealth with the easier to measure (transaction-based) National Income (which measures not wealth but economic activity) makes it easier to tax income than to tax wealth.
But just how well established is the Kuznets curve? The "Criticism" section for its Wikipedia entry is short, not very well written, and poorly cited. Still, even though your excerpt calls it a 'cautious hypothesis', I think it is quite bold, and if true, extremely important. So I wonder how generally accepted it is among economists and historians. The march of civilizations is a series of defenses that man has put up against the dread of pure existence.
While on the one hand Wikipedia, citing the "The Environmental Kuznets Curve: A Primer" by "Yandle B, Vijayaraghavan M, Bhattarai M", says that
Since 1991, Environmental Kuznets Curves (EKC) have become standard features in the technical literature of environmental policy.
on the other hand, the Criticisms of environmental Kuznets curves section, citing the same Yandle et al primer, says that:
Yandle et al. argue that the EKC has not been found to apply to carbon because most pollutants create localized problems like lead and sulfur, so there is a greater urgency and response to cleaning up such pollutants. As a country develops, the marginal value of cleaning up such pollutants makes a large direct improvement to the quality of citizens' lives. Conversely, reducing carbon dioxide emissions does not have a dramatic impact at a local level, so the impetus to clean them up is only for the altruistic reason of improving the global environment. This becomes a tragedy of the commons where it is most efficient for everyone to pollute and for no one to clean-up, and everyone is worse as a result (Hardin, 1968). Thus, even in a country like the US with a high level of income, carbon emissions are not decreasing in accordance with the EKC.
Indeed, in that same comment above, Eric Zencey added:
The data don't bear this out; but that rarely gives a neocon pause.
I contributed to the entry on the EKC in The Encyclopedia of Earth, a gated wiki.
______ The march of civilizations is a series of defenses that man has put up against the dread of pure existence.
Section IV: Conclusion. This paper covered a lot of material by bringing up a lot of complementary theories including Lewis-Two Sector Model, Harris-Todaro model, Killick's flexible economy, and Bottomley's interest rate determination. Even though the Kuznets Curve theory has a lot of intuitive understanding based on other theories as well as many observers including Marx and Upton Sinclair, it is important to test whether it is able to be predictable. Stiglitz notes that: "But a good theory should have no implication which is inconsistent with observations." (Stiglitz, 262) And Birdsall et al showed that at least in the East Asian experience the theory has limited predictive power. But this does not mean it does not have any explanatory powers for when inequality does increase during industrialization. Which means that it most definitely not that inequality is a requirement or necessary for development as Birdsall et al pointed out in the East Asian experiences and it is not sufficient considering all the nations that have high levels of inequality but development is slow or non-existent? Namibia with the highest Gini index according some estimates (Wiki) and clearly showing non-convergence with other developed countries or the world as the CIA notes growth in 2008 was 3.3% while the world's growth was at 4.1. (CIA) It is predicted even slower growth in 2009 and 2010 according to the IMF with growth rates of -0.7 and 1.8% respectively. (IMF) There is also the possibility that HICs are facing a similar Kuznets curve as the inequality between skilled and unskilled labor has been widening. While it may be relatively small, it seems significant and across a variety of markets and Nations that would reflect varieties in social structures also. For example even in Japan it was noted in NBER (NBER): "Wage income inequality rose initially in the 1950s but declined in the subsequent two decades, and has increased slightly since the 1980s. This recent increase in Japan, however, is very small compared to the recent surge in wage income concentration in Anglo-Saxon countries." This may be a subject to consider more in the future...
There is also the possibility that HICs are facing a similar Kuznets curve as the inequality between skilled and unskilled labor has been widening. While it may be relatively small, it seems significant and across a variety of markets and Nations that would reflect varieties in social structures also. For example even in Japan it was noted in NBER (NBER): "Wage income inequality rose initially in the 1950s but declined in the subsequent two decades, and has increased slightly since the 1980s. This recent increase in Japan, however, is very small compared to the recent surge in wage income concentration in Anglo-Saxon countries." This may be a subject to consider more in the future...
