Anyway, out of curiosity I looked at the source of the chart that Krugman uses to make his point (by the way, it was pointed to not by Krugman but by a reader who made a comment). The very first paragraph of that report says this...
In other words, inequality in this context is judged to be about a cycle of industrialization and innovation and dispersion of their benefits to workers, and not about some mythical "vast right wing conspiracy."According to Kuznets’ influential hypothesis, income inequality should follow an inverse-U shape along the development process, first rising with industrialization and then declining, as more and more workers join the high-productivity sectors of the economy [Kuznets 1955]. Today, the Kuznets curve is widely held to have doubled back on itself, especially in the United States, with the period of falling inequality observed during the first half of the twentieth century being succeeded by a very sharp reversal of the trend since the 1970s. This does not, however, imply that Kuznets’ hypothesis is no longer of interest. One could indeed argue that what has been happening since the 1970s is just a remake of the previous inverse-U curve: a new industrial revolution has taken place, thereby leading to increasing inequality, and inequality will decline again at some point, as more and more workers benefit from the innovations. (The Quarterly Journal of Economics, February 2003)
Sorry Paul, you seem to have gotten it wrong again.
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