> "Of course the Gini coefficient is increasing" translated means "income inequality is not a problem".
The book "The Great Leveler" https://www.goodreads.com/book/show/31951505-the-great-level... is probably the most comprehensive dive into history of inequality, and arrives at a fairly unexciting conclusion that periods of great inequality are correlated with significant economic growth (usually related to advances in automation, which tend not to be universally distributed) whereas periods of equality can generally be attributed to stagnation.
there are some very real counterexamples. It's hard to argue that the US did not undergo both decreasing inequality and growth between 1860 and 1900. Decreasing inequality (well a good chunk of the population was no longer chattel slavery, if nothing else), and the US went from "utterly destroyed by a civil war" to "nascent superpower"
Growth from whom and stagnation for whom? If during this "stagnation", the level of societal wealth remains the same, but inequality decreases, that indicates massive utility gains due to decreasing marginal utility of wealth.
Moreover, inequality now is extremely high, and growth is decelerating. China has less wealth inequality than the United States, yet is growing substantially faster.
> Moreover, inequality now is extremely high, and growth is decelerating. China has less wealth inequality than the United States, yet is growing substantially faster.
Growth is a second derivative. Income inequality is a function of first derivatives. You can't directly compare the two. If I had to guess, China's wealth inequality in China is growing at a much faster rate than that of the US.
Hmmm. The traditional (1960's) view (Kuznet's "Inverted U") is that starting from low-tech societies where everyone has more or less the same, inequality rises with the advent of technology, then falls again as democracy and the welfare state kick in.
Thomas Piketty in his magnum opus Capital in the Twenty-First Century argues that the rise in inequality is inevitable (his famous r > g) and only interrupted by wars, depression, hyper inflation, and similar catastrophes that destroy a lot of wealth. That's rather more exciting than stagnation.
Branko Milanović’s more recent (2016) Global Inequality: A New Approach for the Age of Globalization (which originated the famous elephant graph [2]) notes that 1) inequality has risen recently within nations, but decreased among nations; 2) the Kuznet inverted-U needs to be replaced by Kuznet waves; 3) there does not seem to be an efficiency-equity trade-off in the long-term 4) social mobility seems to be falling (such that accidents of birth basically determine your station in life again, as in previous centuries).
> periods of great inequality are correlated with significant economic growth (usually related to advances in automation, which tend not to be universally distributed) whereas periods of equality can generally be attributed to stagnation.
Here, Milanović distinguishes "malign" equalisers, which reduce both inequality and average income (namely the ones noted by Piketty: wars, epidemics, depression, etc.), and "benign" ones: widespread education, greater social transfers, and progressive taxation. [3]
That would seem to indicate that Goodhart's Law is in effect and not much more. At least, not until you demonstrate an analysis of quality of life during those same periods.
The book "The Great Leveler" https://www.goodreads.com/book/show/31951505-the-great-level... is probably the most comprehensive dive into history of inequality, and arrives at a fairly unexciting conclusion that periods of great inequality are correlated with significant economic growth (usually related to advances in automation, which tend not to be universally distributed) whereas periods of equality can generally be attributed to stagnation.