These observations tell us that we have to qualify our conclusion that a rise in inequality is inherently bad. In some cases, inequality may increase on a temporary basis due to causes that will eventually make everyone better off
and ultimately lower inequality. However, with modern-sector enrichment growth, the increase in inequality is not later reversed, and the poor do not escape their poverty.21 So we need to be careful about drawing conclusions from
short-run changes in economic statistics before we know more about the underlying changes in the real economy that gave rise to these statistics. The process of modern-sector enlargement growth suggests a possible mechanism
that could give rise to Kuznets’s “inverted-U” hypothesis, so we turn to this question next.