The Cyclical Relationship of Growth and Distribution, Social Conflict, and Realization of Social Values

The virtuous and vicious cycle between economic growth and income distribution has been discussed for a long time. Especially, Korea, which has been divided into south and north Korea, has experienced serious ideological conflicts last several decades during the unprecedentedly rapid economic development since 1960s. Barro (2000) and others recently assert the inverted U-shaped hypothesis of Simon Kuznets between the two. This paper suggests the possibility of a ‘U’-shape relationship between growth and distribution is empirically estimated with recent OECD data which means more advanced countries to be represented than before. And a cyclical relationship is also assumed in the long-term changes of the Gini coefficient by income level, because Kuznets’ inverted ‘U’ hypothesis is also presumed to be appropriate in developing or less developed countries. This paper also emphasizes that social conflict between proponents for the two is unavoidable and thus we need a model to maximize national happiness to reduce the conflict by exchanging compensation values between losers and gainers using big data and AI technology. The AI technology seems to take very important role to find such social values in conflicting issues particularly complicated by political ideologies, because politicians have used to distort reasonable resources distribution, shrink growth potentiality and threaten the prosperity of the future generation.