Albert Hirschman once noted a Latin American penchant for fracasomanía. This book is of a different genre, accentuating positive trends. Disparate data sets (including wage series, panel and household surveys, and employment statistics) are creatively analyzed by a leading Colombian economist to argue that, contrary to the views of many of his professional colleagues, income concentration in his country diminished over the 1970s, particularly in rural areas. Between 1974 and 1980, the rural minimum wage increased 35 percent in real terms, overlapping with a coffee and illegal drug bonanza. Though urban poverty apparently increased in the early 1970s, it diminished later in the decade. Yet, as he also notes, the rich also got richer as the middle class suffered. Real wages of blue-collar and white-collar workers declined over the first part of the decade and did not fully recuperate by 1980. And Urrutia provides considerable evidence that upper-income groups got proportionally wealthier over the decade.
Not surprisingly for a book of this nature and size, the subject matter is narrowly drawn and historical context is largely absent. This book should be welcome as a corrective to some overly pessimistic accounts. Yet at times it reads like a defense of government policy, which should not be unexpected as Urrutia was bead of the National Planning Department and minister of mines during the Alfonso López administration (1974-78). One disappointment is that the author does not examine contending hypotheses for the changing income distribution trends more thoroughly. His suggestive remarks indicate government policy may have played a small role in helping some of the poor. His analysis also points, however, to the declining rate of population growth, increased incorporation of women into the workforce, puzzling increased demand for urban labor in the 1970s, and expanded coffee investments due to the bonanza which “cannot be expected to continue” (p. 118). More controversially, he downplays the impact of the drug traffic, and claims that financial liberalization did not help concentrate income and that the López administration’s exchange-rate policy did not lead to appreciation of the peso and to windfall profits for coffee exporters.
