The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power and Politics of World Trade.

Whaples, Robert

The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power and Politics of World Trade, by Pietra Rivoli, Hoboken: John Wiley and Sons, 2005.

The lowly T-shirt is an ever-present part of global society. Despite the occasional bit of rude humor or political provocation, T-shirts are pretty innocuous. However, while consumers blithely buy and then discard billions of t-shirts a year, the thought of free trade in t-shirts (and textile goods in general) sends shivers down the spines of producers and politicians worldwide. The simple cotton t-shirt has been deemed too important by many in power to suffer the ignominy of free trade. Its fate is only occasionally in the hands of the free market and that is what makes its story worth telling. Pietra Rivoli, Associate Professor at Georgetown University's McDonough School of Business, tells her t-shirt's story with the sharp eye of an economist and an obvious affection for all those involved in its tortuous global journey--from the cotton fields of West Texas to the factories of Shanghai to a screen printing shop in Miami and a drugstore in Fort Lauderdale and then, unexpectedly, to a Salvation Army drop-off in suburban Maryland, a used clothing trader in Brooklyn and the mitumba shops of Tanzania.

The most profound surprise in her story may concern where the value is added in the production of a t-shirt. The t-shirt she buys--printed with a flamboyantly colored parrot, with the word "Florida" scripted beneath--retails for $5.99. The blank shirt was imported for $1.42 (including 24 cents in tariffs). Thus the vast majority of the value added to this imported good was added domestically in the last couple of stages, stages that involve very little physical labor--designing the parrot image, pressing it onto the shirt, and putting it into the drugstore's t-shirt bin. Later Rivoli reports that it takes about 15 cents worth of cotton to make a typical t-shirt--only 2.5 percent of its final value.

Additional surprises follow when Rivoli introduces us to Nelson Reinsch, a typical cotton farmer in West Texas, contrasting his operations with those of farmers in developing countries. It probably isn't a surprise that the 25,000 cotton farmers in the U.S. wield considerable political power, while the 18 million cotton farmers in West Africa don't. Nor is it surprising that American cotton farmers have been largely freed from manual labor, while farmers in poor countries toil at back-breaking tasks. To me the surprise is the degree to which American farmers (and their enterprising cooperatives) squeeze value out of cotton plants at every possible turn--selling not just cotton and cottonseed but turning what was once thrown away (leaves, stems, bolls and even dirt) into cattle feed and cotton seed hulls into animal feed, fertilizer, and even an industrial-strength dough used to plug leaks in oil wells. Later, we see the same entrepreneurial thriftiness as used clothing dealers sell seemingly useless castoffs for industrial wiping rags and shoddy for mattresses, cushions, insulation and the like. Producers in a market economy are creatively frugal. Another surprise is the degree to which American cotton growers can harness science to control their crops, for example, spraying them to turn the plants brown and crunchy without needing to wait for a short harvesting frenzy after nature provides its own hard freeze. Even more surprising, though, is that even with these technological tricks, the cost of American cotton is considerably above the world price--that cotton can generally be grown more cheaply in the poorest countries.

The heart of Rivoli's story is a visit to China, where the shirt is created from raw cotton. She argues that workers in these factories are exploited not so much because their working conditions (which generally compare favorably to those of similar workers in American and European factories in the nineteenth century) are tough by the lofty standards of rich countries, but because their mobility is highly restricted, depriving them of the blessings of a competitive labor market and shackling them into rather monopsonistic circumstances. American textile firms fear the onslaught of such competition from China. Rivoli humanely explains their protectionist impulses and tactics, but ultimately (like the economics profession as a whole) sides with the cause of freer trade. Her repeated theme is the surprising nimbleness of producers and it is noteworthy that although employment in the U.S. apparel and textile industries is in a seeming free-fall, the value of production has essentially stayed steady. In discussing Rivoli's book in class, I invited in a former student who is CEO of one of North Carolina's midsized fabric producers. He decried the competition from China as unfair in many ways but soberly faced the fact that he has no business competing with it in many of the markets in which his firm once operated. His firm has had its comparative advantage shift dramatically from one market niche to another in recent years, yet it has prospered by specializing in lines where there are natural barriers to entry from foreign producers. The degree of specialization in this industry is mind boggling--his firm makes material for men's pants pockets, treats hotel curtains and blankets with flame retardant, finishes athletic bandages, and has recently moved into casket linings. It abandoned weaving cotton long ago.

The icing on Rivoli's cake is the must-read final section, which describes and analyzes the used t-shirt market. Again and again she shows how traders, who don't actually make anything, add immense value to the economy by artfully and knowledgeably bringing together buyers and sellers.

The book is not without its flaws. Many of the historical arguments are pushed too far, especially the repeated claims that the cotton textile industry was indispensable in igniting the "take-off' into industrialization in country after country around the world. Economic historians have generally concluded otherwise, showing that the sources of modern economic growth have been manifold and ubiquitous--that no single change in institutions or technology ultimately set the process in motion. Likewise, some of Rivoli's claims about the lack competition and hopelessness facing sharecroppers in the postbellum South are overwrought, as much recent research by economic historians shows. However, her broader themes of the repeated attempts to sidestep almost-inescapable market forces and the shrewdness of market participants are ably brought to life in her biography of the humble t-shirt.

ROBERT WHAPLES

Wake Forest University