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Saturday, April 1, 2006

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

Trade Benefits Even the Poorest Participants

With the increasing trade of goods and services across national borders and the erosion of command economies, the enemies of the market have now become “anti-globalists.” To them, “globalization”—specifically, international trade and investment—is responsible for poverty and deteriorating living conditions, especially in underdeveloped countries.

Prompted by a protester’s assertion about the squalid conditions in which garments are manufactured, Georgetown University business professor Pietra Rivoli set out to find the truth. The result is The Travels of a T-Shirt in the Global Economy, in which she traces the provenance of a single commodity: a six-dollar T-shirt. From a Texas cotton field to a textile factory in China, through the nets of Washington bureaucrats to a Florida manufacturer, she follows the product’s life cycle, concluding with its probable fate in an African used-clothing market. In the process, she explores the history of trade in textiles and clothing from the Industrial Revolution to today.

By providing a proper historical perspective, Rivoli underlines the benefits of trade for even the poorest participants. However unpleasant conditions in textile factories have been throughout the ages, workers have willingly sought employment there as an escape from desperate rural poverty. In country after country, the textile industry has provided betterment for workers and their descendants. Especially poignant is Rivoli’s litany of former mill towns across the globe that have progressed to the forefront of more modern industries. Since a large portion of the workforce in the industry has historically been female, textile manufacturing has also been a driving force in the increasing autonomy of women in many societies. As such, Rivoli calls “nonsensical” the anti-globalists’ efforts to stop the so-called “race to the bottom.” She pointedly asks the protesters whom they would wish to condemn to generations of rural poverty.

Another theme of Rivoli’s work is that there is little trade that is truly free. Her narrative is filled with stories of attempts to manipulate the market through the power of government. From nineteenth-century slavery to today’s taxpayer subsidies and crop insurance, American cotton growers have employed a variety of means to escape the vagaries of the labor market. China uses a system of internal restriction on freedom of movement to achieve a similar end in the modern textile industry.

Perhaps the most blatant example of protectionism Rivoli encounters is the decades-old, ever-changing, and byzantine regime of textile import quotas imposed by the United States at the urging of a vocal lobby of manufacturers and labor unions. While the regime merely delays domestic textile job losses, it does create employment for armies of bureaucrats worldwide who administer the quotas. Meanwhile, it makes clothing more expensive for consumers, stifles innovation in American textile manufacturing, increases costs for downstream industries, and enriches foreign investors who trade in quotas as derivative instruments. It also taints U.S. diplomatic efforts for freer trade with hypocrisy. Rivoli correctly identifies the mechanism behind the perpetuation of such inefficiencies: the costs, though in the billions of dollars, are widely spread, while the benefits are concentrated.

She also correctly states that the plight of underdeveloped countries is primarily a political issue, not a result of the “cruelty of market forces.” Indeed, the little-publicized trade in used clothing has given ordinary people a shot at improving their situation, notably in countries that have long suffered from the effects of statist economies. Sadly, Rivoli only touches briefly on the crux of the political issue: insufficient rule of law and protection of property rights in many countries.

Even though Rivoli draws the conclusion that the “moral case for trade . . . is even more compelling . . . than the economic case,” she does not advocate laissez faire. In fact, she claims to have become more sympathetic to the anti-globalists over the course of her study. The efforts of reformers throughout history, she says, have improved the health and safety of industrial workers, often through government fiat. She gives only partial credit to the prosperity caused by industrialization itself, claiming that the “market alone” could not produce such results. Despite her economic expertise, she does not discuss the contribution minimum-wage laws and the like make to unemployment. Nor does she acknowledge that while child labor would be cruel and unnecessary in today’s cotton and textile industries, it could mean the difference between life and death—or a life of prostitution—in less-developed countries, as it did in the West generations ago.

Rivoli admits that her work is anecdotal and unscientific. That aspect could have been one of the narrative’s strengths: it is free of jargon, although it sometimes bogs down in minutiae. Add to that its “hook”—most everyone can identify with T-shirts—and it is appealing and accessible to those unfamiliar with basic economics. Unfortunately, her conclusions may be too half-hearted to change any minds.