Wednesday, 20 November 2013

Another good book

It's taken me a while to catch up with it - I gather it won awards and was on shortlists of best business books of the year when it was published in 2005 - but I've finally read Pietra Rivoli's The Travels of a T-Shirt in the Global Economy: An economist examines the markets, power and politics of world trade.

It's been worth the wait.

Rivoli, a professor of finance and international business at Georgetown University, has written what she calls "a story about globalization", noting that while "stories are out of style today in business and economic research", they play a bigger and useful role in other disciplines.

On this evidence we could do with more economics stories. This is a good one, tracing Rivoli's T-shirt ("white and printed with a flamboyantly coloured parrot, with the word "Florida" scripted beneath") from the cotton grown on a family cotton farm in Texas, through to the yarnmaking, spinning, cutting and stitching together in China, back to the US for the printing and retailing, and finally to Tanzania and its second-hand clothes ("mitumba") markets.

Along the way you'll learn a lot about economic history and economic development (the cotton mills have often played a lead role in countries' industrialisation and in the original Industrial Revolution) and about the politics of trade policy. As she notes, all the "markets" bar the final second-hand clothing one are heavily distorted by protectionism in buyer countries (especially in the US with its domestic cotton subsidies and its quotas and tariffs) and restrictions on functioning markets in supplier countries ("cotton farmers in West Africa are embedded in a system that exposes and impoverishes them...not only does this steep discounting [i.e. the rip-off price farmers get from the state-owned buying board] impoverish the farmers and enrich the state, but the exclusion from the markets created by the A/B [pricing] system gives the farmers no incentive to improve quality", pp54-5).

She is very good on the politics of protectionism, and how the US cotton industry has been so good at it. "Remarkably", she says (p51), "US government subsidies under the cotton program - approximately $4 billion in 2000 - exceed the entire GNP of a number of the world's poorest cotton-producing countries, as well as the United States' entire USAID budget for the continent of Africa". And she quotes research from the US International Trade Commission: "Using the USITC's most conservative estimates, 2002 textile and apparel quotas cost $174,825 per job saved....The costs of protectionism are not only high in dollar terms, they represent a regressive tax, which falls disproportionately on the lower-income workers that the regime is designed to protect". Indeed, there's a whole chapter ("Perverse Effects and Unintended Consequences of T-Shirt Trade Policy") on the cock-ups and harm done by textile protection.

Rivoli started with an economist's belief in the merits of free trade, and it's not shaken by the end of the journey: "Since completing my travels, I have come to believe in a moral case for trade that is even more compelling to me than the economic case" (p214). But she's also sympathetic to any activist working to improve working conditions at the bottom of the world textile manufacturing heap, as long as she (the activist) remembers "to appreciate what markets and trade have accomplished for all of the sisters in time who have been liberated by life in a sweatshop, and that she should be careful about dooming anyone to life on the farm" (p215).

This book is balanced, it's readable, it's right. If you're ahead of me and have read it already, great. If not, it's well worth a go.

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