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The Travels of a T-Shirt in the Global Economy by Pietra Rivoli

13/05/2013

The Travels of a T-Shirt in the Global Economy is an excellent book which uses the example of one product (a t-shirt) to illustrate how international trade affects all of us  in our ordinary lives. Pietra Rivoli is a business professor who clearly has a sophisticated understanding of how a range of diverse factors influence the production of goods and how the wider market and economy influence the distribution of those goods. However, whilst she does use graphic and numerical evidence to support her observations and arguments, where this book most succeeds is in Ms Rivoli’s ability to tell a captivating story that engages her readers in an uncomplicated fashion.

The history of Markets

Perhaps the central theme of Ms Rivoli’s book is the potential for relatively unencumbered markets to improve global welfare and provide opportunities to people to pursue their own happiness to a greater degree. She notes the remarkable change in people’s lives due to opportunities provided by the cotton mills of the 18th and 19th century. It is important to note that before the mid 18th century, economic growth and social mobility, were virtually nonexistent. The majority of people were born, lived, and died in a condition of absolute poverty.

Rivoli notes that much of the history of cotton production, was characterized by producers seeking to limit their exposure to competition through artificial barriers to trade. The obvious example being the use of slave labour in the United States. Slavery was clearly a morally repugnant institution but in the years following abolition, the politically connected producers were also able to skew things in their favour through the regulatory regime using tariffs and subsidies. This regulatory regime around trade has clearly reduced the benefits of trade from a social optimum.

The arrival of cotton mills heralded a sudden change for many men and women born into a condition of absolute poverty in the United Kingdom and later the United States of America. What is significant about those who worked in the cotton factories (as with many of those working in modern day sweat shops) is that they are often women with no better alternatives to earn their own living.

How Markets can liberate

Rivoli succeeds in telling a story that show us how markets can liberate ordinary people by providing them with new opportunities and choices that they can make not just about where they will work but how to spend their leisure time and who they will spend it with. She recounts the experience of a young New York sweat shop worker in the 1900s who works long and tough hours for meager pay. However even in these demanding conditions, she is able to broaden her horizons, spending her leisure time dancing, shopping and attending parties and seeing a young man who wants to marry her. The sweatshop despite its tough conditions is also socially liberating and she decides to wait rather than marrying this man.

Mitumba (finally a free market)

Whilst recounting ways in which markets can liberate ordinary people as described above, Pietra Rivoli also laments the current regulatory regime, where wealthy countries impose restrictions upon trade limiting the ability of the poor to better their lives and consumers to benefit from more efficiently produced goods.

It is when she reaches sub saharan Africa, however, that she is able to revel in the benefits of a truly free market as we have read about in basic economics textbooks. The ‘Mitumba’ markets are markets for low priced second hand t-shirts in sub saharan Africa which provide an opportunity for ordinary Africans to better clothe themselves than they could do previously. The example she gives is of the Trans America Trading Company (http://tranclo.com/) who export unwanted worn t-shirts from the USA to a high end vintage market in wealthy countries and a low end high volume secondary market in Africa. One might expect purchasers of high end vintage t-shirts to be discerning but interestingly the purchasers of low end t-shirts are equally so. Furthermore, as Rivoli points out, a mitumba market is more dynamic than typical American stores and responds directly to consumer preferences:

The market mechanism in African mitumba markets is considerably more flexible than in an American department store. The Dockers with waist sizes in the low 30s sell for more than those with sizes in the 40s , as Tanzanians in general lack Americans’ paunches. Otherwise identical polo shirts can vary in price as well, with more popular colors and sizes commanding a premium. Prices trend up at the end of the month when many workers get paid, but drift lower during periods between paychecks.

Conclusion

Overall, Pietra Rivoli tells an informative story about how trade in markets can benefit the lives of ordinary people, using the example of a t-shirt to illustrate her point. She tells stories of how economic opportunity can and does in a meaningful way provide liberation for women in other spheres of their lives as well. She is quick to note that the history of clothing production has not been one of freedom and open trade but rather many occasions where producers have sought to insulate themselves from the challenges of competition. This is an interesting book which covers the basic lessons of rudimentary economics in an engaging story which is accessible and enjoyable.

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