I need help with this assignment. It’s for international management. I attached the instructions and it is due this Wednesday on April 1st, 2020. Some questions may require answering questions from the books: Travels of a T-shirt by Rivoli (attached) and The Future is Asian by Parag Khanna. The textbook I use for this class is also attached but isn’t entirely needed.
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MGT240—INTERNATIONAL MANAGEMENT PLEASE PREPARE SEVEN TO TEN DOUBLE SPACED PAGES ANSWERING THE FOLLOWING: PLEASE ANSWER ALL OF THE FOLLOWING SHORT ANSWER QUESTIONS: 1. What is the difference between globalization and internationalization? 2. What is the connection of the research thesis of Jeffrey Sachs and Andrew Warner to the Theory of Comparative Advantage? 3. Why is 2017 important to Prof. Khanna in the book, The Future is Asian? 4. What is the connection of Oxfam to the WTO in the context of cotton? 5. How does virtuous and vicious circles apply to cotton? 6. How does Heckscher-Olin, New Trade Theory and Michael Porter expand on the Theory of Comparative Advantage? ESSAY: PLEASE ANSWER THE FOLLOWING TWO QUESTIONS: I. How does the Theory of Comparative Advantage apply to the double movement of Karl Polanyi and the concept of “Economics is part of a larger civilizing project”? II. How does the Theory of Comparative Advantage apply to Michael Porter’s Diamond of Competitive Advantage? e1ffirs02 Date: Jan 19, 2009 Time: 1:3 pm e1ffirs02 Date: Jan 19, 2009 Time: 1:3 pm International Praise for Travels of a T-Shirt, 2nd Edition “This charming, intelligent narrative debunks myths on both sides of the globalization debate. Mixing historical perspective with current events, the book highlights that it’s not market forces but avoiding them that creates winners in world trade … a rich tapestry of globalization past and present that focuses on real people to rip fabrications on all sides of the debate … a great read.” —Asia Times “Don’t miss this unusual book on economics.” —The Hindu “ … thought-provoking … Regardless of your stance on global economics, you will find a lot to agree with and a lot to think about in Travels of a T-Shirt.” —The China Daily e1ffirs02 Date: Jan 19, 2009 Time: 1:3 pm ffirst Date: Jan 22, 2009 Time: 3:10 pm the TRAVELS of a T-SHIRT in the GLOBAL ECONOMY SECOND EDITION An Economist Examines The Markets, Power, and Politics of World Trade Pietra Rivoli John Wiley & Sons, Inc. ffirst Date: Jan 22, 2009 Time: 3:10 pm Copyright © 2009 by Pietra Rivoli. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey Published simultaneously in Canada No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permissions. 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For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. For more information about Wiley products, visit our web site at www.wiley.com. Library of Congress Cataloging-in-Publication Data: Rivoli, Pietra. The travels of a t-shirt in the global economy: an economist examines the markets, power, and politics of world trade/Pietra Rivoli. – 2nd ed. p. cm. Includes bibliographical references. ISBN 978-0-470-28716-3 (pbk.) 1. T-shirt industry. 2. International trade. 3. Free trade. 4. International economic relations. I. Title. HD9969.S6R58 2009 382 .45687115–dc22 2008054905 Printed in the United States of America. 10 9 8 7 6 5 4 3 2 1 ffirst Date: Jan 22, 2009 Time: 3:10 pm For Dennis, Annalisa, and Denny ffirst Date: Jan 22, 2009 Time: 3:10 pm ftoc Date: Jan 21, 2009 Time: 5:55 pm CONTENTS PREFACE TO THE SECOND EDITION PROLOGUE PART I KING COTTON 1 How America Has Dominated the Global Cotton Industry for 200 Years 2 The History of American Cotton 3 Back at the Reinsch Farm 4 All God’s Dangers Ain’t the Subsidies ix xvii 1 3 9 24 49 PART II MADE IN CHINA 5 Cotton Comes to China 6 The Long Race to the Bottom 7 Sisters in Time 8 The Unwitting Conspiracy 75 77 92 105 120 PART III TROUBLE AT THE BORDER 9 Returning to America 10 Dogs Snarling Together 11 Perverse Effects and Unintended Consequences of T-Shirt Trade Policy 12 45 Years of “Temporary” Protectionism End in 2009—Now What? 141 143 156 MY T-SHIRT FINALLY ENCOUNTERS A FREE MARKET 13 Where T-shirts Go after the Salvation Army Bin 213 215 PART IV 171 196 vii ftoc Date: Jan 21, 2009 viii Time: 5:55 pm CONTENTS 14 How Small Entrepreneurs Clothe East Africa with Old American T-Shirts 15 Mitumba: Friend or Foe to Africa? CONCLUSION ACKNOWLEDGMENTS NOTES BIBLIOGRAPHY INDEX 227 239 253 262 264 283 305 fpref Date: Jan 21, 2009 Time: 5:47 pm PREFACE TO THE SECOND EDITION How Student Protests Sent a Business Professor around the World On a cold day in February 1999 I watched a crowd of about 100 students gather on the steps of Healy Hall, the Gothic centerpiece of the Georgetown University campus. The students were raucous and passionate, and campus police milled about on the edge of the crowd, just in case. As speaker after speaker took the microphone, the crowd cheered almost every sentence. The crowd had a moral certitude, a unity of purpose, and while looking at a maze of astonishing complexity, saw with perfect clarity only the black and white, the good and evil. Corporations, globalization, the International Monetary Fund (IMF), and the World Trade Organization (WTO) were the bad guys, ruthlessly crushing the dignity and livelihood of workers around the world. A short time later, more than 50,000 like-minded activists had joined the students at the annual meeting of the WTO in Seattle, and by the 2002 IMF-World Bank meeting, the crowd had swelled to 100,000. Anti-globalization activists stymied meetings of the bad guys in Quebec, Canada, and Genoa, Italy, as well. At the 2003 WTO meeting in Cancun, the activists were joined by representatives from a newly energized group of developing countries, and world trade talks broke down across a bitter rich-poor divide. Anti-globalization activists came from college campuses and labor unions, religious organizations and shuttered textile mills, human rights groups and African cotton farms. Lumped together, the activists were named the globalization “backlash.” At first, the backlash took the establishment by surprise. Even the left-leaning Washington Post, surveying the carnage in Seattle, seemed bewildered. “What Was That About?” they asked on the editorial page the next day. From the offices on the high floors of the IMF building, the crowd below was a ragtag bunch of well-intentioned but ill-informed obstructionists, squarely blocking the only path to prosperity. According to conventional economic wisdom, globalization and free trade offered ix fpref Date: Jan 21, 2009 x Time: 5:47 pm PREFACE TO THE SECOND EDITION salvation rather than destruction to the world’s poor and oppressed. How could the backlash be so confused? The backlash seemed to quiet by about 2005. “Phew,” the business establishment seemed to say, “Glad that’s over with.” But a closer look reveals that nothing was really over with, and that, in fact, the reverse had happened. While some of the craziest slogans (“Capitalism is Death”) had faded away, the backlash was not gone, but had gone mainstream. Surveys showed that Americans were markedly less supportive of trade and globalization in 2008 than they had been at the beginning of the decade: while 78 percent of Americans surveyed had a positive view of international trade in 2002, by 2008, only 53 percent were broadly supportive. Americans were also less supportive of trade than citizens of virtually every other industrialized country.1 In Washington, Congress responded to this popular discontent by stymieing further trade liberalization, and the 2008 presidential candidates responded with sound bites strangely similar to those of the 1999 protestors. By 2008, the WTO talks that had been stalled by protestors in Seattle and Cancun were still stalled—after nearly eight years of mostly fruitless negotiations. While the negotiations had been difficult in the best of times, the severe economic downturn that began in late 2008 left little hope for the revival of the trade tasks. B ack at Georgetown in 1999, I watched a young woman seize the microphone. “Who made your T-shirt?” she asked the crowd. “Was it a child in Vietnam, chained to a sewing machine without food or water? Or a young girl from India earning 18 cents per hour and allowed to visit the bathroom only twice per day? Did you know that she lives 12 to a room? That she shares her bed and has only gruel to eat? That she is forced to work 90 hours each week, without overtime pay? Did you know that she has no right to speak out, no right to unionize? That she lives not only in poverty, but also in filth and sickness, all in the name of Nike’s profits?” I did not know all this. And I wondered about the young woman at the microphone: How did she know? During the next several years, I traveled the world to investigate. I not only found out who made my T-shirt, but I also followed its life over thousands of miles and across three continents. The result of this investigation was the first edition of Travels of a T-Shirt, published in 2005. The book fpref Date: Jan 21, 2009 Time: 5:47 pm PREFACE TO THE SECOND EDITION xi was—and is—a story about globalization and about the people, politics, and markets that created my cotton T-shirt. It is fair to ask what the biography of a simple product can contribute to current debates over global trade. In general, stories are out of style today in business and economics research. Little of consequence can be learned from stories, the argument goes, because they offer us only “anecdotal” data. According to today’s accepted methodological wisdom, what really happened at a place and time—the story, the anecdote—might be entertaining but it is intellectually empty: Stories do not allow us to formulate a theory, to test a theory, or to generalize. As a result, researchers today have more data, faster computers, and better statistical methods, but fewer and fewer personal observations. The story, of course, has a more esteemed role in other disciplines. Richard Rhodes, in his Pulitzer Prize-winning book, The Making of the Atomic Bomb, peels back, layer by layer, the invention of the atomic bomb. In the process, he illuminates the intellectual progress of a community of geniuses at work. Laurel Ulrich, in A Midwife’s Tale, uses the diary of a seemingly unremarkable woman to construct a story of a life in the woods of Maine 200 years ago, revealing the economy, social structure, and physical life of a place in a manner not otherwise possible. And in Enterprising Elites, historian Robert Dalzell gives us the stories of America’s first industrialists and the world they built in nineteenth-century New England, thereby revealing the process of industrialization. So, the story, whether of a person or a thing, can not only reveal a life but illuminate the bigger world that formed the life. This is my objective for the story of my T-shirt. “Does the world really need another book about globalization?” Jagdish Bhagwati asked in the introduction to his 2004 book on the topic. Well, certainly the world does not need another tome either defending or criticizing globalization and trade as abstract concepts, as the cases on both sides have been made eloquently and well.2 I wrote Travels of a T-Shirt not to defend a position but to tell a story. And though economic and political lessons emerge from my T-shirt’s story, the lessons are not the starting point. In other words, I tell the T-shirt’s story not to convey morals but to discover them, and simply to see where the story leads. I brought to the first edition of Travels of a T-Shirt my own biases, and I surely harbor them still. Because I have spent my career teaching in a business school, and no doubt because of my academic background in finance and economics, I know that I share with my colleagues the somewhat off-putting tendency to believe that if everyone understood what we fpref Date: Jan 21, 2009 xii Time: 5:47 pm PREFACE TO THE SECOND EDITION understood—if they “got it”—they wouldn’t argue so much. More than 200 years after Adam Smith advanced his case for free trade in The Wealth of Nations, we are still trying to make sure that our students, fellow citizens, and colleagues in the English department “get it,” because we are sure that once they understand, everyone will agree with us. When I happened by the protests at Georgetown and listened to the T-shirt diatribe, my first thought was that the young woman, however well-intentioned and impassioned, just didn’t “get it.” She needed a book—maybe Travels of a T-Shirt—to explain things. But after following my T-shirt around the world, and after nearly a decade spent talking to farmers, workers, labor activists, politicians, and businesspeople, my biases aren’t quite so biased anymore. T rade and globalization debates have long been polarized on the virtues versus evils of competitive markets. Economists in general argue that international market competition creates a tide of wealth that (at least eventually) will lift all boats, while critics worry about the effects of unrelenting market forces, especially on workers and the environment. Free trade in apparel, in particular, critics worry, leads only to a downward spiral of wages, working conditions, and environmental degradation that ends somewhere in the depths of a Charles Dickens novel. My T-shirt’s life suggests, however, that the importance of markets might be overstated by both globalizers and critics. While my T-shirt’s life story is certainly influenced by competitive economic markets, the key events in the T-shirt’s life are less about competitive markets than they are about politics, history, and creative maneuvers to avoid markets. Even those who laud the effects of highly competitive markets are loathe to experience them personally, so the winners at various stages of my T-shirt’s life are adept not so much at competing in markets but at avoiding them. The effects of these avoidance maneuvers can be more damaging for the poor and powerless than market competition itself. In short, my T-shirt’s story turned out to be less about markets than I would have predicted, and more about the historical and political webs of intrigue in which the markets are embedded. In peeling the onion of my T-shirt’s life—especially as it relates to current debates—I kept being led back to history and politics. Many once-poor countries (e.g., Taiwan or Japan) have become rich due to globalization, and many still-poor countries (e.g., China or India) are nowhere near as poor as they once were. The poorest countries in the fpref Date: Jan 21, 2009 Time: 5:47 pm PREFACE TO THE SECOND EDITION xiii world, however, largely in Africa, have yet to benefit from globalization in any sustained way, and even in rapidly growing countries such as China, many are left behind. My T-shirt’s life is a story of the wealth-enhancing possibilities of globalization in some settings but a “can’t win” trap in others, a trap where power imbalances and poorly functioning politics and markets seem to doom the economic future. My T-shirt’s story also reveals that the opposing sides of the globalization debate are co-conspirators, however unwitting, in improving the human condition. Economist Karl Polanyi observed, in an earlier version of today’s debate, his famed “double movement,” in which market forces on the one hand were met by demands for social protection on the other.3 Polanyi was pessimistic about the prospects for reconciling the opposite sides. Later writers—perhaps most artfully Peter Dougherty—have argued instead that “Economics is part of a larger civilizing project,” in which markets depend for their very survival on various forms of the backlash.4 My T-shirt’s story comes down on Dougherty’s side: Neither the market nor the backlash alone presents much hope for the world’s poor who farm cotton or stitch T-shirts together, but in the unintentional conspiracy between the two sides there is promise. The trade skeptics need the corporations, the corporations need the skeptics, but most of all, the Asian sweatshop worker and African cotton farmer need them both. T he second edition of Travels of a T-Shirt is very much the product of reader reactions to the first. During the past several years I have had the opportunity to speak with fellow academics, students, businesspeople, and policymakers around the United States and the world about the myriad issues raised by the biography of this simple product. My basic conviction that the biographical approach can illuminate complex economic and political issues in a unique way has only been strengthened by these many conversations, and the second edition of Travels of a T-Shirt remains loyal to this conviction. While the biographical facts of my T-shirt’s life are unchanged, as is the approach I have taken, my many conversations with readers have also illuminated a number of ways in which the story of my T-shirt can evolve to continue to engage a variety of debates. First, much has happened in the world of international trade since the book’s publication in 2005. While the major lessons of my T-shirt’s fpref Date: Jan 21, 2009 xiv Time: 5:47 pm PREFACE TO THE SECOND EDITION life are unchanged, or perhaps even strengthened, much has evolved in the manner in which the relevant industries operate, in the competitive dynamics, and in political developments related to trade and globalization. I hope in this edition to provide an update of this changing landscape and to answer the many questions I have received from readers regarding what has happened in the world of my T-shirt since 2004. Second, during the 2005 to 2008 period I have also made return trips—often multiple trips—to most of the locations in my T-shirt’s life story, and I have continued to learn from these visits as well as from my continuing correspondence with the many people involved in each stage of the T-shirt’s life. I hope in this edition that the reader can learn as well from these visits and continuing correspondence. I have also benefited tremendously from the hundreds of e-mails and many conversations that have helped me to sharpen the arguments, review new research and evidence, and expand on several topics that have been of special interest to readers. The third change was born in 2006–2007. I was visiting many colleges and universities during that period, and at Wellesley College and University of Iowa, at Colby College, and at UC Santa Barbara and at Texas Tech—in other words, at universities across the geographical and political landscape—readers were interested in the environmental implications of my T-shirt’s life story. During the same period, the book was also being released in translation, so I found myself in Tokyo, Vienna, and Milan as well. Again, around the world readers wanted to talk about environmental sustainability. Indeed, by 2008, it seemed inconceivable that a book about globalization would fail to address the related environmental issues. Of course, an entirely new book could be written to tell the environmental story of my T-shirt’s life. I make no claims that I have written such a book. I have, however, illuminated a number of the debates that relate environmental issues to both my T-shirt and to broader issues of trade and globalization. Though I did not write Travels of a T-shirt for the “college market,” I have heard from many university faculty who have used this book for a variety of purposes and courses, and I especially hope that the updates provided in this edition will be useful in these settings. To that end, some teaching resources are now available at www.wiley.com/college/rivoli. Needless to say, I enjoyed some reviewers’ and commentators’ views of the first edition of this book more than I did others. Sometimes, however, I have heard a reviewer or commentator explain a point in the book, or an argument, better than I did. More than once, I have thought, “I wish I had fpref Date: Jan 21, 2009 Time: 5:47 pm PREFACE TO THE SECOND EDITION xv written that,” when I heard a particularly insightful or evocative comment about what I actually did write. In late 2005 I spoke about Travels of a T-Shirt at the IMF in Washington. There, Hans Peter Lankes, one of the commentators, explained his reaction to the book in language that not only has stuck with me, but which has helped me in this revision. Hans Peter said that reading the book was “… sort of like circling a Buddhist stone garden. One slips into every conceivable perspective on this issue and there are no villains, only actors in what I call an epic struggle and a fantastically complex, forward-driving, and culture-transforming enterprise.” As I write this in early 2009, I still have not met any villains. Every aspect of my T-shirt’s life is even more fantastically complex than it was earlier in the decade, while the struggles seem even more epic and the actors seem to be running in an even faster race. Yet in this revision I have kept in mind the image of the Buddhist stone garden. My objective, quite simply, has been to continue to circle. I f I learned anything from my travels over most of the past decade, it is that university students represent one of the most powerful forces for change in our society. After I first encountered the protests at Georgetown University in 1999, students peacefully occupied the university president’s office and refused to budge until the university and its apparel suppliers agreed to address the alleged “sweatshop” conditions under which Georgetown T-shirts and other licensed apparel were produced. Similar protests went on at dozens of universities across the country. By 2008, the students and their compatriots around the globe had dramatically changed the way the global apparel industry operates, and had completely rewritten the rules for how some of the world’s largest companies do business. The life story of a T-shirt made today is a different and better story for both workers and for the environment than the story of a T-shirt made just a few years ago. I thought, when I started to follow my T-shirt, that I would in the end have a story that would help the students to see things my way, to understand the virtues of markets in improving the human condition. I do have such a story, I hope, but it is not the whole story. To the students, I also say, I (now) see where you’re coming from. Though I think they see where I’m coming from, too. Students at Georgetown and elsewhere continue to push corporations and universities to improve labor practices in the global marketplace, but fpref Date: Jan 21, 2009 xvi Time: 5:47 pm PREFACE TO THE SECOND EDITION they are now joined by those concerned with the environmental impacts as well. Already, I see these new footprints in business practices and political debates. My old friends are still here: Nelson, Ruth, Gary, Patrick, Yuan Zhi, Auggie, Julia, and Gulam, everyone who played a part in my T-shirt’s life during my first trip around the world. But new friends are here too: Eric is printing T-shirts with soy-based inks, Yiqi is spinning yarn from corn, and Kelly is marketing organic cotton. In 2008 my simple T-shirt is more complicated and fascinating than ever, a tiny microcosm of creation and destruction in our modern world. flast Date: Jan 21, 2009 Time: 5:53 pm PROLOGUE Finding My T-Shirt’s Likely Birthplace Walgreen’s Drugstore Ft. Lauderdale, Florida Spring 1999 The civic leaders of Fort Lauderdale have laid new paint over much of the city in recent years. The stoned surfers and rowdy college students are less visible now, pushed away from the beach with its new cafes and highend hotels. The college students of the 1970s are parents now, and they have money to spend. The city bends toward the money like a palm tree, polishing, sweeping, painting. Yet, like tourist destinations everywhere, a scratch on the shiny paint reveals a bit of the tawdry underneath. Though the city fathers might prefer art galleries, it is T-shirt shops that line the beach because that is what people want to buy. A large bin of T-shirts sat near the exit of a Walgreen’s drugstore near the beach. The bin was positioned to catch shoppers on the way out, and it worked: Nearly everyone who walked by pawed through the bin, if only for a minute. The bin was full of hundreds of T-shirts, each priced at $5.99, or two for $10. All were printed with some Floridian theme, seashells, bright fish, or palm trees. I reached in and pulled out a shirt. It was white and printed with a flamboyant red parrot, the word “Florida” scripted beneath. I went to the checkout line, and then stepped out into the sun and looked at the shirt through the wrapper. “You’re it,” I thought. Back in Washington, I took the T-shirt out of the poly bag and looked at the label. “Sherry Manufacturing,” it said, and underneath, “Made in China.” I typed “Sherry Manufacturing” into my search engine. A few minutes later, I had reached Gary Sandler, Sherry’s president, on the telephone. “Sure,” he said. “Come on down. We don’t get many visitors from Washington.” xvii flast Date: Jan 21, 2009 xviii S Time: 5:53 pm PROLOGUE herry Manufacturing Company is located in Miami’s original industrial district, a bleak landscape of factories and warehouses not far from the airport. Gary Sandler is Florida-tanned and friendly, with a healthy skepticism about college professors. He is completely without pretension, but clearly proud of what he and his family have built. On the wall of his office are pictures of his children and his sales force. Gary’s father, Quentin, formed Sherry Fashions just after World War II, naming the company for his eldest daughter. Quentin started out as an independent wholesaler, going shop to shop along the beachfront, selling souvenir trinkets to the store owners. He would travel to New York to buy and return to Miami to peddle his wares during the tourist season. Then, as now, people liked to shop while on vacation, especially for souvenirs. Quentin found that trinkets with a tropical theme were especially popular with the visiting Northerners. In the 1950s, options for “wearable” souvenirs were limited, and vacationers typically brought home trinkets rather than clothing. However, Quentin found that one of his most popular items was a souvenir scarf, a small cotton square printed with a Floridian motif. The scarf, like much of the tourist kitsch of the era, was made and printed in Japan. Before long, Sherry found itself in a classic wholesaler’s predicament, with margins being squeezed between the suppliers and the retailers. In 1955, Quentin Sandler dispensed with his New York suppliers and opened his own clothprinting shop in Miami. Sherry Fashions became Sherry Manufacturing Company. In the mid-1970s, Gary Sandler quit college to join his father’s company, and in 1986 became president. In mid-1999, the presidency passed to the third generation when Sandler’s nephew (and Sherry’s son) assumed responsibility for day-to-day operations. Today, Sherry is one of the largest screen printers of T-shirts in the United States. It remains a business focused on the tourist trade. In Key West, Florida, and Mount Denali, Alaska, and many tourist spots in between, as well as in Europe, Sherry has T-shirts for sale. Sherry’s artists design motifs for each tourist market, and the designs and locations are printed or embroidered on shirts in the Miami plant. Sherry’s inventory of blank T-shirts (as well as beach towels and baseball caps) fills a two-story warehouse. The blank goods go from the flast Date: Jan 21, 2009 Time: 5:53 pm PROLOGUE xix warehouse to the printing machine, which resembles a Ferris wheel lying on its side. Workers slide each shirt on the flat end of a wheel spoke, which then turns and stops briefly up to 14 times. Each time the wheel stops, a different color is shot through the tiny holes in the screen. When the shirt returns to the starting point on the wheel, a worker slides it off and passes it to another worker, who lays it flat on a drying conveyor belt. The next worker picks it up from the end of the drying belt and lays it flat on a second conveyor belt, which swallows it into a tunnel and shoots it out, neatly folded, from the other end. It’s no longer underwear; it’s a souvenir. The shirts piled up in rolling carts tempt with scenes of beaches, mountains, skyscrapers, and glaciers. Each shirt will allow someone to take a bit of a place and wear it home. A walk through the warehouse adjoining the plant is a travelogue, too, but for the more adventurous. Where the shirts are headed you need sun lotion, but where they come from you need shots. Gary Sandler buys T-shirts from Mexico, El Salvador, the Dominican Republic, Costa Rica, Bangladesh, Honduras, China, Pakistan, Botswana, India, Hong Kong, and South Korea. When I spoke with Gary again in 2008, the T-shirt business was tougher than it had been just a few years before: Competition—especially from abroad—was greater, the Miami labor market was more unpredictable, and overseas sourcing was more complicated. In addition, the economic downturn had severely affected the tourism industry, which had in turn affected Sherry’s business. My T-shirt is from China. It likely departed Shanghai in late 1998 and arrived in the port at Miami a few weeks later. All told, the shirt cost Sandler $1.42, including 24 cents in tariffs. The shirt was one of about 25 million cotton T-shirts allowed into the United States from China under the U.S. apparel import quota system in 1998. The shirt’s journey, as we shall see, is a testimony to the power of economic forces to overcome obstacles. To arrive here, the shirt fought off the U.S. textile and apparel industries, Southern congressmen, and a system of tariffs and quotas so labyrinthine that it is hard to imagine why anyone would take the trouble. But Gary Sandler takes the trouble. Despite the best efforts of Congress, industry leaders, and lobbyists; despite the quotas, tariffs, and Chinese bureaucracy, China has the best shirts at the best price. But China is a big place. Where, exactly, I asked Sandler, did the shirt come from? Sandler riffled through his Rolodex and pulled out a card. “Mr. Xu Zhao Min,” the card read, “Shanghai Knitwear.” flast Date: Jan 21, 2009 xx Time: 5:53 pm PROLOGUE “Call him up,” said Sandler. “He’s a great guy. He’ll tell you everything.” “Xu Zhao Min,” I tried to read aloud. “No, no,” said Sandler. “Patrick. His American customers call him Patrick.” Patrick Xu and his wife accepted my invitation to visit Washington during their next trip to the United States. P atrick Xu straddles East and West, rich and poor, communism and capitalism with almost cat-like balance. He travels to the United States two or more times each year, visiting old customers and scouring for new ones, watching the Western fashions and bringing ideas back to the factories. While Patrick is happy to sell white T-shirts to established customers like Gary Sandler, he does not see much of a future in white T-shirts for Shanghai Knitwear. There is too much competition from lower-wage countries and other parts of China, and soon, he believes, his hard-won customers will be sourcing T-shirts far from Shanghai. Patrick is trying to move up the value chain into fancier goods such as sweaters. “Come to China,” Patrick said during our first meeting in 1999. “I’ll show you everything.” I wanted the whole story, I explained. Could he show me where the shirts were sewn? No problem. What about where the fabric is knit? Yes, of course. I pushed my luck: What about the yarn the fabric is made of? The spinning factory? Yes, he could arrange it. But this wasn’t quite the beginning. What about the cotton? To tell the life story of my shirt, I had to start at its birthplace. I knew that China was one of the world’s largest cotton producers. Could I go to the farm and see how the cotton is produced? Patrick looked at the T-shirt. “Well, that might be difficult. I think the cotton is grown very far from Shanghai. Probably in Teksa.” “Teksa? Where is Teksa? How far away?” I asked. There was a globe on my desk and I spun it around to China. Could he show me Teksa on the globe? Patrick laughed. He took the globe and spun it back around the other way. “Here, I think it is grown here.” I followed his finger. Patrick was pointing at Texas. e1c01 Date: Jan 22, 2009 Time: 3:35 pm PART I KING COTTON Nelson and Ruth Reinsch at Their Farm in Smyer, Texas. (Photo Courtesy of Dwade Reinsch and Colleen Phillips.) e1c01 Date: Jan 22, 2009 Time: 3:35 pm e1c01 Date: Jan 22, 2009 Time: 3:35 pm 1 HOW AMERICA HAS DOMINATED THE GLOBAL COTTON INDUSTRY FOR 200 YEARS REINSCH COTTON FARM, SMYER, TEXAS U nlike French wine or Florida oranges, Texas cotton doesn’t brag about where it was born and raised. Desolate, hardscrabble, and alternately baked to death, shredded by windstorms, or pummeled by rocky hail, west Texas will never have much of a tourist trade. Flying into the cotton country near Lubbock on a clear fall day, I had a view of almost lunar nothingness: no hills, no trees. No grass, no cars. No people, no houses. The huge and flat emptiness is jarring and intimidating at first, since one can’t help but feel small and exposed in this landscape. Though I had traveled to dozens of countries and to almost every continent, during my first visit to Lubbock, Texas, I thought it was one of the most foreign places I had ever been. Somehow, since then, it 3 e1c01 Date: Jan 22, 2009 4 Time: 3:35 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY has also become one of my favorite places. There is a very good chance that my T-shirt—and yours—was born near Lubbock, the self-proclaimed “cottonest city” in the world. The people of this forbidding yet harshly beautiful place are wellsuited to the landscape. Indeed, they are the product of it. The land has humbled them with its unpredictable temperament and its sheer scale, yet made them proud of each small success in taming and coaxing from it the fluffy white gold of the cotton plant. According to local legend, when God created west Texas, He made a mistake and forgot to fashion hills, valleys, rivers, and trees. Looking at His desolate and barren mistake, He considered starting over, but then had another idea. “I know what I’ll do,” He said. “I’ll just create some people who like it this way.” And so He did. Nelson Reinsch, cotton farmer, still stands tall and handsome at the age of 87. He laughs easily but speaks carefully. He calls his wife, Ruth, “Sugar,” and every other woman “Ma’am.” Nelson is a gentleman in the older sense of the word, well-mannered and considerate from the inside. We last met in 2008, and, remarkably, Nelson seemed not to have aged a bit since our first meeting in 2000. In his 87 years, Nelson has missed four cotton harvests, all of them during his Navy service in World War II. Nelson and Ruth are happy enough (or perhaps just polite enough) to talk about the past if that is what their guests want to hear about. But they wallow not one bit in “the good old days,” and their minds are opening rather than closing as they approach the ends of their lives. The world is still very interesting to Nelson and Ruth Reinsch. Of the many places and people I have visited during the research for this book, among my favorite times have been sitting in the Reinsch kitchen, eating (too much) of Ruth’s cake and learning about cotton. In 2008, Nelson and Ruth remained on their farm in the middle of the west Texas emptiness. However, in that year Nelson scaled back his cotton operation and began to rent out much of his land. Producing cotton is no longer the backbreaking physical process it once was, but every year Nelson and Ruth still battle both the whims of nature and the vagaries of markets. Each summer they take on the wind, sand, heat, and insects; and each fall, at harvest, they take on the world markets, in which they compete with cotton farmers from over 70 countries. The Reinsches’ 1,000 acres can produce about 500,000 pounds of cotton lint if fully planted, enough for about 1.3 million Tshirts. That Nelson is ending his life in the same occupation in which he e1c01 Date: Jan 22, 2009 Time: 3:35 pm HOW AMERICA HAS DOMINATED THE GLOBAL COTTON INDUSTRY 5 began tells us much about him. It also tells us much about the U.S. cotton industry. History shows that almost all dominance in world markets is temporary and that even the most impressive stories of national industrial victories typically end with sobering postscripts of shifting comparative advantage. Within the baby boomers’ lifetime, preeminence in consumer electronics has shifted from the United States to Japan to Hong Kong to Taiwan to China. Apparel production has moved from the American South to Southeast Asia to the Caribbean and back to Asia. Advantages in steel have moved from the U.S. Rust Belt to Japan to South Korea. But for over 200 years, the United States has been the undisputed leader in the global cotton industry in almost any way that can be measured, and other countries, particularly poor ones, have little chance of catching up. The United States has historically occupied first place in cotton production (though recently second to China), cotton exports (though occasionally second to Uzbekistan), farm size, and yields per acre.1 On the surface, cotton is an unlikely candidate for economic success in the United States. Typically, American industries compete with those in “like” countries. U.S. firms compete with Japanese automakers, German chemical companies, and Swiss pharmaceuticals. But for climatic reasons, few advanced industrial economies produce cotton. Instead, American cotton growers compete with producers in some of the world’s poorest and least developed regions. If our labor costs—among the world’s highest—have toppled or relocated industries as diverse as apparel, steel, and shipbuilding, how has U.S. cotton maintained its world dominance? More broadly, how can an industry so basic and “downstream” as cotton production continue to thrive in an advanced, service-oriented economy? There would appear to be little sustainable advantage in an industry such as cotton. Models of business strategy would predict that dominance in such an industry can only be fleeting and stressful: The lack of product differentiation, the intense price competition, and the low barriers to entry make it scarcely worth the trouble. Business professor and strategist Michael Porter notes that advantages [are] often exceedingly fleeting [in these industries]. … Those industries in which labor costs or natural resources are important to competitive advantage also often have … only low average returns on investment. Since such industries are accessible to many nations … because of relatively low barriers to entry, they are prone to too many competitors. … Rapidly shifting factor advantage continually attracts new entrants who bid down e1c01 Date: Jan 22, 2009 6 Time: 3:35 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY profits and hold down wages. … Developing nations are frequently trapped in such industries. … Nations in this situation will face a continual threat of losing competitive position. …2 While this description of life on the economic precipice rings true for poor cotton farmers in South Asia and Africa, it does not describe the cotton industry around Lubbock. Year in and year out, American cotton farmers, as a group, are on top. What explains American cotton’s success as an export commodity in a country that has experienced a merchandise trade deficit in each year since 1975? And what explains U.S. cotton producers’ ability to export such a basic commodity to much poorer countries? Why here? Why was my Chinese T-shirt born in Texas? Oxfam, the international development organization, believes it has the answer. According to a number of scathing Oxfam reports, the comparative advantage enjoyed by U.S. cotton farmers lies in their skill at collecting government subsidies.3 In the fall of 2003, bolstered by Oxfam’s research and resources, the poorest countries in the world cried foul against the richest at the opening of the World Trade Organization (WTO) trade talks in Cancun, Mexico. Tiny, desperately poor countries such as Benin and Burkina Faso stood firm and stared down U.S. negotiators: They charged that U.S. cotton subsidies were blocking their route out of poverty, and that it was impossible to compete with Uncle Sam’s largesse to U.S. cotton farmers. In a soundbite that carried considerable punch, the poor countries pointed out that U.S. cotton subsidies exceeded the entire GDP of a number of poor cotton-producing countries in Africa. If the United States was going to champion the case for free trade, Americans needed to walk the walk as well as talk the talk. The stare-down continued for several tortured days until the talks collapsed and both rich and poor gave up and went home.4 The point, however, had been made, and several months later the WTO ruled that U.S. cotton subsidies violated global trade rules and unfairly tilted the playing field toward American producers. In the summer of 2004, with the huge subsidies in the public spotlight, U.S. trade negotiators agreed not only to put cotton subsidies on the table, but to tackle the cotton issue “ambitiously, expeditiously and specifically” during the Doha Round of trade negotiations.5 As of the fall of 2008, however, the negotiations remained stalled, with most of the subsidies still in place. There is no doubt that the subsidies are big and little doubt that they are unfair to poor countries. But anyone who believes that America’s competitive power in the global cotton industry reduces to government subsidies should spend some time near Lubbock, Texas. While the e1c01 Date: Jan 22, 2009 Time: 3:35 pm HOW AMERICA HAS DOMINATED THE GLOBAL COTTON INDUSTRY 7 subsidies are, of course, a boon to U.S. producers, the success of cotton growers such as Nelson Reinsch is a much more complex phenomenon. First, the dominance of the U.S. industry predates by well over a century the implementation of national farm subsidies. As Chapter 2 describes, the U.S. cotton industry passed its competitors over 200 years ago. Therefore, while subsidies may account for some cost advantages today, they cannot be the longer-run explanation for the industry’s dominance. Second, the subsidy explanation for America’s dominance gives short shrift to the astounding entrepreneurial creativity of the American growers. In many ways, the American cotton farmers are MBA case studies in adaptability and entrepreneurship. American cotton growers have adapted their production methods, their marketing, their technology, and their organizational forms to respond to shifts in supply and demand in the global marketplace. The shifts in demand and supply that reveal cotton’s story as a business were sometimes gentle and predictable trends of ascendancy and decline, and the farmers could see what was ahead; but sometimes changes were sudden and cataclysmic, reshaping the world in front of them. In each case, the cotton farmers responded with a creative maneuver—a new idea, a new technology, a new policy. Whether it occurs by design or necessity, the open-mindedness and forward orientation that struck me within minutes of first meeting Nelson and Ruth Reinsch is a regional trait as well as a comparative advantage, because farmers in poor countries who are tradition bound—for whatever reason—rather than innovation bound, lose. The American growers’ remarkable adaptability and entrepreneurial resourcefulness have their roots in character but also in the institutions and governance mechanisms taken for granted in the United States, but which are lacking in many poor countries. In the United States, the farms work, the market works, the government works, the science works, and the universities work; and all of these elements work together in a type of virtuous circle that is decades away for the poorest countries in the world. In much of West Africa, with or without U.S. cotton subsidies, these institutional foundations for global competitiveness are weak. In addition, the institutions that are in place in many poor countries serve to funnel resources and power away from farmers rather than toward them. While subsidies alone cannot explain U.S. dominance in this industry, the subsidies are but one example of a much broader phenomenon that has contributed to the U.S. farmers’ seemingly immutable spot at the top. For 200 years, U.S. farmers have had in place an evolving set of public policies e1c01 Date: Jan 22, 2009 8 Time: 3:35 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY that allow them to mitigate the important competitive risks inherent in the business of growing and selling cotton. They have figured out how to compete in markets but also—and at least as important—how to avoid competing when the risks are too high. Put another way, U.S. cotton growers have since the beginning been embedded in a set of institutions that insulate them from the full strength of a variety of market forces. When we consider the risks that a cotton boll faces on its way to becoming a T-shirt, it is a wonder we have clothes at all. The cotton can’t be too hot, and it can’t be too cold; it is susceptible to both too much water and too little; and it is too delicate to survive hail or even heavy wind and rain. Cotton plants are easily overtaken by weeds; there are dozens of varieties of pests that can take out a cotton crop; and crop prices are highly volatile. There is labor market risk as well, as workers must be available at a reasonable price when the cotton is ready to be weeded or picked. Every cotton farmer in the world faces these risks. And of course there are the normal business risks associated with falling prices and rising costs, foreign competition, and access to financing. As explained in Chapters 2–4, however, American cotton’s story, and its success, have been about excellence in avoiding—or at least cushioning the impact of—these risks. Today’s proponents of markets and globalization can find much to like in the story of American cotton’s victory, but the backlash can find support as well. For every noble victory in this industry, and for every case in which the Americans were smarter, faster, and better than the competition, there is a shameful victory as well. The most shameful of all was the cotton slave plantation, where the U.S. cotton industry was born, and where the Americans first trounced their foreign competition. Less shameful but still embarrassing are today’s high subsidies. But to understand American cotton’s long-run dominance, we should begin by agreeing to neither demonize nor romanticize American cotton farmers. During the 200 years in which the United States has dominated this industry, sometimes it was possible to win on the high road and sometimes it wasn’t. My T-shirt’s parentage in the fields of the American South has many things to be proud of, but some things to hide. E1C02 Date: Jan 19, 2009 Time: 12:41 pm 2 THE HISTORY OF AMERICAN COTTON WINNING BY DUCKING THE LABOR MARKETS Demand Pull: The Humble Class Gets a Taste for “Gaiety of Dress” The world’s first factories were cotton textile factories, and it was entrepreneurial developments in the production of cotton cloth and yarns that launched the Industrial Revolution in eighteenth-century Britain. A rapid-fire series of technical improvements in both the spinning and weaving of yarns made large-scale production possible and opened the way for the manufacture of textiles to move from the home and workshop into the factory. The exploding productivity of the English cotton industry dramatically lowered prices, so that for the first time, the poor could dress attractively. A consumer class was born. Edward Baines, a nineteenthcentury historian, described the consumer pull of cheap cotton clothing: It is impossible to estimate the advantage to the bulk of the people, from the wonderful cheapness of cotton goods … the humble classes now have the means of as great neatness, and even gaiety of dress, as the middle and upper classes of the last age. A country-wake in the nineteenth century may display as much finery as a drawing room of the eighteenth.1 9 Date: Jan 19, 2009 10 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY 1800 1600 Millions of Pounds (weight) E1C02 1400 1200 1000 800 600 400 200 0 1791 1801 1811 1821 1831 1840 1850 1860 India Africa Asia excl. India U.S. Latin America and Caribbean Other Areas Source: Bruchey, 7. Figure 2.1 Cotton Production (Millions of Pounds) by Region and Time As technological innovation increased productivity, higher productivity in turn lowered prices. The lower prices spurred demand for textiles, which then left England starving for raw cotton. Once the British masses had a taste of “gaiety of dress,” there was no turning back. The cheap cotton clothing available to the masses was the historical equivalent of today’s $5.99 cotton T-shirt. Then, as now, consumer demand was behind the push and pull of world trade flows. Of course, British demand for cotton does not fully explain American success in meeting that demand. Indeed, at the takeoff of the Industrial Revolution, the United States did not seem like a promising source of cotton at all. As Figure 2.1 shows, in 1791, the U.S. share of world cotton production was almost too small to be counted. The American South produced barely 2 million pounds of cotton in 1791, a minuscule amount compared to the output of producers elsewhere. It is doubtful that producers in Asia (primarily India), with production of nearly 400 million pounds, perceived much of a competitive threat from the American South. The boom in U.S. cotton production that happened next was astounding. In 10 years, American production increased by 25 times. And E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 11 by the outbreak of the Civil War, the South was producing more than a billion pounds per year, approximately two-thirds of the total world production. Cotton production was overwhelmingly export oriented. From 1815 to 1860, cotton constituted approximately half of the value of all U.S. exports, and more than 70 percent of all American cotton produced was exported, primarily to England.2 In a relatively short period of time, American cotton farmers had trounced their foreign competition. The victory did not come cheaply. First, the single-minded concentration of capital, labor, and entrepreneurial energies into cotton production left the American South far behind the North in broader industrial development, a gap that has narrowed decisively only during the past 25 years. Second, early American cotton production took place mostly, though not entirely, on slave plantations, and there is little doubt that this system of human captivity contributed significantly to the “productivity” of the American cotton grower. And while plantation slavery was undoubtedly the most horrible of the many labor systems in U.S. economic history, as we will see, slavery is not the only instance in which a horrific—or at least objectionable—labor system played a role in the production and trade of cotton clothing such as T-shirts. On this issue, today’s trade skeptics have a point. Slavery was the first significant American “public policy” that served to protect cotton growers from the perils of operating in a competitive market. For a number of reasons, relying on a competitive labor market—rather than on captive slaves—was a risk that growers were loath to assume, and it was also a risk that would have likely precluded the explosive growth in American cotton production. Growing cotton in the antebellum South was mind-numbing, backbreaking physical labor. Beginning in mid-spring, the ground would be prepared for planting with hoes, and later, mule-drawn plows. Following planting, the battle of the weeds began. The tender cotton plant was not able to hold its own against the rapacious weeds, and so required the constant help of workers who guarded the young plants against their encroachment. Indeed, numerous journals and diaries reveal that keeping cotton “out of the grass” was perhaps the planters’ biggest worry and the most physically demanding work.3 Weeding and thinning continued, although at a slower pace, almost until the four-month harvest season began in late summer. On a large plantation, one worker could prepare, plant, weed, and harvest about 18 acres of cotton. Critically, the timing and intensity of each of these tasks was dictated by the weather, so the growers were unable to predict their labor E1C02 Date: Jan 19, 2009 12 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY requirements beyond the weather forecast. During a very rainy spring, each field had to be weeded up to six times, which doubled the labor requirement during that season. The harvesting of cotton was perhaps the most unpredictable task. (Even today, Nelson and Ruth Reinsch cannot plan for Thanksgiving travel.) Cotton cannot be picked either in the rain or while still wet, and it typically takes three to four days to dry. A few days of rain, then, might leave pickers idle for a week. But once the cotton was open and dry, it needed to be picked as soon as possible, so that the tender fluffs did not blow away or fall to the ground. Cotton that had been rained on became spotted and weaker, so often planters tried hurriedly to get the cotton picked as rain clouds approached. These exacting and unpredictable labor requirements were impossible to meet while relying on the market. As Gavin Wright has argued, farm labor markets in the American South barely functioned, if in fact they existed at all.4 Farms were geographically dispersed, which made communication and transportation difficult. The very low population density, combined with uneven labor requirements throughout the year, as well as poor information flows, meant that a farmer who relied on the “market” to meet his labor needs might not be able to harvest his crop at any price. The problem of farm labor, then, was not limited to a shortage of workers or high wages. Rather, the problem was the absence of a well-functioning market where farm workers and growers could transact with any degree of effectiveness. Relying on the market to supply the right number of workers at the right time was a business gamble that cotton farmers preferred to avoid. Even with a functioning labor market, however, it is doubtful that workers would have been attracted to opportunities as wage hands in cotton production. As a very early student of the cotton economy noted, “the difficulty or impossibility of inducing the whites to become wage earners while they were in contact with cheap land is undoubtedly the chief reason why the cotton industry in the country was developed by slave instead of by free labor.”5 Of course, the same could be said of blacks. In the absence of slavery, blacks as well as whites would prefer a farm of their own to work as wage hands. And, in the early years of the American South, land was available to all comers. In summary, free labor—black or white—was unlikely to be attracted to wage work on Southern cotton farms, because of both the poor functioning of labor markets and the superior alternative available to these workers—the family farm. Slavery, then, allowed cotton farmers both a E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 13 way to avoid the risks associated with transacting in the labor market and a way around the family labor constraint. Slavery also enabled the growers to cultivate greater acreage. The greater acreage in turn allowed cotton production to increase. The average farm size in the cotton South was nearly twice that of the free states of the North, and there was a strong positive relationship between farm size and relative cotton production, at least for farms below 600 acres.6 Put simply, large farms were slave plantations, not family farms, and it was the slave plantations that produced most of the world’s cotton by 1860. Keep the Fiddler Well-Supplied with Catgut Slave ownership alone did not guarantee successful large-scale cotton production. Effective systems of control, monitoring, and incentives were also required. These systems accounted for both the economic success of the slave plantation for the planters, and for the inhumanity of slavery. The profitability of the plantation depended not on slave ownership per se, but on the planter’s ability to induce his slaves to perform repetitive and exhaustive physical labor at unpredictable times. Large volumes of cotton production required that the planter devise a “factory” system wherein a large number of workers performed repetitive tasks, and the factory “shift” could be activated at the whim of the weather. The planters were able to induce this repetitive labor on demand with a complex blend of positive incentives (e.g., prizes), negative incentives (e.g., whipping), and paternalism.7 A common theme in slaveholder journals is that the planters had a moral duty to protect those “in dependent status,” and that slaves who were well cared for and happy would be more productive. A large plantation owner in Georgia offered his own practices as exemplary: My first care has been to select a proper place for my “Quarter” well protected by the shade … and to erect comfortable houses for my negroes. … A large house is provided as a nursery for the children where all are taken at daylight, and placed under the care of a careful and experienced woman, whose sole occupation is to … see that they are properly fed and attended to. … I have a large and comfortable hospital provided for my negroes when they are sick … [and] I must not omit to mention that I have a good fiddler, and keep him well-supplied with catgut, and I make it his duty to play for the negroes every Saturday night until twelve o’clock.8 E1C02 Date: Jan 19, 2009 14 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY Lest we be tempted to sign up, the writer later notes that his solicitous human resource policies reduced, but did not eliminate, the need for whipping. Whatever its motivation, paternalism clearly strengthened the control of the planter over his slaves and served as a governance mechanism. And when combined with constant monitoring, and the positive and negative incentives that ruled the workday, the planter’s domination was complete. To summarize, slavery was the first in a set of evolving public policies that served to insulate farmers from the perils of the market. American success in producing large volumes of cotton for world markets required a reliable supply of farm labor, but this labor was likely both unwilling and unavailable through a market mechanism in the pre–Civil War South. But slave ownership alone did not assure productivity. To induce slaves to perform the repetitive and exhausting tasks associated with cotton production, planters used a complex blend of governance mechanisms, including positive and negative incentives, paternalism, and monitoring. Many elements of the command-and-control factory system, of course, survive today in many industries. And complicated blends of incentive and monitoring mechanisms survive as well. The lessons of the early American cotton industry are relevant for modern debates. America’s early dominance of the cotton industry illustrates that commercial success can be achieved through moral failure, an observation especially relevant for T-shirts, which critics allege are produced under sweatshop conditions not far removed from slavery. But the early story of American cotton also reveals a critical lesson for the marketphobic: It was not the perils of the labor market but the suppression of the market that doomed the lives of the slaves. More generally, the tactic of suppressing and avoiding markets rather than competing in them continues today to be a viable business strategy, particularly in agriculture but also in other industries. This ability to suppress and avoid competition, as we will see, is often the result of a power imbalance between rich and poor, an imbalance that persists in world cotton agriculture today. W ith the labor problem “solved” by slavery, unlimited land to the West, and unlimited demand from the East, the pieces were still not quite in place for American cotton’s victory. In their westward expansion, cotton growers encountered perhaps the greatest production bottleneck in American economic history. Once they had pushed farther than 30 miles E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 15 from the Atlantic coast, the cotton growers found that the lustrous and strong Sea Island cotton demanded by British mills would not bloom. Only Upland cotton, with a shorter fiber and stickier seed, would grow further west. However, while Sea Island cotton could be separated from the seeds with a simple roller gin modeled on an ancient device from India (the Churkka gin), this device was unable to separate the sticky seeds in Upland cotton from the lint. The severity of this supply bottleneck is difficult to overestimate. A young and healthy slave could pick up to 300 pounds of cotton each day. Even children could typically pick 100 pounds per day. With the seeds, however, the cotton had no market. Since the roller gins would not remove the seed from Upland cotton, slaves were required to pick the seeds out by hand. So sticky and stubborn were the seeds, however, that a slave could clean no more than 1 pound per day. England’s mills would die of cotton starvation at this pace. So if it hadn’t been Eli Whitney, it likely would have been someone else, and soon. In the fall of 1792, the necessary ingredients for entrepreneurial success converged: a production bottleneck, an idea, a source of capital, and a way to make a profit. For developing countries today, the important part of the story is not Eli—poor countries have plenty of smart and inventive people—it is the convergence of all the ingredients necessary for forward leaps. Eli Meets a Venture Capitalist From his childhood in Massachusetts until his graduation from Yale, Eli Whitney was known to friends and family as a talented and inventive tinkerer. Following his graduation he traveled south to assume a position as a private tutor. What happened next is perhaps best related by Whitney himself, in a letter to his father dated September 11, 1793. Whitney’s letter conveys his technical brilliance and entrepreneurial energy, but more touchingly, also the guilt and excitement of a young man who, in pursuing his entrepreneurial dream, has somewhat neglected his familial duties. He starts by admitting he should have written sooner to let his parents know what he was up to:9 Dear Parent: I received your letter of the 16th of August with peculiar satisfaction and delight. It gave me no small pleasure to hear of your health and was very happy to be informed that your health and that of the family has been so good since I saw you. … I expected to have been able to come [home to] E1C02 Date: Jan 19, 2009 16 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY Westboro’ sooner than I fear will be in my power. I presume, sir, you are desirous to hear how I have spent my time since I have left College. This I conceive you have a right to know and that it is my duty to inform you and should have done it before this time. … On the way to Savannah, Whitney had met the widow and family of Major General Greene of Revolutionary War fame. Mrs. Greene took a liking to the polite young man and invited him to spend a few days on the family’s plantation before continuing his journey. When a group of Revolutionary War officers who had served under General Greene came to the plantation to pay their respects to his widow, the conversation soon turned to the pressing need for a mechanism to separate Upland cotton from its seeds so as to meet the British demand. The seeds, the planters were sure, were the only obstacle to their fortunes. “Gentlemen,” Mrs. Greene remarked, “apply to my young friend, Mr. Whitney,—he can make anything. ” Whitney quickly protested that he had never seen either cotton or cottonseed. Yet he was immediately intrigued, as is evident from the next paragraph of his letter: I went from N. York with the family of the late Major General Greene to Georgia. I went immediately with the family to their plantation … with an expectation of spending four or five days. … During this time I heard much said of the difficulty of ginning Cotton, that is, separating it from its seeds. There were a number of very respectable gentlemen at Mrs. Greene’s who all agreed that if a machine could be invented which would clean the cotton with all expedition, it would be a great thing for both the Country and the inventor. Critically, there was a venture capitalist at the Greene plantation, as Whitney explains later in his letter: I involuntarily happened to be thinking on the subject and struck out a plan of a machine in my mind, which I communicated to Miller (who … resides in the family, a man of respectability and property). He was pleased with the Plan and said that if I would pursue it and try an experiment to see if it would answer, he would bear the whole expense, I should lose nothing but my time, and if I succeeded we would share the profits. … The machine worked, of course. Whitney’s simple and elegant model was quickly duplicated throughout the South. The good news was that during the next eight years, cotton production rose 25-fold, and by 1820, more E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 17 than 90-fold. The bad news was that more than any other single factor, Eli Whitney’s cotton gin solidified the slave plantation in the cotton South. For the growers, it was good while it lasted. For the men and women who had been bought and sold and bred and whipped and captured and fiddled to, it was good when it ended. Where Was the Competition? Where, we have to ask, was the competition? What of India and China, especially? Why were these countries, world leaders in cotton production in the late 1700s, left in the dust by the Americans? At the beginning, as Figure 2.1 shows, other countries continued to produce cotton in relatively stable quantities while American production soared. It was not a matter, then, of American producers squashing the competition with low-cost and efficient production. Instead, for the older cotton producers, it was business as usual. But business as usual was not good enough. British demand for cotton had exploded with the new textile machinery and the burgeoning consumer class. It was not a matter of steady growth in demand, not a curve that the old cotton producers could ride profitably on into retirement. The British Industrial Revolution was a lightning bolt in cotton’s story, like the cotton gin or the boll weevil or emancipation, which changed everything ahead. By 1860, Britain was consuming over a billion pounds of cotton per year, which was considerably more than the entire production of the world, excluding the United States.10 An explosion in demand required an explosion in supply. The question, then, becomes why the supply exploded in the United States rather than in the countries that had been the world’s major producers since the beginning of the cotton trade. The question of American success becomes more intriguing when we note the remarkable lengths to which the British went—quite unsuccessfully—to reduce their risky dependence on American cotton. Put simply, modern markets did not yet work in India or China, in cotton or in anything else. As economic historian David Landes advises, a useful way to understand why something in economic history did or did not happen at a certain place and time is to ask, Who would have benefited?11 If cotton growers in India or China could have benefited by increasing their productivity, improving quality, and selling cotton to British mills, they would have done so. It appears, though, that they would not have E1C02 Date: Jan 19, 2009 18 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY benefited; the risks were too great, the rewards likely minimal. Capitalism of the type that rewards an idea, an improvement, or an initiative, had not yet taken hold in Asia. The foundations were lacking. First, there were no property rights, or as Francois Bernier, a Frenchman who lived in India during the seventeenth century, wrote, no mien et tien (no mine and yours).12 There were no incentives to improve age-old methods, to learn, to grow more, to do better. The agricultural workers were at the mercy of rulers who were often absent, and who changed and moved frequently. And even if wealth had been created, Bernier wrote, it had to be hidden lest it be extorted or seized.13 In China, too, cotton growers would not have benefited. Under the tyranny of the emperor, there was little reason to take a business risk in the modern sense of the term. As a Christian missionary remarked in the late 1700s, “Any man of genius is paralyzed immediately by the thought that his efforts will win him punishment rather than rewards.”14 As Landes notes, too directly for most tastes, China’s “cultural triumphalism and petty downward tyranny made [the country] a reluctant improver and a bad learner.”15 Culturally, the Qing dynasty, which ruled China from the 1600s until the early 1900s, displayed an aversion to all things Western, and to change in general. A Jesuit passing through commented that the Chinese were “more fond of the most defective piece of antiquity than of the most perfect of the modern.…”16 In other words, all of the Eli Whitneys in China had no reason to try. On the surface, of course, the American cotton victory over India and China appeared to be due to slavery. An 1853 observer confidently noted that American cotton growers’ “superiority” was due to the “cheap, and reliable labor they derive from that patriarchal system of domestic servitude.”17 While certainly it was slavery that allowed the cotton factories on the plantations to produce such enormous volumes of cotton, India and China, too, had millions of people who were made to work for nothing by tyrannical rulers, millions of people who could not say no. Why these people were never organized to produce large volumes of cotton for export is another matter entirely. Thus, while slavery allowed farmers to evade the risks of the labor market, it does not explain why other countries failed to seize the opportunities presented by the Industrial Revolution. The institutions necessary to support factory-style cotton production—property rights, incentive structures, what is today called “governance”—also had an important role to E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 19 play. Governance still has an important role to play, which will remain the challenge for many poor cotton-producing countries. As we will see, all of the Eli Whitneys in Mali, Burkina Faso, and Benin often still have little reason to try. All God’s Dangers Ain’t a White Man Shortly before the beginning of the Civil War, James Henry Hammond of South Carolina—senator, former governor, plantation owner, cotton farmer—stood to address the U.S. Senate. In one of the most famous pieces of Southern political oratory of the era, Hammond thundered on about the destruction of the world that would surely accompany the demise of the slave cotton plantation. It was not just the Southern gentleman’s way of life that Hammond sought to preserve, it was civilization itself: Would any sane nation make war on cotton? Without firing a gun, without drawing a sword, should they make war on us, we could bring the world to our feet. … What would happen if no cotton was furnished for three years? … this is certain: England would topple headlong and carry the whole civilized world with her, save the South.18 This dire prediction about the demise of civilization rested on the importance of cotton to the industrial centers of the Northern states and Europe. The giant textile mills that lined the rivers of the new industrial centers depended on the South to supply cotton. This bit of fluff, the boll as big as a fist yet lighter than a breath, reigned supremely, if not benevolently, over the world’s new economic order. Southern cotton had a God-given monopoly. Because it could not be grown either in the Northern states or in England, Hammond reasoned, the industrial world would bow to cotton, and the South had nothing to fear: No, you dare not make war on cotton. No power on earth dares make war on cotton. Cotton is king.19 It is clear from his words that Hammond did not believe that the cotton kingdom could thrive under the rules of the North. To destroy the slave plantation was to destroy the cotton economy, or so he thought. But while the Civil War eliminated slavery, the cotton economy of the South survived because public policy evolved to continue to protect the growers from the perils of the labor markets. Labor requirements in cotton production remained highly seasonal, and the challenge was still E1C02 Date: Jan 19, 2009 20 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY to have sufficient labor available at critical but unpredictable times in the cotton cycle. However, transacting in a labor market was fraught with risk, as the market still offered no guarantees about either the price or availability of labor at these critical times. Without the tight control of slavery, landowners needed an alternative system to bind labor to their land upon demand. The labor system that emerged—tenant farming, or “sharecropping”—fit the bill. In exchange for their labor, the landowner provided the sharecroppers with housing and food (known as the furnish) as well as the right to hunt and to fish. By providing housing and food, rather than cash, the landowner bound the worker to the property and assured himself of labor at critical times. The worker was contractually bound as well, since he was indebted to the landlord through the harvesting of the crop. A wide variety of public policies were instituted to bind the sharecroppers to the land and insulate the cotton growers from the risks of transacting in the labor market.20 Gradually, the legal definition of sharecropper shifted in favor of the landowners, especially through the passage of crop lien laws.21 These laws changed the status of the sharecropper in the courts to a laborer who was paid wages in crops rather than a tenant with ownership of a share of the crop. The difference was critical. As a laborer, the sharecropper could not offer his crop for lien because it technically belonged to the landowner. The crop lien laws, then, shut the sharecropper out of the capital markets while widening access to capital for the landowners. Other laws, such as vagrancy laws and “alienation of labor” laws (which protected the landowner from having his labor hired away) also served to bind the sharecropper to the land. At the same time, planters opposed public schooling for blacks and poor whites, so illiteracy and lack of education kept the balance of power in the sharecropping arrangement heavily in favor of the planter, and limited the alternatives of the workers. Moreover, the contractual arrangement between sharecropper and landowner left the sharecropper little hope of climbing out of subsistence. The sharecropper’s dream—to own land—was thwarted by a cycle of perpetual debt whereby the sharecropper’s share of each harvest was barely enough to settle the year’s debts, and by exclusion from external capital markets. A remark reportedly made by Louis XIV of France is apt: “Credit supports agriculture as a cord supports the hanged.”22 Ned Cobb, an Alabama cotton farmer, recalled the standstill that trapped him as a sharecropper. While he made six bales of cotton in 1908, a respectable crop: E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 21 It took all them six bales to pay Mr. Curtis. In the place of prosperin’, I was on a standstill. … I had not a dollar left out of the cotton. … Mr. Curtis had Mr. Buck Thompson furnish me groceries … kept a book on me. … [Mr. Curtis] paid Mr. Thompson and I paid him—the deal worked that way—out of my crop. So he made somethin off my grocery bill besides gettin half my crop when the time came.23 Cobb’s biography repeats this theme year after year. Some years, there was a little cotton left after paying the landlord; in other years, there was not enough to settle the debts and Cobb had to start the next year in the hole. Thanks to creative accounting, it was typical to come out even. In Macon County, Alabama, researchers uncovered a remarkable coincidence: 62 percent of black sharecroppers had come out even for the year in 1932.24 Ironically, the success that the planters had in devising public policies to keep the workforce docile and uneducated soon began to backfire. When the boll weevil began to ravage the southern cotton crop in the early 1900s, government extension programs were mobilized to spread advice to farmers on how to combat the weevil and save their crops. The news and advice reached the large farms and the educated farmers, but often passed by the poor and illiterate sharecroppers, black and white, who had to fend for themselves.25 In 1921, approximately 30 percent of the cotton crop—predominantly that produced by small sharecroppers—was lost to the weevil.26 Many were pushed off the land. Ned Cobb remembered the time well: That was boll weevil time. … these white folks told the colored people if you don’t pick them cotton squares off the ground and destroy them boll weevils we’ll quit furnishin’ you. Told em that—puttin the blame on the colored man for the boll weevil. Couldn’t nobody pay his debts when the weevil et up his crop.27 “Yes,” he added later, in reference to the weevil, “all God’s dangers ain’t a white man.”28 F or Deep South sharecroppers, not much changed from the end of the Civil War until the late 1920s: a few acres of tired soil, a few mules, a few bales at the end of the year, and a perpetual crushing debt. E1C02 Date: Jan 19, 2009 22 Time: 12:41 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY But while this rhythm played on in the Deep South, a new type of cotton factory was rising in the West. By the early 1900s, Texas would be the country’s largest cotton producer. By the 1920s, Texas would be selling cotton to China. Cotton Factories Arrive in Texas Texas and Oklahoma were the new cotton frontier, wide-open, blue-sky places with no crumbling plantation houses, no old ways of doing things, and plenty of room to build cotton factories. Between 1900 and 1920, the area around Corpus Christi was divvied up into huge landholdings on a scale never seen before, and rarely since, for the purpose of growing cotton. Henrietta King of Corpus Christi owned 1.4 million acres, Charles Taft owned over 150,000 acres, and C.W. Post—the man behind the cereal—owned 200,000 acres.29 The requirements for successful large-scale cotton farming had changed little from the pre–Civil War South. The landowners still required large numbers of workers to be available on demand to plant, weed, and harvest the crop at the whim of the weather. Relying on a labor market in the modern sense of the term was still fraught with risk and expense. How would the planter be assured that the market would provide for labor requirements when the weeds bloomed or the cotton opened? And what if the market wage went up or help was hired away by competitors? Creative solutions abounded.30 Planters imported monkeys from Brazil and tried to teach them to pick cotton, but the animals in the end were uncooperative. And geese, it turned out, will weed a cotton field when fenced in, and the farmers discovered that only two geese could weed an acre of cotton. They also discovered, however, that geese could not be trained not to trample cotton plants, and that insecticide is also goosicide. For a time, farmers also used flamethrowers to weed cotton fields, but taking fire down the rows of their livelihood proved too difficult for most. In the end, neither monkeys nor geese nor fire could accomplish the tasks as well as a captive labor force. This time, to tie the labor to the land and to avoid the market, the cotton growers borrowed an idea from the North: the company town. The Taft cotton ranch, near Corpus Christi, occupied 39 percent of the land of San Patricio County.31 The ranch was organized as a corporation, but in reality it was a community in which people’s lives—not just their work—were hierarchically managed for the purpose of cotton production. E1C02 Date: Jan 19, 2009 Time: 12:41 pm THE HISTORY OF AMERICAN COTTON 23 The ranch had company housing, schools, and churches segregated along ethnic lines for whites, Mexicans, and blacks. Like the “furnish” provided to old South sharecroppers, workers were paid partly in scrip, which could be redeemed only at company stores. Finally, like the plantation owner who kept his “fiddler well-supplied with catgut,” the Taft Ranch provided holidays, music, and festivities as well, again designed for the three different ethnic groups. This entire system, of course, served to ensure that workers were around when the cotton needed to be planted, weeded, and harvested. The new cotton factories did not so much influence public policy, they were public policy over vast stretches of Texas. These large and tightly controlled production systems were hailed as models of the farms of the future, models of productivity, efficiency, and profitability. Once again, successful large-scale cotton production depended on a factory system in which large numbers of workers were available on demand to complete the repetitive chores associated with weeding, planting, and picking. Once again, success depended on avoiding—not competing in—the labor market. Of course, observers of the day also acknowledged that the economic success of these large Texas cotton “factories” also meant the demise of the smaller family cotton farms. It was sad but inevitable, the way of the future. Well, maybe. Perhaps someone forgot to tell Nelson and Ruth Reinsch. e1c03 Date: Jan 22, 2009 Time: 1:46 pm 3 BACK AT THE REINSCH FARM T oday, Lubbock, Texas, is indeed the “cottonest city in the world,” and the surrounding farmland is the leading birthplace of the world’s T-shirts. Lubbock has the world’s largest cotton cooperative and the world’s largest cottonseed oil mill, and the region produces nearly 30 percent of American cotton. Texas Tech University, on the west side of town, performs some of the most advanced cotton research in the world. And Lubbock is an international cotton center. A majority of the region’s cotton is exported: loaded onto trucks and trains in Lubbock, and bound for ports on every U.S. coast. And at the bottom of this successful chain are neither plantations nor sharecroppers nor company towns nor even family farms, but people like Nelson and Ruth Reinsch.1 No single factor explains the success that cotton farmers in west Texas have had in competing in international markets. The growers are embedded in a web of institutions that help them to continue their tradition of shifting market risks away from themselves, and they continue to win as much by limiting competition as by competing. Texas cotton farmers have solved, once and for all, the age-old labor market risk problem associated with cotton production, creatively applying mechanization, scientific research, and public policy to the challenge. These producers were 24 e1c03 Date: Jan 22, 2009 Time: 1:46 pm BACK AT THE REINSCH FARM 25 also leaders in the development of the modern agricultural cooperative, a brilliantly simple organizational form that allows cotton farmers such as Nelson and Ruth Reinsch to capture every shred of value from the cotton plant, backward into the oilseed and forward into blue denim. Texas cotton farmers are also masters of political influence, leading the U.S. government to assume the business risks—including price and nonpayment risks—that the farmers would rather not. Remarkably, the Reinsches and their west Texas neighbors have even taken control of the wild Texas climate. They can make it rain, they can stop the sand from blowing, and they can even freeze the cotton plant on a warm and sunny day. Perhaps most significant, Lubbock is the center of the “Silicon Valley” of cotton production. The Lubbock area benefits from a highly symbiotic and virtuous-circle relationship between farmers, private companies, universities, and the U.S. government. The farmers, well-educated and entrepreneurial, both contribute to and benefit from the research that takes place in the universities and firms, while the U.S. Department of Agriculture (USDA) supports both the research and the farmers with funding, technical, and business assistance. Cotton growers in poor countries are challenged not so much by the prospect of competing with Nelson Reinsch, but by competing with the much larger and permanent advantages of this interlocking virtuous circle. Competing with Nelson is hard enough, but competing with Nelson as he is teamed up with Texas Tech, Monsanto, and the USDA is another matter entirely. T o the untrained eye they might be hard to see, but a close look at the original seal of Texas Tech University shows 10 cotton bolls in the form of a T, each boll representing one of 10 cotton-producing counties that surround Lubbock (Figure 3.1). Indeed, Tech history buffs are quick to point out that the university was founded to support the cotton and textile industries. Today, though the University is widely acknowledged to be one of the most advanced centers for cotton research in the world, Tech is also a diversified national research university with distinguished programs in many academic fields. In 2002, Dr. David R. Smith was appointed the new Chancellor of Texas Tech. Though Smith had spent a number of years in Texas, he was an Ohio native and a graduate of Cornell. According to marketing consultants hired by the new Chancellor, most people outside the region associated e1c03 Date: Jan 22, 2009 26 Time: 1:46 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY Figure 3.1 Original Seal of Texas Tech University. (Photo Courtesy of Texas Techsan Magazine.) Texas Tech with sports. Smith believed that Tech needed to show the world a new image that reflected the University’s diverse academic and research accomplishments. After all, the modern Texas Tech was about more than cotton farming and football. The Chancellor proposed a new “visual identity system” for Tech, and in May 2005, he unveiled a new seal for the University. The seal had an academic emphasis, including an open book and a scholarly-looking key. In a nod to the University’s agricultural heritage, a branch of vines decorated the bottom part of the seal. The cotton bolls were gone.2 An uproar followed. Generations of Tech alumni were bound to the cotton industry: cotton farmers, cotton traders, cotton ginners, cotton brokers, cotton scientists, cotton exporters. There were news conferences, town meetings, and angry blogs. Eddie Smith, chairman of the local cotton cooperative and a Tech alum, took umbrage not only at the removal of the cotton bolls but at the addition of the vines (“Vines are weeds in my cotton field,” he complained to the local newspaper).3 The alumni clung e1c03 Date: Jan 22, 2009 Time: 1:46 pm BACK AT THE REINSCH FARM 27 fast to their cotton tradition while the Chancellor argued that the time had come for Tech to move on. John Johnson of the Plains Cooperative Cotton Association was telling me this story in late 2007: “So what happened?” I asked. “Oh, they’re gone now,” John told me. “The cotton bolls?” “No” John said, “the Chancellor and the marketing consultants.” Tech’s new Chancellor, Dr. Kent Hance, was appointed in 2006. Hance is a Tech alum from Dimmitt, Texas, a tiny cotton community 90 miles and zero stoplights northwest of Lubbock. On the cover of the next issue of the Techsan—Tech’s glossy alumni magazine—was a field of snow white cotton bolls in a Texas sunset. In many years of thinking about international trade, I had never thought of tradition-bound and loyal university alumni as the basis for comparative advantage. But there it is: Tech looks after cotton, cotton looks after Tech, and Texas cotton is still winning in the global marketplace. Today, it looks as though Nelson and Ruth Reinsch have arrived at something of a comfortable place. They are still here, bringing in the cotton each year, more than 50 years after they arrived. The virtuous circle works pretty well on the Reinsch farm: the machines, the chemicals, the GM seed, the cooperatives, the university research, and the government programs. They can relax now, as Ruth kept telling me back in 2000. Only now, eight years later, is Nelson giving this a try. C.F. and Hattie Move West (and Bring a Tractor) As cotton continued its westward push in the 1920s and 1930s, the Reinsches moved, too. Although Texas had already become the nation’s biggest cotton producer by 1890, at this time virtually all Texas cotton was produced in the eastern part of the state, bordering on the plantation South. By the 1930s, however, cotton began to take hold of the west Texas region surrounding Lubbock. It was during this period that C.F. and Hattie Reinsch arrived here with young Nelson, then a teenager. The Reinsches come from a long line of early adopters and innovators. Cotton farmers near Lubbock were starting from scratch. There was no dismantling of the old ways to be accomplished, no old habits to break, no Old South traditions to hold back progress. This freedom to start from e1c03 Date: Jan 22, 2009 28 Time: 1:46 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY scratch undoubtedly explains why most innovations in cotton production spread from west to east rather than from east to west. They still do. In 2007, I met with Wally Darneille, the new president of the Plains Cotton Cooperative Association in Lubbock. Wally had spent the previous 30 years in the cotton business in Alabama before moving to Lubbock in 2006 to assume his new role. Wally found a striking difference between the cultures of the cotton business in west Texas and Alabama: He told me that a change in practice that would have taken years in Mobile takes just months in Lubbock. In the Old South, mule farming in cotton production persisted into the 1960s. In west Texas cotton country, it never started. When cotton farmers began to settle near Lubbock—the mid-1920s—the gasoline tractor arrived with them. Whereas the Old South cotton farmers gradually sold their mules and replaced them with tractors, cotton farming in west Texas used tractors from the beginning. This led to drastically different labor patterns in the two regions, differences that would have lasting implications. Richard Day has divided the mechanization of cotton production to 1960 into four stages (see Figure 3.2).4 In Stage 1, all land preparation and planting is mule-powered, and weeding is done by hoe. Cotton is handpicked. In Stage 2, some cultivation and weeding is also mule-powered, but land preparation is done by tractor. Cotton is handpicked. In Stage 3, the use of fertilizer increases cotton yields, and more cultivation and weeding is done by tractor implements, but cotton is still handpicked. Finally, in Stage 4, cotton is mechanically harvested and only a small amount of hand weeding remains in the spring and summer seasons. Early tractor technology was capable only of the brute-strength chore of breaking the land in winter and so did little to solve the ancient labor problem of cotton production. There was little reason to buy a tractor for land breaking, since this chore required the least labor. Therefore, there was little incentive for Deep South cotton farmers to move from Stage 1 to Stage 2, since the labor force was still needed on demand for the rest of the year for weeding, cultivating, and harvesting, and the mules would be needed as well. Gradually, tractor implements became capable of the finer tasks of weeding between rows, though weeds close to the cotton plant still had to be pulled by hoe. On the other hand, growers at Stage 3 who had started with tractors had every incentive to mechanize the harvest or move to Stage 4, because of the highly uneven labor requirements associated with harvesting. Date: Jan 22, 2009 Time: 1:46 pm BACK AT THE REINSCH FARM STAGE 2 STAGE 1 60 60 30 30 0 0 60 30 30 0 0 fall fall summer spring spring winter summer 60 90 winter 120 120 90 STAGE 4 fall STAGE 3 summer 90 spring fall summer spring winter Labor Hours/Acre 90 winter 120 120 Labor Hours/Acre e1c03 S T AG E 1: Mule-powered land breaking and cultivation. Extensive hand weeding and hand picking. S T AG E 2: Tractor land preparation in winter. Mule-powered cultivation. Some hand weeding. Hand picking. S T AG E 3: Tractor-powered land preparation and cultivation. Some hand weeding. Hand picking. S T AG E 4: Complete mechanization with a small amount of hand weeding. C O T T O N L AB O R C Y C L E : Winter: Spring: Summer: Fall: land breaking planting, cultivation, weeding weeding harvest Source: Adapted from Day, p. 440. Figure 3.2 Manual Labor Requirements in Cotton Production 29 e1c03 Date: Jan 22, 2009 30 Time: 1:46 pm THE TRAVELS OF A T-SHIRT IN THE GLOBAL ECONOMY Percentage of Work Done with Tractors LAND BREAKING STATE 1939 1946 PLANTING 1939 1946 CULTIVATING 1939 1946 ALABAMA 10 33 3 15 5 14 TEXAS 49 85 45 80 43 83 Source: Adapted from Street, p. 164. Figure 3.3 Use of Tractor Power in Cotton Production, 1939 and 1946 The remarkable mechanical leapfrogging of the Reinsches and their west Texas neighbors is shown in Figure 3.3. By 1946, over 80 percent of Texas cotton production—including that on the Reinsch farm—had reached Stage 3, while in the Deep South, this stage had been reached by only 14 percent of cotton farmers. In 1946, more than 20 years after the widespread introduction of the tractor into west Texas cotton country, 67 percent of Deep South cotton farms were still exclusively mule-powered. The reluctance of Deep South cotton farmers to trade in their mules for tractors in the move to Stage 3 was due largely to a faithful attachment to tradition and reluctance to change, as well as to the economics of small holdings. It was even due to an attachment to the animals themselves. In speaking to his biographer, Ned Cobb seemed to remember each of his mules—their colors, their names, their personalities, their quirks. To give up mule farming was to relinquish a way of life, and many were loath to do so, even as they clearly saw the future in front of them. Here is Ned Cobb, speaking in the early 1970s: I was a mule farmin’ man to the last; never did make a crop with a tractor. I’ve owned some of the prettiest mules that ever walked the roads. Now there ain’t none of my children, nary one by name, got a mule.5 Something was lost, of course, in the move from mules to tractors: You couldn’t pet a tractor, or name it, and the machine had no personality at all. Into the mishmash of obsolete Southern traditions went the art of talking to a mule.6 Date: Jan 22, 2009 Time: 1:46 pm BACK AT THE REINSCH FARM 31 1000 900 800 700 600 500 400 300 200 100 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1995 1990 1985 1980 1975 1970 1965 1960 1955 1950 1945 1940 1935 1930 1925 1920 1915 1910 1905 1900 1895 1890 1885 1880 1875 0 1870 e1c03 Yield Source: USDA/NASS. Figure 3.4 Cotton Yields (Pounds of Lint per Acre) But while the Reinsches had nary a mule, either, there still was not a satisfactory mechanical way to pull the fluffy white lint from the cotton plant. From the settling of west Texas cotton country, this was done as it always had been, by men, women, and children pulling heavy sacks between the rows. And there was more to pick. Thanks to the introduction of advanced fertilizers, cotton yields were increasing (see Figure 3.4). While a traditional Deep South plantation might hope for 120 pounds per acre, by the 1950s, the Reinsches were coaxing nearly a bale (480 pounds) out of each acre planted in cotton. As Day’s estimates show then, the labor necessary to harvest the crop from an acre of cotton had approximately doubled from the pre–Civil War South. At the same time, labor requirements during the rest of the year were dropping dramatically. Rather than solving the labor problem, the mechanization made the labor problem at harvest even worse. White Guys Get All Dr…