Comparative Advantage: America’s Cotton Industry

The Thrilling Beginning

The first part of the book was very thrilling that changed my perspective of how trade and economy are in the United States. The country is so efficient in the production of cotton that is ranked number one globally. Nelson and Ruth Reinsch are very captivating as they have mastered the art of trade. Nelson reaps benefits of breaking his back in his parent’s cotton field in the 1930s as he and Ruth, his wife owns one of the largest cotton farms in Lubbock, Texas. Definitely, this interesting read put things into perspective and shows great direction for the United States of America.

Comparative Advantage USA Has

A comparative advantage exists when a particular task can be done or a good produced at a lower opportunity cost by one nation than a potential trading partner.

Government Support

Firstly, government support. Legislators came up with Agricultural Adjustment Act. The cotton farmers enjoy collecting government subsidies. The dominance of the US industries predates by well over a century the implementation of national farm subsidies. Subsidies account cost advantage over other poor nations. The research has also lead to more money as the farmers have learned how to transform their waste products such as Snickers bars and Peter Pan peanut butter. They have also learned to use the fuzz from cotton seed in throw pillows, blankets, and medical supplies. The United State has advanced technology which allows for the larger quantity of cotton. America’s cotton is sent to China where it’s made into T-shirts in their sweatshops. The laborers are paid subsistence wages working for 12 hours in a day. The T-Shirts are brought to the US where they are protected by the government through subsidies, tariffs, taxes, and policies which ensure that these foreign products don’t provide too much competition to America made shirts. The regulations include a number of shirts that are imported into the country. Cheap labor force provided by the government through the Bracero program allowed Mexicans to work legally in the US providing cheap labor while Americans workers were overseas fighting the war.

United States Farmers

Secondly, United States farmers are well educated and have an entrepreneurial spirit. The Reinsch are well informed about wind, sand, heat, and insects which could spoil the cotton produce. Eventually, they harvest during fall where they compete with cotton farmers from over 70 countries (Liu 254). Their farm which is 10,000 acres produces about 500,000 pounds of cotton lint if fully planted. That is enough to produce 1.3 million T-shirts. Many American Cotton Farmers are MBA case studies in entrepreneurship and adaptability. Cotton growers in the US have adapted their production methods, marketing, technology and organizational forms to respond to shifts in supply and demand in the global marketplace. United States institutions and governance mechanisms have helped achieve a comparative advantage over developing countries as the farm’s works, the government works, the market works and science works to achieve a common objective which lacks in developing countries.

Supply and Demand

Sometimes, the shifts in demand and supply are gentle and predictable thus a farmer can have a revelation what could happen in the market. Other times sudden changes came which could be catastrophic to one’s business. Farmers have to maneuver a new idea; new technology and new policies.

Copying England’s Example

Cotton was cooler in England and more comfortable than wool. It could be dyed into colors and patterns. English manufacturers had to battle with Indian cotton textiles as they were far much cheaper. The British government enacted barriers and protectionist tariff against Indian cotton which allowed British textile industry to grow and nourish. US copied England by growing its own textile industry in a northeastern part of the country.

Electronic Marketing and Free Markets

Electronic marketing would take place through The Seam, an internet-based system that provides buyers globally access to West Texas cotton and allow textile mills to examine on the computer screen the classing results for millions of bales. This all beats hitching up the mule, or driving downtown to Avenue to see the cotton (Rivoli 48). The T-shirts usually enter a free market. This is the point where they become castoffs and ending up in Salvation Army bins. ’America’s castoffs have customers the world over and clothing thrown away by Americans forms the backbone of a highly successful global industry’ (Rivoli 176). Africans dress well for very little money courtesy of the US textile recycling industry. Even playing field has been achieved from the recycling of T-shirts devoid of protectionist policies like tariffs, favorable government policies. In 2003 recycled clothing was by far America’s largest export to Tanzania, and Tanzania ranked fourth worldwide as a customer for America’s castoffs, with competition from countries such as Benin, Togo, and The Republic of Congo (Rivoli 190). Today, free-market policies are forcing the America textile Industry to face the fact that global competition from countries able to produce clothes more cheaply than they can be forcing them out of the market. Eventually, free-market policies will win in the end.

Conclusion

Rivoli explains each and every journey of a T-shirt in a captivating way. The US textile industry benefits much from government aid and protectionist policies until it reaches Africa, the last travel. US comparative advantage of being assisted by government and cotton farmers being well educated and being entrepreneurs has skyrocketed the sales to become one of the leading cotton producers. Supply and demand have also put the US in a concrete position in this business. But the future is evolving and other nations have shown potential in becoming top producers in the cotton business. How long then will the T-shirt travel?

Work Cited

Liu, S. M., et al. “Benefit of spatial analysis for furrow irrigated cotton breeding trials.”Euphytica 201.2 (2015): 253-264.

Rivoli, Pietra. The travels of a t-shirt in the global economy: An economist examines the markets, power, and politics of world trade. New preface and epilogue with updates on economic issues and main characters. John Wiley & Sons, 2014.