The Role of Politics and Public Policy in The Travels of a T-Shirt in the Global Economy - Book Report/Review Example

Download file to see previous pages... These subsidies have been the point of heated debate at various international conferences. Developing nations have claimed that the subsidy provided by US government makes it impossible for their famers to compete with US farmers. The book also highlights this point. It has been mentioned that US farmers receive about 33% of their income directly from the government which goes to even 45% in some years. . For a region which produces revenue of $5 billion; the government subsidy amounts to $6billions.Farmers is also insured against any natural calamity by the government. Apart from the direct subsidies provided by the US government certain hidden subsidies also play an important role in their dominance. Universities who have been conducting research regarding cotton production are funded by the government which is not done by developing economies. This research leads to an increase in the productivity of farmers and thus increases their dominance. Thus the subsidies help in creating a cocoon without which the Texas cotton industry will fail to survive in competition to the cheap cotton from various developing countries The cotton for the T-shirt is grown in West Texas; but the important point to ponder over here is that West Texas is not particularly a very good place to grow cotton. It has a history of being colonized to produce cotton for British Mills. Due to this history; the area is dependent on cotton production for its survival since centuries. Pressure groups in this area are reluctant to let go of this historical business they have been engaged in. The US textile industry provides employment to about 5% of total US manufacturing employment. These large numbers of people form a very strong “interest group” and it is very difficult for US policymakers to ignore their voices. Another advantage enjoyed by the famers of USA is private property rights. These rights are not available to farmers of developing world. Most have them have to work under “Zamindars” and do not keep the profit from the land. Due to this the farmers are reluctant to give their best. Although a number of changes have been made by governments of the emerging countries but the rights enjoyed by farmers are still a far cry from those enjoyed by farmers of USA. USA also has very organized credit and lending system. Farmers can take loans at subsidized rates provided by government and use these loans to increase their production. Most of the farmers of developing world depend on the unorganized sector to take loans for their products. The unorganized sector charges exorbitant interest rates and captures the farmers in dept trap. The recent suicide by farmers in the Vidharbha region of India due to debt trap is a case in point here. The T-shirt finally comes back to US in order to be printed. Why is the T-shirt sent back without printing? The answer to this lies in the quota system which has been applied by the US government. Unfinished T-shirts invite less quota restrictions as compared to finished ones. These restrictions have been used in order to provide further provide protection to the domestic manufacturers by the US government. Cotton from Texas is sent to China for manufacture of T-Shirts.the books explores why this phenomenon happens? The book examines why the labor costs are so dirt cheap in China and why do US companies choose China over India which also boosts of low labor costs. The answer is provided again by the ...Download file to see next pagesRead More