September 30, 2015

The Self-Made $4,000 Suit and the Benefits of Exchange

By Chelsea German
Last week, I wrote about a man who spent 6 months of his life and $1,500 to make a sandwich entirely from scratch, without the benefits of market exchange. The story illustrates how exchange and trade enrich our lives.  

After making his incredibly costly sandwich, the same man embarked on an even costlier endeavor: making a suit from scratch. He picked cotton from a field, spun the cotton into thread, wove the thread into cloth, sheared wool from a sheep, harvested hemp, raised silkworms for their silk, killed a deer and tanned its hide to make leather. This process cost him 10 months of work and $4,000.  

At the end of the video documenting how he made the “suit,” he stands in a bizarre-looking outfit with pants that end at his knees and says with regret, “OK, even with all that work, I might have run a little short on material.” Even after 10 months of intense labor, he was unable to come close to matching the quality and price of a product that he could procure through the free market.   

Thanks to market exchange and the division of labor, obtaining new clothes is simple and increasingly affordable. For example, increasing cotton yields have lowered the price of a staple fabric material.

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The real price of a suit, measured in the number of hours it takes an average worker to earn enough to buy one, has declined: a two-piece wool suit cost the average American 12.4 fewer hours of work in 2012 than it did in 1956. (Check out Professor Don Boudreaux’s analysis for further details).  

Critics sometimes decry increasingly affordable clothing, viewing falling prices as a sign of worker exploitation. In 1891, U.S. President Benjamin Harrison summed up this viewpoint when he said, “I pity the man who wants a coat so cheap that the man or woman who produces the cloth or shapes it into a garment will starve in the process.” However, as Johan Norberg pointed out yesterday in the U.K. Huffington Post, far from making people poorer, the garment industry has actually helped to decrease poverty. As he eloquently puts it:

Western activists rail against "sweatshops", but among researchers and economists from left to right there is a consensus that these jobs are the stepping stones out of poverty.    
Take a moment to consider what you are wearing right now, and how much work went into its creation, from the harvesting of its raw materials to the finishing touches. No one person created it—it is the fruit of a complex family tree of mutually beneficial human cooperation through the market.