What’s Wrong With Free T-Shirts?

by Jacob Huebert on February 17, 2011
in Economics

Before each year’s Super Bowl, t-shirt makers print thousands of shirts that announce one team as the winner and thousands of shirts that announce the other team as the winner.  That way, they can be ready to sell the actual winner’s championship t-shirts as soon as the game is over.   The loser’s t-shirts aren’t destroyed but are instead donated to charity and shipped off to poor countries to be given away.  So although the Green Bay Packers beat the Pittsburgh Steelers in this year’s Super Bowl, there will soon be thousands of Africans wearing shirts celebrating Pittsburgh’s fictional victory.

At economist William Easterly’s AidWatch blog, co-blogger Laura Freschi says the shipment of all those shirts to poor countries is a bad thing. She lists three reasons:

1.  It’s not needed. Seriously, neither the developing world as a whole nor the specific recipient countries named by World Vision suffer an undersupply of T-shirts.

2.  It’s not cost effective. The cost of collecting, sorting, shipping and distributing bulky, low-value items like a bunch of T-shirts does not justify the (very questionable) benefit. And don’t forget to include the opportunity cost, the lost chance to allocate those same, considerable resources to provide something better, like clean water or medicine. (A World Vision PR rep told the New York times in 2007: “Where these items go, the people don’t have electricity or running water.”

3.  It can perpetuate local community’s dependence on free handouts and stifle home-grown economic initiatives, not to mention putting out of business local shirt sellers.

Though I appreciate AidWatch’s concern for the world’s poor — and especially its criticism of the U.S. government’s destructive foreign-aid policies — reasons #1 and #3 on this list are premised upon economic fallacies and therefore aren’t good reasons to stop giving the shirts away.

The first reason is bad because there is always an “undersupply” of goods that are free, assuming people will willingly take more of them. Presumably the people who receive these t-shirts would otherwise have to pay for their shirts and appreciate getting free ones. After all, even in the U.S., there are cheap t-shirts everywhere, and many people are still happy to get one for free.

The third reason is even worse because it mirrors common arguments against “cheap imports” and free trade. If t-shirts become cheap in these countries and no longer need to be produced and sold by locals, presumably those locals can direct their efforts toward the production and sale of something else. So now people in those countries will be able to have the free t-shirts plus additional things that they wouldn’t otherwise have. As free-market economists often point out, the purpose of an economy is to create wealth, not to create jobs for its own sake or to preserve particular jobs — so the free shirts are good for the economy because they increase the overall quantity of goods.

That leaves reason #2, which at least isn’t obviously fallacious. The idea here apparently is that if you want to help poor people, water and medicine are far more important than shirts. That seems reasonable enough, though it’s not at all obvious that resources currently spent on distributing shirts would otherwise be spent on distributing water and medicine. But if that is the case, then that’s the argument AidWatch should focus on — and it should scrap arguments that depend on and perpetuate the economic ignorance that plagues both the first world and the third world.

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