Now that Labor Day is over, the “fall fashion” season is in full swing. And in today’s world, most of that buying will center on “Fast Fashion” — trendy, inexpensive garments produced in large amounts and manufactured speedily in subcontracted factories across the globe.
At first glance, this is good news. Despite inflation, you can buy more clothes while spending less money than at the height of the early Cold War in 1960.
Here’s an interesting factoid:
In 1960, an average American household spent over 10 percent of its income on clothing and shoes – equivalent to roughly $4,000 today. The average person bought fewer than 25 garments each year. And about 95 percent of those clothes were made in the United States.
Today, the average American household spends less than 3.5 percent of its budget on clothing and shoes – under $1,800. Yet, we buy more clothing than ever before: nearly 20 billion garments a year, close to 70 pieces of clothing per person, or more than one clothing purchase per week . . .
But there is a downside. Only about 2 percent of this clothing is made in the United States, thanks to the offshoring and globalization that took hold in the 1980s. Industrial centers up and down America’s Eastern Seaboard and across the South have become ghost towns as factories have emptied and employees have filed for unemployment.
We talk about ‘going global’ now like it’s something new. But it isn’t. The globalization of trade started more than 2,000 years ago with merchant traders and the ‘old’ Silk Road. From its earliest beginnings, fashion has been integral.
Going Global: A Brief History
According to a piece by the World Economic Forum, we’re now in the midst of Globalization 4.0. There’s a wonderful visual timeline on their site (although a little bit blurry) that’s worth taking a look at. You can access it here. The snippets below are taken from the above article to provide a brief history.
The Silk Road in the 1st Century B.C.
As of the 1st century BC, luxury products from China started to appear on the other edge of the Eurasian continent – in Rome. They got there after being hauled for thousands of miles along the Silk Road. Global trade links were established for luxury goods – silk and spices. These goods comprised a very tiny segment of the economy.
Muslim Traders in the 7th-9th Centuries
As the new religion of Islam spread in all directions from its Arabian heartland in the 7th century, so did trade. By the early 9th century, Muslim traders dominated Mediterranean and Indian Ocean trade; afterwards, they could be found as far east as Indonesia. Spices were the main focus of the expansion and, like before, they made up only a small volume of the economy. While we’re not talking about ‘globalization’ as we know it today, the original Belt (sea route) and Road (Silk Road) of trade between East and West did now exist.
The Age of Discovery: The 15th Century On
In the Age of Discovery, from the end of the 15th century on, European explorers connected East and West – and accidentally discovered the Americas. Yet economists today still don’t regard this era as one of true globalization. The global economy was still very much siloed and lopsided. The European empires set up global supply chains, but mostly with those colonies they owned. Their colonial model was chiefly one of exploitation, including the shameful legacy of the slave trade. The empires thus created both a mercantilist and a colonial economy, but not a truly globalized one.
The Modern Era:
The First Wave (19th century-1914)
The first wave of globalization, which roughly occurred over the century ending in 1914, was the era of the First Industrial Revolution.
Exports worldwide rose from a share of 6 percent of global GDP in the early 19th century, to 14 percent on the eve of World War I.
In 1914, the outbreak of World War I brought an end to this period of globalization.
By the end of World War II, trade as a percentage of world GDP had fallen to 5 percent – a level not seen in more than a hundred years.
Second and third wave of globalization
The end of the World War II marked a new beginning for the global economy. Under the leadership of a new hegemon, the United States of America, and aided by the technologies of the Second Industrial Revolution, like the car and the plane, global trade started to rise once again.
In the early decades after World War II, institutions like the European Union, and other free trade vehicles championed by the US were responsible for much of the increase in international trade.
Although the Iron Curtain divided the world into two spheres of influence, the Soviet Union saw a similar increase in trade, albeit through centralized planning rather than the free market.
The End of the Cold War
When the Iron Curtain fell in 1989, globalization became a truly global phenomenon. Worldwide, trade once again rose to 1914 levels: in 1989, export once again counted for 14 percent of global GDP. It was paired with a steep rise in middle-class incomes in the West.
The newly created World Trade Organization (WTO) encouraged nations all over the world to enter into free-trade agreements, and most of them did, including many newly independent ones. In 2001, even China, which for the better part of the 20th century had been a secluded, agrarian economy, became a member of the WTO, and started to manufacture for the world. In this “new” world, the US set the tone and led the way, but many others benefited.
At the same time, a new technology from the Third Industrial Revolution, the internet, connected people all over the world in an even more direct way.
Since the end of the Cold War, fashion has grown from a $500 billion trade, primarily domestically produced, to a $2.4 trillion a year global industry.
As one would expect, given the growth of the industry and its global reach, the impact has been dramatic.
The Impact of Globalized Fashion: The United States
Up until the late 1970s, the US produced at least 70 percent of the apparel that Americans purchased.
By 1980, even though about 70 percent of the clothing Americans bought was still made domestically, a new segment of the apparel business was popping up, soon to experience rapid growth.
Labeled Fast Fashion, the focus was on trendy, inexpensive garments produced in large amounts and manufactured speedily in subcontracted factories across the globe.
A handful of big retail chains like Gap Inc. and J.C. Penney began transitioning away from actually making their own clothes. Instead, they increasingly just designed and marketed them. To keep prices down, they slashed manufacturing costs by offshoring to some of the world’s poorest countries where labor costs were low.
Offshoring caught on across the industry just as globalization took hold.
Early adopters began to develop vast global supply chains that allowed them to divide up each step of the production process, sending the work to whichever location offered the cheapest, most efficient services. According to Elizabeth Cline, author of Overdressed: The Shockingly High Cost of Fast Fashion, by 2003, Gap was ordering its clothes from more than 1,200 different factories in 42 countries.
Labor in Developed Countries
In 1991, as the Cold War ended, 56.2 percent of all clothes purchased in the United States were American made. By 2012, that percentage had declined to 2.5 percent.
Between 1990 and 2012, the US textile and garment industry lost 1.2 million jobs, more than three-fourths of the sector’s labor force. Not surprisingly, the work went to Latin America and Asia. Large textile mills and factories had been emerging in these areas since the mid-1970s. Their operations offered incredibly cheap labor and raw materials, as well as the capacity to quickly manufacture huge orders.
American textile manufacturers just couldn’t compete. The average US garment worker makes about 38 times the wage of his or her counterpart in Bangladesh.
At the same time that US workers were losing their jobs, the number of apparel and textile workers globally nearly doubled, from 34.2 million to 57.8 million.
Trade Deficits
Offshoring created massive trade deficits in the West, and the fashion industry is a good example of globalization’s impact.
In 2017, Britain imported 92.4 per cent of its clothing. In the European Union, only Italy managed to hold on to its domestic clothing industry. It did so largely because of its reputation in the luxury fashion market.
By 2017, US apparel exports totaled roughly $5.7 billion, while imports were about $82.6 billion.
Americans say they’re concerned about the trade deficit. Yet, according to a 2016 poll, when given the choice of a $50 pair of pants made offshore vs. an $85 pair manufactured in the US, 67 percent of respondents said they would opt for the cheaper ones – even if their household income was more than $100,000.
Human Rights in Developing Countries
Fashion is the most labor-intensive industry worldwide, employing 1 in 6 people around the globe. Fewer than 2 percent of these workers earn a living wage.
Most apparel workers are women; some are children.
The Planet
The World Bank estimates that the clothing sector is responsible for nearly 20 percent of all industrial water pollution annually. It releases 10 percent of the carbon emissions in our air.
The fashion industry consumes one-fourth of all chemicals produced worldwide.
In the last 20 years, the volume of clothes Americans throw away yearly has doubled from 7 million to 14 million tons, equaling 80 pounds per person per year.
Of the more than 100 billion items of clothing produced each year, 20 percent go unsold. Leftovers are usually buried, shredded, or incinerated.
Worldwide we toss away 2.1 billion tons of fashion with much of it ending up in African landfills. This waste is not recycled since most clothes are synthetics, and most synthetics aren’t biodegradable. The fabrics that do break down often contain chemicals that contaminate the soil and the water table.
The Predominance of Fast Fashion
ZARA
Zara is the world’s largest fashion brand, producing more than 450 million items in 2018.
The parent company of Zara, Inditex, reported $28.63 billion in sales for 2017, of which Zara made up two-thirds or about $18.8 billion.
In 2016, Amancio Ortega of Inditex was the second richest person in the world (after Bill Gates) with a net worth of $67 million.
By 2018, 5 of the world’s 55 richest individuals were fashion company owners.
SHEIN
The fast fashion brand Shein was recently profiled by The New York Times. You can read the article here. As The Times notes:
Shein — officially pronounced “she-in,” though often pronounced “sheen” — recently surpassed Amazon as the most downloaded shopping app in the United States, according to analysis by Sensor Tower. Shein is privately held and declined to share financial figures but was estimated by Coresight Research to bring in $10 billion in revenue in 2020.
As Shein has grown, so have the controversies surrounding the company. It has been criticized for selling a swastika necklace, copying the work of major designers, working with suppliers that violate labor laws, and failing to make necessary disclosures about factory conditions. Last year elevated levels of lead were found in some of its products – a toddler’s jacket, for instance.
What Do You Think?
BlackRock CEO Larry Fink thinks the war in Ukraine is accelerating the end of globalization that has shaped the new world order for the last 30 years.
Oaktree Capital Management founder Howard Marks said the war is forcing the pendulum of international affairs to swing away from globalization as companies and governments rethink their interdependence.
Wharton management professor Exequiel (Zeke) Hernandez disagrees. He says it will take much more than a conflict between two countries to destroy the economic fundamentals of international trade.
I believe that there could be some short-term disruption, but I don’t believe that globalization in the medium to long run is going to be completely obliterated, which I think is the spirit of a lot of these predictions, he said during an interview with Wharton Business Daily on SiriusXM.
You can read an article about the argument here.
So what do you think? Has globalization been worth it? Will it continue or is it on the way out? And what about Fast Fashion? Is the lower cost worth it? I’d love to hear your thoughts.
________________________________________________
Selected Sources:
From KAED.org – Why America Stopped Making Its Own Clothes – Stephanie Vatz (May 24, 2013)
The Bureau of Labor Statistics
A Brief History of Globalization – World Economic Forum
Overdressed: The Shockingly High Cost of Fast Fashion – Elizabeth Cline
Conscious Closet – Elizabeth Cline
Fashionopolis: The Rise of Fast Fashion and the Future of Clothes – Dana Thomas
The People’s Republic of Shein – New York Times (September 1, 2022)
Photographs:
Featured Photo by RamitaGirl67 (Flickr)
Silk by fdecomite (Flickr)
Coca Cola by Jerry Clack (Flickr)
Zara by Mike Mozart (Flickr)
