Rivoli Reading

A. The cotton market Rivoli describes differs from an idealized, pure market theory due to a few reasons:

1. The market continually escaped the market for labor by using slaves, immigrant labor and sharecroppers.
• Because the market for cotton is so varied (some labor is needed in mass amounts with short notice) using these means allowed cotton farmers the work force they needed without the risk of a labor market.
2. Government subsidies allow the cotton market to escape the yearly changes in price.
• In 2007, American farmers were receiving a price of 72 cents/lb when the market price was 50 cents/lbs and where did those farmers get those extra 22 cents/lb? The good ol' US of A. 

 Every other advantage the cotton market seems to be due to a stable government ensuring property rights and the effects of a market that thrives on innovation.

Cotton, Cottonseed oil, Cottonseed

B. An example of culture interacting with economics is in Texas. These farmers do exactly what American culture ingrains in its citizens from birth: be as efficient as possible in order to make the most money possible. They do this by selling every possible by product of the cotton crop and by purchasing equipment and materials to make the growing season as productive in time, labor and crop yield. The American culture of continually tries to gain more wealth and this causes most to all areas of business to try and continually improve. This cultural mindset benefits American economics because Americans continually try to improve their product.

C. I was surprised at how well oiled the cotton industry in America was. Initially (and naively) I believed that farming was fairly low tech, backbreaking labor. I never realized that there was research that went into farming and just how efficient American cotton farming has become today.