< The Friday Podcast: The Cotton Wars
OCTOBER 29, 20108:38 PM ET
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(SOUNDBITE OF ARCHIVED RECORDING)
MARK ZANDI: I think it's premature to conclude that the coast is clear, though, because these numbers are quite volatile week to week. And the level of claims is still uncomfortably high, but it is encouraging that it's moving in the right direction.
(SOUNDBITE OF SONG, "IN THEM OLD COTTONFIELDS BACK HOME")
JOHNNY CASH: (Singing) When I was a little bitty baby, my mama would rock me in my cradle in them old cotton fields back home.
ALEX BLUMBERG, HOST:
Hello, and welcome to NPR's PLANET MONEY. I'm <PRESIDIO_ANONYMIZED_PERSON>.
CHANA JOFFE-WALT, HOST:
And I'm <PRESIDIO_ANONYMIZED_PERSON>. Today is Friday, October 29. And that was Mark Zandi of Moody's Analytics you heard at the top of the show talking about the drop in new jobless claims.
BLUMBERG: Today on our show - I'm so excited for this podcast - we continue with our T-shirt project. On Tuesday, we figured out what our shirt would look like. Today, we're figuring out what it should be made of. We travel the world in search of four bales of cotton. Well, specifically, Chana, you traveled the world.
But first, the indicator from our very own J. Julius Goldstein.
JACOB GOLDSTEIN, BYLINE: Today's PLANET MONEY indicator is 2%. That's how much GDP grew in the third quarter, according to the estimate the government put out this morning.
JOFFE-WALT: And 2% GDP growth - I don't know how I'm supposed to feel about that.
GOLDSTEIN: It feels about like your tone of voice. It's like a rainy weekend. But you knew it was going to rain. So you don't feel great about it, but, you know, what did you expect, right? Everybody predicted GDP growth was going to be about 2%. And it's more of this slow, weak recovery that we've been in for a while now. People's incomes, on the whole, are going up a little bit. People are buying a little bit more stuff. But this kind of growth, it's definitely not enough to make a big dent in unemployment. And really, ultimately, it's not enough to make it feel like things are finally getting back to normal.
BLUMBERG: All right. Well, thank you, Jacob.
GOLDSTEIN: Thanks, guys.
BLUMBERG: OK. So if you've been listening to the program for a while, you know that we here at PLANET MONEY are embarking on an exciting project to make PLANET MONEY T-shirts. And when we say make, we mean make. We are coming up with the design. We're buying the cotton ourselves. We're choosing where that cotton is going to be made into fabric. We're finding the factory to stitch the fabric together into a shirt that we will hopefully then sell to you, our listeners.
JOFFE-WALT: And the idea is that we could learn, along the way, the unbelievably complicated global process by which our clothes end up on our backs.
BLUMBERG: And it is, as we're finding out, unbelievably complicated. And today's installment makes that very, very clear - how to buy four bales of cotton, four simple bales of cotton. That's all the cotton we need to make our T-shirts. And this story has so many twists and turns. It has it all. It turns out that the search for cotton landed right in the middle of a decade-old international conflict. There's an underdog named Pedro who took on the world's largest superpower. There's quiet money transfers, retaliation, $147 million bribe. Like I said, it has it all.
And, Chana, you did all the reporting for this story. And so, as we do from time to time, we're going to turn the entire podcast over to you. So take it away.
JOFFE-WALT: OK. Thank you, Alex.
So the first thing I learned when I set out to buy us four bales of cotton is that no one making T-shirts actually does this. They don't buy their own cotton. If you're a small DIY T-shirt shop or if you're a big manufacturer like Jockey, you buy cotton from a mill. You don't buy cotton bales from a farmer. And honestly, you've probably never considered where the cotton comes from. So you don't know this story, and you don't know about Pedro, the underdog.
Now, the second thing I learned is if you do want to consider where your T-shirt actually begins and choose where the cotton is grown and picked, you have many options. Cotton is grown all over the world. There are thousands of varieties. You can buy from Uzbekistan, from Mali, Australia and from the U.S., which is where I started.
DAHLEN HANCOCK: OK. So you take seed - well, this is the seed. It's just a little - you can touch it. And that's the seed that then we will use, planters, to go plant in the spring. All right, so let's go walk out here. I'll show you - once it's planted, I'll show you a cotton plant.
JOFFE-WALT: Cotton seed is round and dark. It's sort of like dried black beans. And the farmer talking there is a fit, chatty guy. His name is Dahlen Hancock in New Home, Texas. And Dahlen says if you want to buy cotton, the United States is the perfect choice. We are the world's largest cotton exporter by far. We've been farming cotton for 200 years, and Dahlen is the fourth generation in his family - 6,000 acres of neat green rows.
HANCOCK: Well, it's kind of far as the eye can see. I mean, that's the - I guess the easiest way, I would say, to describe it.
JOFFE-WALT: Did you ever consider not going into cotton?
HANCOCK: Yes. Whenever I was in high school, I remember I had the opportunity right out of high school to farm some land because, you know, my granddad was going to help me, but I didn't want to farm. So...
JOFFE-WALT: Why?
HANCOCK: So - well, I don't know. I just kind of wanted to see what was out there. I just - there's bound to be something more than, you know, than New Home, Texas.
JOFFE-WALT: Turned out there wasn't. There was electrician training, which Dahlen didn't like. And then there was New Home and the family land. And today, Dahlen's a big booster for American cotton. Texas cotton, he says, is reliable, good quality and affordable, all of which independent cotton experts confirmed. But then, as Dahlen was selling me on U.S. cotton, he kept mentioning another place that grows cotton. And this was a place I never asked about, a country none of the cotton expert people even brought up. But when Dahlen randomly mentioned it, out came the cotton trash talk.
HANCOCK: Yeah, because sometimes - I mean, just facts are facts. Brazil, for example, wants to kind of be equal to the U.S., but they also don't have the mechanism and the delivery system that we've - the infrastructure that we've had for years. I mean, years and years and years that they don't have the delivery system, really, to get it there on a continual basis.
JOFFE-WALT: Now that, the cotton experts told me, is not entirely true. They said there's absolutely no reason to think Brazil could not quickly and safely get us four bales of cotton. And yet, here is Dahlen trash talking Brazil, albeit with mixed sports metaphors.
HANCOCK: The only reason I bring them up is just because they lash out at us a lot of times about how we do things and very negative about the U.S. They focus more on what we're doing rather than just worry about what they're doing. Just produce the cotton. You produce it, and you produce it at a price that's, I guess, as competitive as the rest of the world, and you step up to the plate and play the game. And we've played it very well for so many years. Year after year after year, we're always at the plate. They keep coming to the table and coming the court and always griping and always bitching and complaining whenever, you know - I mean, we don't. You know what? We've stepped up to the plate every day and played the game.
JOFFE-WALT: The reason Dahlen Hancock is so obsessed with Brazil, brought it up three times without being asked - there's a backstory. And the backstory begins with a guy named Pedro, a Brazilian who disputed all of Dahlen's sports analogies that the U.S. plays the game better than Brazil with a sports analogy of his own, although I didn't quite get it at first.
PEDRO CAMARGO: They're taking shots. They're taking shots.
JOFFE-WALT: Shots is, like, when you shoot the basket.
CAMARGO: No, no. They're taking shots. The shots here - now, how do you say? They're hormones. They're taking prohibited. You know, they're taking hormones. And we play fair.
JOFFE-WALT: What Pedro means is steroids. And it turns out how to buy cotton in the global economy, this question that we're asking, is not about comparing prices or quality. It is about this. The United States and Brazil are in the middle of an eight-year war over cotton. It's an emotional and quiet war. And where we end up buying our cotton has everything to do with this war. Now, like I said before, it all started with Pedro, Pedro Camargo. He's a Brazilian cattle farmer. He's got huge glasses and a gray, bushy mustache. And the steroids he's talking about are subsidies. The U.S. subsidizes American cotton farmers like Dahlen. Depending on the year, American cotton farmers get anywhere between 1.5 to $4 billion in subsidies. Pedro does not like that. He has never liked that.
CAMARGO: Well, I was sure that they were against us. And I had the feeling they were - that we were being cheated in the process.
JOFFE-WALT: Who is against you?
CAMARGO: The rich countries.
JOFFE-WALT: The way Pedro sees it, the cheating happens in places like this.
KIM PARIS: All right, that sounds good. All right.
JOFFE-WALT: A tiny office in Lynn County, Texas, with file cabinets for walls, a couple desks, dusty plants. This is where farmers like Dahlen come to get their payments from the government. For reasons we'll get into later, getting money from the government is really complicated, so they need the help of the heavily braceleted Kim Paris. Kim tells me the guys come in to fill out volumes of paperwork, and then they'll stop by next month to ask volumes of questions.
PARIS: Did I get paid? How much did I get paid? How come I didn't get paid on this one farm and I got paid on these other farms? How come my owner didn't get paid and I did? It takes years to understand these programs, so they think I know everything. A lot of times, we'll go to the post office, grocery store, church, and they're asking us, oh, you saved me a trip. Let me ask you this. So yes - and I've known them all my life. If you've lived here, you've known them all your life.
JOFFE-WALT: Kim Paris might be the only person in Lynn County who does actually know close to everything about how the various cotton subsidy programs work. There are four, and the one that gets Pedro especially worked up is the marketing loan program. And it basically works like this. So the government sets a price that it thinks cotton should sell for, a reasonable price that a farmer could cover his costs - say, 50 cents a pound. But, of course, the U.S. government can't tell the buyers of the world, this is the right price for cotton. Pay this. Sometimes the market is willing to pay more and sometimes less. So on the months that farmers like Dahlen have to sell their cotton for less - say, 30 cents a pound - the U.S. government essentially makes up the difference. Twice a year, Kim Paris' office sends out a check. And so when Dahlen says the international cotton business is like a game and the Brazilians are whining because year after year the U.S. wins, Pedro's face goes all red.
CAMARGO: Yes, they win with the help of U.S. government, with the Treasury. And we win as a farmer. We want to compete farmer against farmer. And that Brazilian farmer and the American farmer with the help of the United States government - that's - not only it's not fair. It's not following the rules.
JOFFE-WALT: Ah, the rules. So Pedro, like Kim Paris, has developed a specialized knowledge of an incredibly important and largely unknown corner of our global economy. In between whining, Pedro has spent the last 15 years as a farm union leader studying the global trade rulebook, otherwise known as the World Trade Organization Agreements, the WTO - rules that, in 1994, the U.S. and Brazil and 151 other countries said they would follow, rules that do allow some subsidies but, Pedro was sure, not the ones the U.S. was paying to cotton farmers. And so in the 1990s Pedro began what he describes as a complaining binge. As a farm union organizer, he'd talk about how the U.S. was cheating to other farmers, to his friends, to the woman at the grocery store, to lots and lots of people who could do nothing about it.
CAMARGO: I had been on this for years, and I had been looking and complaining for years. And then suddenly, I'm invited to go to government.
JOFFE-WALT: In February 2000, Pedro was invited to be the Secretary of Production and Trade at the Ministry of Agriculture in Brazil. His first day in February began at 9 a.m. By 1 p.m., he was telling the agriculture minister about how the U.S. was cheating Brazil. Minister, he said, we need to file a case with the WTO to stop U.S. subsidies.
CAMARGO: On my first meeting with him, I had that - I thought, now I'm going to do it. I had the pen, the power to sign things, you know? I had the pen, you know? I said, oh, I have the pen. I'm going to do it.
JOFFE-WALT: Pedro's timing was impeccable. If he had proposed taking on the world's most powerful country even a year earlier, he likely would have gotten laughed out of the minister's office. But Brazil was changing. It was coming of age in the global economy, opening up. It was suddenly sending things all over the globe - orange juice to China and sugar to Nigeria. It was sending its soybeans all over the place.
But what bugged Brazilians at this moment was that the rest of the world hadn't yet taken notice that Brazil had arrived. One cotton farmer told me he'd go to Europe, and they'd say, oh, yeah, Brazil. Samba. Soccer. Women. And in the 1990s, when he went to the U.S., someone asked him if he ate with a knife and fork. Brazil wanted to be seen as a big guy. And to the agriculture minister and to the president, Pedro was pitching a way to do it.
CAMARGO: And then we started looking. Let's look at other cases, also. Let's look - let's find a case with Europe. Let's find something with Europe. And let's find something with Japan.
JOFFE-WALT: You set out to take on the United States, Europe and Japan all at the same time.
CAMARGO: All at the same time. What was - that was quite ambitious. Yes. The ambition was to be a leader.
JOFFE-WALT: Now, Brazil did not go after the world's superpowers without preparing. The country hired an American lawyer and then an American economist. And then, and only then, in 2002 Brazil filed their case with the global court against the world's most powerful country.
Kimberly Elliot is a senior fellow at the Center for Global Development, and she's studied at least 100 WTO cases.
KIMBERLY ELLIOTT: So the first step in a WTO dispute settlement process is consultations.
JOFFE-WALT: That just means they talk to each other.
ELLIOTT: Exactly. The government trade ministry bureaucrats talk to one another, see if they can find a solution to the problem. And actually, quite often in a lot of WTO cases, countries are able to resolve their problems during that consultation process.
JOFFE-WALT: Not so with Brazil and the United States. Talking to each other did not help. From the beginning, this case was not like the others because U.S. subsidies to cotton farmers are very complicated, partially because it gets very convoluted when you're trying to stay on the legal side of WTO agreements. That's why Kim Paris, the woman back in Lynn County who gets accosted at the post office - that's why she's probably the most valued person in her community because she actually understands all this stuff.
So the WTO does allow certain subsidies with very specific limits. And the U.S. was claiming that their very carefully crafted and Byzantine programs were within those rules. So talking went nowhere. The cotton case proceeded to the WTO's version of a jury, a panel of three international experts who sit around, study the case and come up with a verdict.
ELLIOTT: Well, in theory, they're supposed to have six months. In this case, they - it took over a year for the panel. They said that the issues were just too complex.
JOFFE-WALT: And then what happened?
ELLIOTT: We were found guilty pretty much across the board.
CAMARGO: We never imagined what resulted this big or this good, you know? I mean, it was larger and stronger than anybody imagined.
JOFFE-WALT: In 2004, the victory was a huge story in Brazil. Pedro was no longer a complainer, but he was the man that had taken on the big guys. Reporters called, showed up at his door.
CAMARGO: You know, they come to me every time there's - something happens. When we win, they would come to me, wow, brother, we won. Pedro, what you think? All good. We won. Is not Pedro. Is not Brazil who said. It's the WTO. It's Geneva, which even has American working there.
JOFFE-WALT: The underdog had won. And other underdogs of the world took notice.
CAMARGO: And so when you went to India or when you went to China or went to Africa or went to - Brazil was the country which had filed the cases.
JOFFE-WALT: Pedro's life was different. Brazil's image had changed.
There was one thing that didn't change, though - anything else. U.S. kept subsidies in place almost exactly as they had been, kept paying cotton farmers. And the U.S. fought the decision. They appealed. That took six months. And then, Kim Elliot says, the appellate court came out with another ruling.
ELLIOTT: Basically upholding everything that the original panel had ruled, i.e., again finding the U.S. guilty of illegally subsidizing cotton farmers.
JOFFE-WALT: The U.S. appealed again. A year later, the U.S. lost again, making us 0-3. At this point, it was 2008, six years after Pedro filed the case. He wasn't even working at the Agriculture Ministry anymore, although he'd still get calls from the press.
CAMARGO: Hey, Pedro. What about now? I said, well, now we have to force the United States to change. We will win appeal, win appeal. And they still (vocalizing). And the United States would ignore, completely ignore.
JOFFE-WALT: This is the crazy thing about the WTO. It has a formal process. It has high-powered lawyers and judges and 153 member countries, countries that bring major international disputes to its doors. And the WTO comes out with a ruling. And then that's it. Nothing. If everyone wants to obey the ruling, that's cool. And if not, that's OK, too.
This really set in for me when I was talking to James Bacchus, who was a judge for many years at the WTO. He ruled on things like, should the U.S. limit steel imports? And can Canada subsidize their aviation industry? Or can Japan restrict imports of American apples? And Bacchus says each time, all he can do is make his ruling.
JAMES BACCHUS: The WTO has no legal authority to make any sovereign country do anything. It has no police force. It has no black helicopters.
JOFFE-WALT: Wait. So all that, and the WTO can't make the U.S. comply?
BACCHUS: The United States is a sovereign country. It can choose to comply with a WTO ruling or not. There is nothing called the WTO that can make anyone in the world do anything.
JOFFE-WALT: So if you're Brazil, there is only one option left - retaliation. And we're not talking everyday lashing out retaliation, but a permitted controlled retaliation process. And if you want to understand the bizarre state of global trade, just watch what happens next. So retaliation in a WTO context means taxes. A country that wins the WTO case, as Brazil just did, is allowed by the WTO to tax the losing country's stuff. The WTO doesn't tell Brazil what to tax, but it tells Brazil how much it can levy in taxes on American goods that Brazil imports - and in this case, $570 million a year.
RENATO AMORIM: So the first challenge was, what products do we put in this list?
JOFFE-WALT: This is <PRESIDIO_ANONYMIZED_PERSON>. He was brought in as special adviser to the Foreign Trade Ministry. You can call him retaliation master. It turns out that retaliating is quite a skill. The point isn't to get $570 million in taxes. The point is to get other American industries besides cotton and recruit them into your battle.
AMORIM: So you have to think very cleverly. That said, the list itself can become a negotiation - a bargain chip. And that's how you use it.
JOFFE-WALT: Because remember what Brazil wants to bargain for. It wants the U.S. to stop subsidizing cotton. The international court is on their side, but it's clear that's not enough. Brazil needs Americans on their side, too, preferably powerful ones, more powerful than the cotton industry. So those are the people that it targets in operation retaliation.
AMORIM: Luxury cars, cosmetics, some medicine. You don't want to see, for example, your pharmaceutical companies, your software companies suffer, too, because you have refused to negotiate on a trade deal.
JOFFE-WALT: So Renato blasts off his list of 102 American products Brazil plans to tax. And he sends it to the American Trade Ministry, politicians, as many powerful American business groups as he can think of with the following instructions.
AMORIM: We will apply this within 30 days.
JOFFE-WALT: So basically, you have 30 days to act.
AMORIM: Yes. We are open to negotiation within this 30 days. So hello, Washington. Please send a team to Brasilia to negotiate. And this is what the American government did.
JOFFE-WALT: It worked.
AMORIM: It really worked.
JOFFE-WALT: It worked because of people like Steven Bipes, who works at the Brazil-U.S. Business Council, an organization specifically set up to promote U.S. business in Brazil on behalf of his members, his very powerful members, such as...
STEVEN BIPES: We have the National Association of Manufacturers, the American Apparel and Footwear Association, the Intellectual Property Owners Association, the Personal Care Products Council, the Recording Industry Association of America, the Telecommunications Industry Association, the U.S. Chamber of Commerce, U.S. Wheat and Associates. And there's many others.
JOFFE-WALT: Many others who all care deeply about being able to export to Brazil, Latin America's largest market. On the morning the list was sent out, Steven Bipes had hundreds of emails and voicemails from his members, members who were all wondering the same thing - what the hell some cotton dispute had to do with them. And they were telling Steven, fix it.
BIPES: Well, the first instinct is to lash out. Why is the Brazilian government doing this? Why are Brazilian cotton growers bringing this case forward? What do they have against us? What do they have against our products? What have we done wrong? So then the feeling, if you will, after some thought and consideration, shifted from the raw reaction - why is Brazil doing this? - to, why do we have these policies? It was these farm programs. And I'd like to take this opportunity to laud the leadership of the Obama administration and Secretary of State Clinton and then through the additional leadership of Ambassador Ron Kirk, the U.S. trade representative, and Secretary of Agriculture Vilsack.
JOFFE-WALT: Wait. What are you doing right there? You're shouting out all the people who listened to you when you lobbied and sent them letters.
BIPES: Among many others, correct. We asked all the parties, the Congress, administration, to be creative, to find a solution to avoid retaliation because it would hurt the business community. It would hurt jobs.
JOFFE-WALT: But Brazil knew you were going to do that. That's why Brazil put you on that list. Brazil targeted you guys because they knew that you would then go to all those people that you just listed and lobby them to get a change.
BIPES: Exactly. And our community isn't reacting in response to what the Brazilian government wants. It's what's in our own best interest.
JOFFE-WALT: I want to just pause here to admire the elegance of what just happened, the elegance with which the retaliation master went about his business. He basically created a situation in which very powerful interests who normally don't give a crap about what he wants all of a sudden are his best allies. All of a sudden, American shoe manufacturers and music executives and wheat farmers are putting pressure on the American government. Just days after the retaliation master sent out his list, the U.S. sent a delegation to Brazil to negotiate. And here is where the story takes its last and final and probably weirdest twist. The American negotiator sat down in Brazil and immediately declared it impossible to get rid of the cotton subsidies right away. Farm subsidies, they explained, are set by Congress in the Farm Bill. And the Farm Bill is not up for discussion until 2012.
It's unclear what was said next or who promised who what. The Brazilians seem to think that the Americans committed to get rid of cotton subsidies as soon as they can, in 2012. The Americans do not confirm this. What is clear is the group came to another agreement. If Brazil agreed to drop retaliation against the United States, the United States would pay them money, literally write them a check every month to stop what they were doing. It would be called the Brazilian Cotton Farmers Fund. News of the fund came out in the morning of April 6, 2010. And before noon, reporters were back at Pedro's door asking, how about instead of getting rid of the subsidies, they pay us? What do you think, Pedro? Pedro was skeptical.
CAMARGO: What do you think of the fund, Pedro? And I said, well, I don't want the - how do you say? I don't want a tip.
JOFFE-WALT: You don't want a tip?
CAMARGO: I said, no tips. I want a solution. And I went to the press - no tips.
JOFFE-WALT: But then, just a few hours later, Pedro found out just how much the United States was offering - $147 million a year.
CAMARGO: One hundred fifty million dollars - not a tip. Maybe it's a bribe, but it's not a tip. It's a lot of money. For Brazilian farmers, it's a lot of money.
BACCHUS: To my knowledge, no country has ever proposed to write another country a check to make them go away in order to resolve a trade dispute.
JOFFE-WALT: This, again, is James Bacchus, the WTO judge who watched hundreds of international cases unfold over the entire history of the WTO.
To review, the United States was found to be illegally subsidizing U.S. cotton farmers. We are still illegally subsidizing U.S. cotton farmers. Instead of getting rid of the subsidies, we are now also paying Brazilian cotton farmers. And I asked Bacchus, is that even legal?
BACCHUS: It's not at all illegal under the WTO rules. If the United States went to Brazil and said, I'll offer you a bouquet of flowers and a dozen balloons if you'll agree that our dispute is resolved and if the Brazilians agreed, then that would be okay under WTO rules. What matters is what the parties to the dispute think is a resolution to the dispute.
JOFFE-WALT: The parties to this dispute seem pretty OK with this resolution. Americans seem all right with it. I'm going to go out on a limb here and guess that most Americans likely don't know that A, we have a cotton industry in the U.S. or B, that we're subsidizing that industry, and definitely don't know C, that we are now also subsidizing the Brazilian cotton industry, as well.
The Brazilian farmers mostly seem happy, too. The Cotton Farmers Association has set up an institute to receive monthly payments of $12 1/4 million. It'll be managed by the head of their cotton association, Geraldo Cunha (ph). He says the money will go to things like pest control and marketing. Even Pedro, who spent 10 years complaining about the subsidies and then nearly 10 more taking the case through the WTO, seems cool with the whole thing.
CAMARGO: Well, I think at that moment, it's hard to be against $150 million, you know? That a lot of money. Geraldo was happy, you know. Everybody was happy. I decided I would be happy, also (laughter).
JOFFE-WALT: So did you win?
CAMARGO: No. No, we didn't win. But we got compensated to wait because we still expect to win. I think maybe we'll win. And we're waiting with $150 million in the pocket - helps.
JOFFE-WALT: There is one party that does not seem entirely pleased with this outcome, and that's American cotton farmers like Dahlen. He's worried that come 2012, the shoe lobby and the wheat lobby will have more power and more friends in Congress than the cotton guys and that the U.S. will do what the WTO first ruled it should do eight years ago - reduce or do away with cotton subsidies.
Here's Dahlen, back in Texas.
HANCOCK: I have a real hard time whenever somebody somewhere else starts trying to tell us how to run our business here and that we're hurting them whenever all we're doing is just trying to survive ourself. You know, I don't buy that. I mean, so, you know, for them to say that we don't need some backup or some subsidy to protect us, I think, is wrong.
JOFFE-WALT: For now, that's where everything stands. The U.S. still subsidizes cotton. And the U.S. has now sent close to 90 million to the Brazilian cotton fund. And we here at PLANET MONEY, Alex, still need four bales of cotton.
BLUMBERG: And now we know the choice before us, I guess. Although, before I get to that choice, I do want to mention that there's probably one other group who I'm pretty sure is unhappy with this arrangement. And that group - economists. Subsidies are generally very unpopular with economists because they encourage one domestic industry over another. Like, for example, maybe Dahlen should have become an electrician. Maybe we need electricians more than we need cotton farmers. But because of the U.S. subsidy, it's all distorted.
And actually, there's one more group I want to mention - me. I don't know if I'm very happy with this. Why are my tax dollars not only going to subsidize the cotton industry; they're also going to subsidize an entirely other cotton industry in a country where I don't even live? Although, one thing I guess we can conclude from this - it doesn't really matter where we buy our cotton from since we're subsidizing it no matter what. In some ways it's like we've already prepaid for this cotton, no matter where we buy it.
JOFFE-WALT: I'm glad you feel that way, Alex, because, like everything else with cotton, what you think are your choices that will guide this decision are not really choices at all. In the end, it's kind of been decided for us because here's what I learned when I got back to New York. So Adam Davidson is in charge of the next step in Project PLANET MONEY T-shirt. And he is going to find us a mill that will take our cotton and make it into yarn and fabric. And it turns out that some of the world's best mills are in the United States, in the South mostly. So Adam's really excited that there's a great story to tell there about how this is one of the few parts of T-shirt making that the U.S. is still really strong and competitive and why that is. So we're going to take our cotton to this mill, and they'll make it into fabric. But that mill, like every other mill in the United States, uses only U.S. cotton.
BLUMBERG: So if we want to use an American mill, we have to use American cotton?
JOFFE-WALT: Right. It basically is decided for us. We're going to go American. We're going to buy Dahlen Hancock's cotton from the Plains Cotton Cooperative in Lubbock, Texas. And Adam is going to follow it to the mill in an upcoming podcast in the next month or so.
(SOUNDBITE OF SONG, "IN THEM OLD COTTONFIELDS BACK HOME")
CASH: (Singing) When I was a little bitty baby, my mama would rock me in my cradle in them old cotton fields back home.
BLUMBERG: That's it for us today. As always, we love hearing from you. We recently got a letter from a listener who heard the podcast I did with Edith Calzado, the woman who gets help from the government through transfer payments, which she hopes will help her son live a better life than her. The email's from a guy named Diogenes who heard the show and wrote us to say, I was that kid in 1992. Jacob Goldstein called him up, asked him some questions about how he thinks about money now. That's on our blog, npr.org/money.
JOFFE-WALT: And you can always send us your thoughts, too. You have two main options of the way to get them to us. We've got a Facebook page, facebook.com/planetmoney. And we have email that we promise we check regularly, <PRESIDIO_ANONYMIZED_EMAIL_ADDRESS>. I'm <PRESIDIO_ANONYMIZED_PERSON>.
BLUMBERG: And I'm <PRESIDIO_ANONYMIZED_PERSON>. Thanks for listening.
(SOUNDBITE OF SONG, "IN THEM OLD COTTONFIELDS BACK HOME")
CASH: (Singing) ...Cotton fields back home. When I was a little bitty baby, my mama would rock me in my cradle in them old cotton field back home.
Read  the above podcast transcript with Chana Joffe on the cotton subsidy programs provided by the U.S.
government  and answer the following questions. Your responses do not need to form a cohesive essay; instead focus on concisely responding to each prompt.  The podcast is vague about the details of the U.S. cotton subsidy system due to their complex nature. One program, the Marketing Loan Program, is discussed at the 9:30 mark of the podcast. How is this similar to a price floor? Is (are) there any difference(s) between this system and a traditional price floor in terms of how it affects market outcomes (prices, quantities, surplus to various groups)?