Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Dec 29, 2025 3:55 AM

The Biden administration proposes a global minimum tax on corporations to end the “global race to the bottom.” Leaving aside the wisdom of letting France tax U.S.-based corporations, this phrase recalls one of the regnant canards of our time: Capitalism inevitably lowers living standards and grinds people down into poverty.

The myth of the “race to the bottom” is among the multitudes of errors, distortions, and outright lies of the 1619 Project but has escaped notice, because so few recognize it as a fib.

Princeton sociology professor Matthew Desmond’s essay – “American Capitalism Is Brutal. You Can Trace That to the Plantation” – summarizes the standard argument well:

In a capitalist society that goes low, wages are depressed as pete over the price, not the quality, of goods; so-called unskilled workers are typically incentivized through punishments, not promotions; inequality reigns and poverty spreads. In the United States, the richest 1 percent of Americans own 40 percent of the country’s wealth, while a larger share of working-age people (18-65)live in povertythan in any other nation belonging to the Organization for Economic Cooperation and Development (O.E.C.D.).

This is but one of many “errors of historical fact” and “misuse of historical sources” that Desmond should retract in this essay. But for our purposes, the key error is that, in a free-market economy, pete over the price, not the quality, of goods.” A brief reflection will show that the assertion is so erroneous that even Desmond does not believe it.

If Desmond truly believes that consumers only care about finding the lowest price, that raises a series of questions:

When Desmond takes his wife, Tessa, out to eat, does he always take her to the cheapest restaurant – McDonald’s for her birthday, White Castle for their anniversary?When Desmond buys a gift for his mother, does he always purchase the least expensive jewelry – the worst-cut diamond?When Desmond is in the market for a new car, does he always purchase a used Yugo (the vehicle imported from Communist Yugoslavia that Car and Driver called “the worst car in history”)?

The answer to these questions, presumably, is no. Yet Desmond and others discard the reality of their “lived experience” to make the faith-based argument that all other Americans single-mindedly focus costs regardless of quality. It’s unclear where they get this notion: No survey of consumer debt would indicate that the American people are especially obsessed with saving money.

In real life, price is only one consideration for a consumer in any society. The buyer always wants to purchase the largest quantity of the highest-quality good at the lowest price. The seller wants to sell the lowest quantity of the least-expensive good at the highest price. In order to find the biggest market, pete with one another to find the pelling niche. The market allows for both Aldi’s and Whole Foods, Hyundai and Mercedes, Great Value and Gucci. And marketing tests show that Americans are wary of buying anything that is priced too low precisely over concerns about its quality. There is no “race to the bottom,” because consumers are not heedless of their safety.

True, e down over time in the capitalist system. Marian Tupy of HumanProgress.org notes:

In 1968, for example, a 23” Admiral colour TV cost $2,544 or 125 hours of labour in the manufacturing sector. In 2018, a 24” Sceptre HD LED TV cost $99.99 or 4.7 hours of labour in the same sector (all prices are in 2018 US dollars). That’s a reduction of 96 per cent in terms of human effort.

The same could be said of microwaves, air conditioners, and everything from household appliances to luxuries. By contrast, the services that have caused Americans the most material pain over the last four decades are healthcare and education – those subject to the greatest government intervention, precisely the direction Desmond wishes to take all industries.

But what about quality? The 1968 Admiral TV’s cathode ray tube pare with the picture quality produced by 2018 technology, much less warrant a price 25-times as high. I love my 5,000-record collection on vinyl as much as any collector, but it doesn’t sound better, last longer, or take up less room than a file of MP3s.

Free exchange benefits Americans by raising the purchasing power of workers’ wages. Economist Joseph Schumpeter described capitalism as “first and last an engine of mass production which unavoidably also means production for the masses.” Its main “achievement does not typically consist in providing more silk stockings for queens but in bringing them within reach of factory girls in return for steadily decreasing amounts of effort.”

That is, capitalism reduces cost through innovation, improvement, and abundance. New technologies don’t simply replace old ones; they sometimes subsume bine them. Take, for instance, this paring entertainment technology of the 1980s with today’s smartphone:

If anything, the picture understates the wondrous advancement of technological progress: The cell phone not only replaces pay phones and all the items pictured but also televisions, gaming systems, calendars, personal planners, photo albums, clocks and wristwatches, road maps, GPS units, rulers and tape measures, passes, notebooks, board games, pitch pipes, books, newspapers and magazines, filing cabinets, and snail mail. Few homes in the 1980s could afford all of these items, let alone for the price of a smartphone – which 85% of Americans now own (up from 35% in 2011).

These are curious status flags in the “race to the bottom.”

And Desmond misses the fact that individuals invented, improved, or replaced all of these products in the hope of making a profit in the marketplace through free exchange. Furthermore, they made our lives better even while misguided theorists falsely accused them of exploitation and despoilation parable to chattel slavery. As the Book of Proverbs says, “In all toil there is profit, but mere talk tends only to poverty” (14:23).

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Museum of plastic cadavers
Chicago’s Museum of Science and Industry is currently hosting the Body Worlds show, a display of plasticized cadavers and body parts. According to museum publicity, some 16 million people worldwide have seen the show, the creation of Gunther von Hagens, a German inventor who claims to have created the “plastination” technique. This, basically, is a modern-day form of mummification which allows museums to exhibit skinned and otherwise dismembered bodies in interesting and even entertaining postures. Depending on your point of...
Prayer for all Christians in their vocation
Almighty and everlasting God, by whose Spirit the whole body of thy faithful people is governed and sanctified: Receive our supplications and prayers, which we offer before thee for all members of thy holy Church, that in their vocation and ministry they may truly and devoutly serve thee; through our Lord and Savior Jesus Christ, who liveth and reigneth with thee, in the unity of the same Spirit, one God, now and forever. Amen. –U.S. Book of Common Prayer, “For...
To the moon and beyond
I was born on the seventh anniversary of Neil Armstrong’s historic moonwalk, which may or may not have something to do with my lifelong love of aviation. I have fond memories from my childhood of sitting in front of the pletely captivated by network news coverage of the launch of the Space Shuttle. Now, I’m not even certain that the 24-hour cable networks cover launches anymore. Sadly, for a shuttle mission to make front-page news these days, it has to...
The Public Square: “Civic friendship”
From First Things, June/July 2005, No. 154, p. 68 The Public Square: A Survey of Religion and Public Life • Rome Diary, etc., Richard John Neuhaus • “Civic friendship.” What a beautiful idea, but in our rancorous political climate some might be excused for thinking it is a pipe dream. In an instructive little book published by the Acton Institute, Trial by Fury, by law professor (and FIRST THINGS contributor) Ronald Rychlak, applies the idea of civic friendship to tort...
The right to migrate
Dr. Andrew Yuengert, the John and Francis Duggan Professor of Economics at Seaver College, Pepperdine University, discussed the various economic and moral dimensions of the critically important immigration issues facing America today. In an interview on The Jerry Bowyer Show yesterday, Dr. Yuengert discussed “The Right to Migrate”. Dr. Yuengert argues, within the context of Catholic Social Teaching, that there is a “right to migrate,” but it is not an “absolute right.” This means that for policy discussions, “the purpose...
Capitalism and Catholic social teaching
Rev. Robert Sirico responded over the weekend in the Detroit News to a letter disputing one of his previous columns. In “Catholic social teaching embraces markets,” (May 21) Rev. Sirico writes that “the fact that the church has no economic models to propose is not the same as saying all economic models are the same. Some have greater moral potential than others.” You can read Rev. Sirico’s initial piece, “Pope Benedict XVI will turn out to be a real liberal,”...
Book smarts vs. street smarts
Many may know that the season finale of The Apprentice was broadcast last night, with the conclusion being a victory for the “Book Smarts” team (college educated or higher) over the “Street Smarts” team (high school only). Arnold Kling at EconLog points out that the contributions of the young and above-average are almost always undervalued. This experientially strikes me as true. His advice: “If you are exceptional and young, you should start your own business. That way, you will get...
Technology imperialists at the forefront
This Wired News article examines the European outrage at Google’s announced plans to digitize the holdings of all the world’s libraries. “There is a growing awareness in continental Europe of the technology gap, even with some of the very good technologies they have had, panies like Google, like Microsoft, like Apple … which are presented as almost technology imperialists at the forefront,” said Jonathan Fenby, a former Observer editor and author of France on the Brink. “There is this defensive...
The Public Square: On Ordered Liberty
From First Things, June/July 2005, No. 154, p. 69 The Public Square: A Survey of Religion and Public Life • Rome Diary, etc., Richard John Neuhaus • Of the thousands of books that deserve a review, relatively few get reviewed here or elsewhere. Sometimes we plan a review but, for one reason or another, it doesn’t pan out. Happily, that can be partially remedied by borrowing, as I here borrow from Daniel J. Mahoney’s excellent review of Samuel Gregg’s On...
The art of movie piracy
I recently watched a rerun of Seinfeld, in which Jerry es entangled with a movie bootlegger, and finds out that he has a gift for movie piracy. Jerry’s talent would be the cure for what this Slashdot plains about: “I’ve yet to find a blockbuster movie that isn’t readily available on the net after it opens, but somehow this is still news. It’s still usually worth shelling out the cash to see a version that isn’t fuzzy with garbled sound,...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved