Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Dec 16, 2025 5:50 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
re: Environmental indulgences
Follow up thought, Kevin: Church indulgences had their roots in cheerful giving. Lots of cheerful “carbon giving” going on right now too; in fact, I’d call it downright prideful (which is why giving to God always had this condition on it). That cheerful giving morphed into aguilt-giving, and was ultimately mangled by the Guardians of Truth intoਊ pulsory tax on the faithful. Will we see a similar pattern emerge here? Would not be surprised. Nor would I expect such a...
T-U-R-T-L-E power
This might just be the best argument for increasing the minimum wage that I’ve heard yet: It’s just not fair that Michelle needs to go deep in hock to “feed her Ninja Turtle obsession,” is it? Well, maybe such an “obsession” leads to making poor economic decisions, but to each her own I guess. How sad. In related news, the newest TNMT movie is set for release on March 23, 2007. ...
The labeling conspiracy is expanding
It looks like Julianne Malveaux is going to have to expand plaint against the labeling of milk to a whole new spate of products, including yogurt. It may be that the whole scope of ing from the dairy industry is going to be affected. Here’s the label off a yogurt container that I ate out of last week: Malveaux is concerned that this kind of labeling, which she argues deceives the consumer into thinking that the product approximates “organic” certification,...
Bainbridge on the Boston Scare: ‘Triumph of capitalism’
Prof. Bainbridge on the hijinks of the Boston duo responsible for the now infamous ad campaign for Adult Swim: “These guys validate my life’s work: They confirm that corporations rule the world and are therefore a worthy subject of study.” Here’s the rather incredible press conference, where almost every question is answered with, “Sorry, that’s not a hair question.” The best part is when a reporter actually gets them to address the situation, if even in a somewhat round about...
Environmental indulgences
Among the immediate causes of the sixteenth-century split in Western Christianity was the sale of indulgences. The theological crudity of this abuse was encapsulated in the venality of Dominican friar Johannes Tetzel, whose activities in Wittenberg riled Martin Luther. Tetzel allegedly preached “Sobald das Geld in Kasten klingt, die Seele aus dem Fegefeuer springt.” (“As soon as the coin in the box clinks, the soul out of purgatory springs.”) That slogan came to mind as I was reading Jay Nordlinger’s...
Love the sinner, hate the sin
Speaking of the ubiquity of pornography in our culture, last week ABC News’ Nightline highlighted the work of XXXChurch, a ministry aimed at evangelizing porn stars and pornographers, as well as addressing the spiritual problems associated with consuming pornography. Check out the story, “The Porn Pastors: .” JR Mahon of the ministry says in the piece, “Our biggest critics are Christians.” Sadly es as no surprise. When XXXChurch came up with the idea of a New Testament with a cover...
“The Pursuit of Happyness” a hit with libertarians
A favorable review of Will Smith’s The Pursuit of Happyness in Liberty: “The Importance of ‘Happyness’.” And just in case you thought that libertarians have no appreciation for social bonds whatsoever, here’s the conclusion of the piece: “Underlying this free-market philosophy, however, is a film that is unabashedly moving, demonstrating that true happiness does not lie in the accumulation of property alone, but in having someone to share the joy of good fortune. Without someone to tell, someone to care,...
The right to a religious education
Sen. Dave Schultheis of Colorado has “proposed a ‘Public Schools Religious Bill of Rights’ bat what he calls mounting, nationwide violations of students’ and school staffs’ constitutionally protected religious freedom.” Without endorsing any particular elements of Schultheis’ bill, I have to admit that I have actually considered writing a piece on an idea like this before, a students’ bill of rights which includes the right to learn about God. It strikes me that for people who are religious, the current...
European Union releases comic book; EU unintentional comedy production skyrockets
“We noticed that they took the umbrellas and the pens, but threw away the policy leaflets before they walked out of the door.” You don’t say? It’s the weekend; I can get away with a post like this on the weekend. Update: “If all the legislation the EU has passed were laid out lengthways it would be over 120 miles long, whilst legislation currently in force would be 31.7 miles long.” ...
Blu-ray closing the gap; Thanks PS3!
Following up on my musings about the potential for the PlayStation 3 to position itself as the “family friendly” next-gen gaming system because of its on-board Blu-ray drive, it looks like Blu-ray is closing the gap on HD-DVD (HT: Slashdot): VideoScan’s numbers indicate that during the seven days between Jan 7 and Jan 14, Blu-ray managed to close the gap of total discs sold since inception with HD DVD by over seven percentage points, suggesting that if the current trend...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved