Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Dec 7, 2025 12:19 PM

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
Unemployment as economic-spiritual indicator — February 2019 report
Series Note: Jobs are one of the most important aspects of a morally functioning economy. They help us serve the needs of our neighbors and lead to human flourishing both for the individual and munities. Conversely, not having a job can adversely affect spiritual and psychological well-being of individuals and families. Because unemployment is a spiritual problem, Christians in America need to understand and be aware of the monthly data on employment. Each month highlight thelatest numberswe need to know...
Charity – the anomaly of giving
if it is true that by our very nature and economy we tend to be transactional and reciprocal, then charity really is a theological virtue. It requires God’s own gift of grace so that we may give gifts like He Who Gives. Read More… This week’s Ash Wednesday marked the first day of Lent – a period of intensive spiritual renewal in many Christian liturgical calendars. Lent is a season lasting exactly 40 days, as we imitate the time Jesus...
Tyler Cowen finds economic answers in ‘Genesis’
Tyler Cowen, professor of economics at George Mason University and all around internet impresario, has a new column up at Bloomberg on his recent rereading of the Book of Genesis, Living standards rise throughout the book, and by the end we see the marvels of Egyptiancivilization, as experienced and advised by Joseph. The Egyptians have advanced markets in grain, and the logistical and administrative capacities to store grain for up to seven years, helping them to e famine risk (for...
Christian action in God’s world
This week’s Acton Commentary is adapted from a foreword to a new volume by Acton research fellow Anthony B. Bradley, Faith in Society: 13 Profiles of Christians Adding Value to the Modern World. The focus of this book is on Christians who are working out of their faith convictions in the world, not only in the context of secular institutions and environments, but especially in institutions that are animated by Christian values and identity. In this Abraham Kuyper stands as...
Who’s the true good samaritan?
Mike Weirsky, an unemployed New Jersey man, just won $273 million in the Mega Millions lottery. According to one headline he “has a Good Samaritan to thank.” Weirsky left his tickets at the store where he bought them, but someone found them and gave them to the cashier. Thanks to this person Weirsky was able to reclaim his tickets the next day, and he then discovered he was the jackpot winner. He says that now he doesn’t need to worry...
80% of the globe is ‘religious restricted’: UN hearing
Freedom of religion is denied in much of the world, according to the U.S. ambassador for religious freedom. And a United mittee of NGOs dedicated to religious liberty has called the UN to protect the most fundamental freedom. “Eighty percent of the world’s population lives in a religiously restricted atmosphere,” Sam Brownback told mittee. “Eighty percent of the world is religious. How can we tolerate this continuing situation?” He recounted harrowing tales of persecution that he had personally witnessed, especially...
The moral threat of measuring the ‘pay gap’
The “ethnic pay gap” in the UK has been estimated at £3.2 billion ($4.2 billion U.S.), or nearly $200 a week. To rectify this, 15 major employers– including the Bank of England, Deloitte UK, and Citibank UK – have agreed (after nudging from the Conservative government) to publish their ethnic pay figures. But Philip Booth warns that these figures are misleading and will harm those they intend to help, in a new essay for Acton’s Religion & Liberty Transatlantic website....
Acton Line: Rev. Robert Sirico on the reality of socialism; Interview with a Venezuelan dissident
On this episode of Acton Line, Acton’s co-founder and president, Rev. Robert Sirico, sits down with Acton’s associate researcher and librarian, Dan Hugger, to discuss the realities of socialism seen specifically in Nicaragua and Venezuela. After that, a redux segment is re-released, featuring 2018 summer intern and student at Grove City College, Noah Gould, who speaks with Javier Avila about inflation, unrest and hope in Venezuela. Check out these additional resources on this week’s podcast topics: Read “The Sandinistas’ faithful...
7 Figures: National Academies report on child poverty
In a massive new599-page study, the National Academies of Sciences, Engineering and Medicine’s Board on Children, Youth, and Families produced a report on the costs of child poverty in the United States and the effectiveness of current efforts aimed at reducing poverty. Here are seven figures from the report you should know: 1. In 2015, the latest year for which estimates were available, more than 9.6 million U.S. children (13.0 per cent) lived in families with annual es below a...
Explainer: The Trump Administration’s new educational choice proposal
What just happened? Last week, U.S. Secretary of Education Betsy DeVos, along with U.S. Sen. Ted Cruz (R-TX) and U.S. Rep. Bradley Byrne (R-AL), unveiled the Education Freedom Scholarships (EFS). The EFS is the Trump Administration’s primary plan to “expand and improve the education options available to students across the country.” The proposed legislation establishes a federal tax credit to support state-designed and controlled school scholarship programs. How can the EFS be used? The individual states will be able to...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved