Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Dec 15, 2025 12:26 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
Roundup: Supreme Court Rules on the Ministerial Exception Case
A quick news and analysis digest here on the Hosanna-Tabor Evangelical Lutheran Church and School v. Equal Employment Opportunity Commission ruling by the Supreme Court yesterday. Congratulations and thank you to the Becket Fund. To watch a two-hour Federalist Society panel discussion recorded in November on what is informally known as the Ministerial Exception case, visit YouTube. Beckett Fund: Supreme Court Sides with Church 9-0 in Landmark First Amendment Ruling — Becket Fund wins greatest Supreme Court religious liberty decision...
Samuel Gregg: The Problem with Compassionate Conservatism
On National Review Online, Acton Research Director Samuel Gregg reacts to musings by conservative writers David Brooks and Michael Gerson about Rick Santorum’s political rise in the GOP primaries and how his social views might be expressed in government policy. Would a President Santorum usher in a smaller but more “transformational” role for the state in addressing social ills? Gregg: On the one hand, passionate conservatives understand there is no such thing as morally neutral laws or morally indifferent government...
Ecology, Theophany, and Economics
Last Friday, January 6, marked the Orthodox Christian feast of Theophany (Epiphany in the West). memorates the baptism of Jesus Christ by John in the Jordan river, the manifestation of the Trinity to those present, and the sanctification of the waters through their contact with God incarnate. Every year this last aspect of the feast stands as a reminder of the Christian viewpoint of God’s concern for the world he created. Indeed, according to a hymn from the Great Blessing...
Ministry, Service, and Stewardship in Biblical Perspective
In this week’s Acton Commentary, “Ministers of Common Grace,” I note that in addition to ministry, “Another scriptural term, that of stewardship, can helpfully describe the pluriformity of God’s grace, both special mon: ‘Each of you should use whatever gift you have received to serve others, as faithful stewards of God’s grace in its various forms’ (1 Peter 4:10 NIV).” I conclude by calling for “better attention to the overlap and varieties of these biblical terms.” What I have primarily...
Ministries of Common and Special Grace
Should the President of the United States be seen as theologian-in-chief? That might be one way to understand Bryan Fischer’s claim that “we are in fact choosing a minister when we select a president.” I explore some of the dimensions of understanding politicians as “ministers of God” in this week’s Acton Commentary, “Ministers of Common Grace.” It strikes me that those who seek salvation from politicians are making a significant category mistake. Politicians cannot save because politics cannot save. Politics...
Millennials Embrace the Entrepreneurial Vocation
A recent study by Millennial Branding reveals that “Owner” is the fifth most popular job title [listed on Facebook] for Gen-Y [i.e., Millennials] because they are an entrepreneurial generation. Even though most of panies won’t succeed, they are demonstrating an unprecedented entrepreneurial spirit. The study does not speculate on the causes of this upsurge in enterprise and creativity among 18-29 year-olds, but no doubt “Mother Necessity” has her hand in it somewhere. Our country and world are facing serious financial...
Review: Blue Collar Intellectuals
“Stupid is the new smart,” and “Pop culture is a wasteland” are just a few lines from Daniel J. Flynn’s introduction to Blue Collar Intellectuals: When the Enlightened and the Everyman Elevated America. Certainly, one does not need to read Flynn’s account to surmise that there are grave problems with our culture. But many would miss some great stories and a return to a people and time that crafted a great uplifting for mass audiences. Flynn has profiled six intellectuals...
Audio: Jordan Ballor on Christian Responses to Occupy Wall Street
Jordan Ballor is a busy man. He serves as a research fellow here at Acton, as well as being the executive editor of the Journal of Markets & Morality. As if those duties don’t keep him busy enough, he also finds time to do the occasional radio interview, in this case on 101.5 WORD FM in Pittsburgh, Pennsylvania, discussing how Christians should react to the Occupy Wall Street movement. For some additional perspectives on the issue, check out this Think...
I, iPhone
The latest episode of This American Life follows the story of Mike Daisey and his investigation into the origins of Apple products, especially the iPhone which is “Made in China.” What might the iPhone say if it could speak for itself? Ira Glass provides some answers to such a question in the opening moments of this episode, “Mr. Daisey and the Apple Factory.” It’s illuminating that Daisey half-jokingly describes his devotion to Apple products in religious terms (this doesn’t prevent...
Looking Back at the 1976 North Carolina Primary
With media attention focused on the Republican presidential primaries and how the race could change as it moves South, I thought it would be good to add an update to my 2007 post, “The Spirit of 76: Reagan Style.” The Mark Levin Show linked to the piece yesterday, helping to motivate me to add a few additional thoughts and highlight a newer article on that race. In my original post, I noted the deep influence former North Carolina Senator Jesse...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved