Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Jan 6, 2026 3:08 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
The gift of the Incarnation
All of life is God’s gracious gift. This graciousness applies not only to ourselves and our neighbors, each of whom is made in His image and likeness, but applies as well to the whole of creation which was entrusted to the human family’s care and cultivation (Gen. 1:26-31). This gracious gift, both of ourselves and the creation, was marred by our own disobedience, born of ingratitude, and resulted in our separation from that gracious Giver. Sin and death are the...
The government funds U.S. farmers – and their competitors
When government es sufficiently large, its impact on private citizens is not just harmful; it’s self-contradictory. U.S. policy toward dairy farmers offers a poignant example. Joseph Sunde recently explored one aspect of U.S. agricultural policy: The Food and Agriculture Act of 1977, signed by new President Jimmy Carter, intended to artificially raised the price for dairy products (and led to a 500-million-pound stockpile of “government cheese”). Government intervention in the market, which inevitably confuses price signals, forced U.S. consumers to...
Explainer: What was in the Queen’s Speech of December 2019
On Thursday, December 19, 2019, Her Majesty Queen Elizabeth II delivered her 66th Queen’s Speech. The speech – which followed her last Queen’s Speech by just two months – set out the policy agenda of the newly emboldened Prime Minister Boris Johnson for this term of Parliament. For an explanation of the Queen’s Speech, which opens every session of Parliament, see this article. Today’s speech, which made reference to more than 30 pieces of legislation, touched on the following topics:...
Slavery, Shmi Skywalker, and Star Wars
As the final installment of the final trilogy of the Star Wars saga opens today, it’s worth thinking about where this blockbuster franchise and cultural phenomenon started. And by that I mean where the story of Anakin Skywalker started in Episode I: The Phantom Menace. I got to revisit some of this as the earlier movies have been playing on repeat on cable TV leading up to today’s opening. The part I noticed as I flipped through the channels was...
Acton Line podcast: Breaking down Lyndon B. Johnson’s Great Society with Amity Shlaes
On May 22nd, 1964, Lyndon B. Johnson launched his program for a “Great Society” in a speech at the University of Michigan. “The Great Society rests on abundance and liberty for all,” Johnson began. “It demands an end to poverty and racial injustice, to which we are mitted in our time. But that is just the beginning.” 84 bills later, Johnson’s war on poverty was in full effect, expanding to sectors in education, medicine, housing, and many more. Did the...
Wine caves or fox holes?
The sixth Democratic primary debate featured seven presidential hopefuls and four references to wine caves. The candidates’ rhetoric should bring the issue of wealth and political power into greater clarity than a Swarovski crystal. The term “wine cave” lit up the internet after Senator Elizabeth Warren used cabernet as a cudgel against South Bend Mayor Pete Buttigieg. “Mayor Pete” held a closed-door fundraiser at the Hall Rutherford wine caves of California’s Napa Valley, giving her a line of populist attack...
Clarence Thomas on the harmony of faith and reason
In the Christmas season, the secular West begrudgingly nods toward its faithful past. Yet amidst the darkness, Supreme Court Justice Clarence Thomas joined with one the nation’s most distinguished colleges to highlight patibility of faith and reason. Justice Thomas spoke at the dedication of Hillsdale College’s Christ Chapel on October 3, 2019. Thomas told the students that a university chapel joins two of the institutions on which liberty relies: Christ Chapel reflects the College’s conviction that a vibrant intellectual environment...
Christmas consumerism: Spending for the glory of God?
The Christmas shopping season is well underway—and with it, a peculiar blend of hyper-generosity and hyper-consumerism. Indeed, while many celebrate the social and spiritual glories of gift-giving and merriment, others are quick to warn about the steady creep of materialism and self-indulgence. Over at Made to Flourish, Matt Rusten explores these tensions, asking, “Does worshipping the Christ of Christmas necessarily conflict with the proliferation of shopping and festivities during the holiday season?” plaints are many, as Rusten aptly summarizes: “The...
Alejandro Chafuen in Forbes: the universality of the Nativity scene
Some weeks ago I met with a priest named Fr. Mike at his office in the local Curia. He is a well-trained lawyer who is now in charge of civil legal affairs for one of the largest Catholic dioceses in Europe. His work deals with donations, inheritances, real estate, and the like. Several ideas from that conversation are still fresh in my mind. One of aspect of our conversation dealt with Fr. Mike’s workload. When I saw the pile of...
Acton Line podcast: Behind China’s drive for global domination
During Christmastime in China in 2015, 1,700 churches were torn down or vandalized, a result of the Chinese government growing increasingly hostile to Christianity. In 2018, The Chinese government raided and shut down churches ahead of Christmas and detained pastors and members caught celebrating. From reports of labor camps in the country to growing surveillance through technology, China is increasingly cracking down on freedom. This is all laid out in a new book, titled Deceiving the Sky: Inside Communist China’s...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved