Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Dec 2, 2025 6:11 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
Understanding the President’s Cabinet: White House Chief of Staff
Note: This is the post #18 in a weekly series of explanatory posts on the officials and agencies included in the President’s Cabinet. See the series introductionhere. Cabinet position:White House Chief of Staff Department: Executive Office of the President Current staffer:Reince Priebus Department Budget: Primary Duties of the Secretary:While the roles of the chief of staff varies by presidential administration, they usually include the following: • Select key White House staff and supervise them; • Structure the White House staff...
UN health agency spends more on travel than on AIDS and malaria combined
The primary role of the World Health Organization (WHO) is to “direct and coordinate international health within the United Nations’ system.” But a new report finds that the UN agency is directing more money toward travel expenses than to fighting global diseases. According to the Associated Press, the WHO routinely has spent about $200 million a year on travel expenses—more than what it spends to fight AIDS and hepatitis ($70.5 million), tuberculosis ($59 million), and malaria ($61 bined. At a...
What are the arguments against international trade?
Note: This is post #35 in a weekly video series on basic microeconomics. Does trade harm workers by reducing the number of jobs in the U.S.? Is it wrong to trade with countries that use child labor? In this video by Marginal Revolution University, Alex Tabarrok discusses some of the mon arguments against international trade. (If you find the pace of the videos too slow, I’d mend watching them at 1.5 to 2 times the speed. You can adjust the...
The EU’s plan to fight ‘inequality’ is undermined by its own data – and King Solomon
Economic growth is so vibrant in Europe that it is time to begin redistributing all the excess wealth, according to EU officials in Brussels. The European Commission issued its country-specific resolutions on Monday, and it believes the recovery from the Great Recession has been robust enough for EU members to turn their vision bating “economic inequality.” “This year, addressing inequality is firmly at the heart of our assessment,” said Marianne Thyssen, the EC’s Commissioner for Employment, Social Affairs, Skills and...
Charles Murray: ‘We need a cultural Great Awakening’
In response to increasing economic disruption and drastic social shifts in American life, Sen. Mike Lee recently launched the Social Capital Project, a multi-year research project dedicated to investigating “the evolving nature, quality, and importance of our associational life.” As I recently noted, the project’s first report highlights the connections between “associational life” and the nation’s economic success, stopping short ofspecific policy solutions. “In an era where many of our conversations seem to revolve around the individual and large institutions,...
A rift with ‘Europe,’ or just the EU?
After last weekend’s G-7 and NATO summits, leading figures would have the world believe that transatlantic relations are rougher than ever, literally as well as figuratively. The media have highlighted such ephemera as President Trump’s allegedly pushing the prime minister of Montenegro and his white-knuckle handshake with French President Emmanuel Macron. European politicians, however, speak in starker tones about the twin threats of a Trump presidency and an impending Brexit. German Chancellor Angela Merkel announced her despair at a campaign...
Wim Decock named the 2017 Novak Award winner
Professor Wim Decock In recognition of Professor Wim Decock’s outstanding research into the fields of theology, religion and economic history, the Acton Institute will be awarding him the 2017 Novak Award. Professor Wim Decock teaches legal history at the Universities of Leuven and Liège (Belgium). He is an associate fellow at Emory University’s Centre for the Study of Law and Religion (USA) and an affiliate researcher at the Max-Planck-Institute for European Legal History (Germany). Decock holds an M.A. in Classics,...
Did ‘inequality’ cause the Manchester bombing?
The mind boggles as it tries prehend what could drive someone to bomb a crowd of concert-goers, many of them children, in the name of his or herreligion. Some, however, believe they have the answer: economic inequality. In a new essay for Religion & Liberty Transatlantic, Fr. Peter Farrington – a Coptic priest in the UK – notes that this facile explanation for the darkness that lies within the human heart enjoys the patronage of some of the West’s most...
25 Facts about Africa
May 25 is Africa Day, a holiday originally created to celebrate the foundation of the Organization of African Unity (now known as the African Union) on May 25, 1963. In honor of memoration, here are 25 facts you should know about the continent: 1. The continent has 54 independent states and one “non-self-governing territory” (Western Sahara). 2. Before colonial rule prised up to 10,000 different states and autonomous groups with distinct languages and customs. 3. The mon language spoken on...
MEP: This Catholic doctrine can save the EU
In secular Europe, it is rare for politicians to suggest that theEuropean Union’s expansive, imperious policies should be reformedby implementing a Christian doctrine. Yet that is precisely what a manifesto aimed at curbing EU excesses has done. The document proposes paring back the EU’s authority in the name of subsidiarity, the Catholic principle that a higher level of government should refrain from interveningin the actions of a lower level of government (and, we should add, in the actions of civil...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved