Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Jun 15, 2026 6:50 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
Global Warming Consensus Alert: The Science is Settled!
Remember – there’s really no dispute over the evidence that catastrophic anthropogenic climate change is underway. All the models predict it; the science is solid; the consensus is broad and unshakable. Oh, and pay no attention that significant downward revisions have had to be made in recent US temperature data: Climate scientist Michael Mann (famous for the hockey stick chart) once made the statement that the 1990’s were the warmest decade in a millennia and that “there is a 95...
Baxter, How to Do Good to Many, Part 2
Readings in Social Ethics: Richard Baxter, How to Do Good to Many (London, 1682; repr. 1830), part 2 of 3. References below are to page numbers. On Motives: Human works are God’s appointed means of grace: “It is God’s great mercy to mankind, that he will use us all in doing good to one another; and it is a great part of his wise government of the world, that in societies men should be tied to it by the sense...
T.S. Eliot & Ritualistic Nihilism
Lately, I’ve heard one too many emo kids misread T.S. Eliot as being one of their own. In Russell Kirk’s words, it is easy for the “rootless and aimless” of the new generation to over-identify with Eliot, seeing him as a spokesman “for the futility and fatuity of the modern era, all whimper and no bang — a kind of Anglo-American ritualistic nihilism.” And whining, pining, Anglo-American ritualistic nihilism is the cultural trend of the day, whether you look at...
Book Review Roundup
Here are some book reviews of note from recent weeks that you may find to be of interest: Charles H. Parker. The Reformation of Community: Social Welfare and Calvinist Charity in Holland, 1572-1620. Cambridge Studies in Early Modern History. Cambridge: Cambridge University Press, 2006. xv + 221 pp. Illustrations, map, tables, notes, sources cited, index. $37.99 (paper), ISBN 0-521-02540-0. Reviewed by Victoria Christman, Department of History, Luther College.Gertrude Himmelfarb. The Moral Imagination: From Edmund Burke to Lionel Trilling. Chicago: Ivan...
Baxter, How to Do Good to Many, Part 3
Readings in Social Ethics: Richard Baxter, How to Do Good to Many (London, 1682; repr. 1830), part 3 of 3. References below are to page numbers. Concluding Consectaries: These consectaries are aimed at Baxter’s audience, wealthy Christian merchants. Baxter examines in some particular detail suggestions for the right use of their charitable funds and efforts: “Might not somewhat more be done than yet is, to further the gospel in your factories, and in our plantations?” (329)Concerning Christians abroad who are...
Sicko and the Sick Man of the Great White North
Time sure does fly. It’s been almost two years since I called Canada’s government-run health care system “The Sick Man of the Great White North” and wrote: Canada’s system may be the gold standard for government-run health care, but only if you’re looking for a system that can’t provide essential medical services in a timely manner. Sadly, nothing much has changed in the interceding time between that post and now. In fact, things are very much the same: Canadians still...
Global Warming Consensus Alert: Flaming, Earth-Crushing Death!
Remember the 2004 tsunami in Indonesia and Sri Lanka? I distinctly remember people making jokes about how they’d find a way to blame the whole catastrophe on global warming. Note to self: climate change hype is beyond parody: Unlike most apparently intractable problems, which have a tendency to go away when examined closely and analytically, the climate change predicament just seems to get bigger and scarier the more we learn about it. Now we discover that not only are the...
Marketing is the New Finance
No doubt feeding the fears of those who believe that global corporations pose the greatest threat to the future flourishing of humanity, such multi-nationals are beginning to hire their own economists, much like governments have their own financial and economic experts. See, for instance, this interview on the WSJ Economics Blog with UC-Berkeley economist Hal Varian, who has taken a position as chief economist with Google, Inc. Where will Varian be focusing his attention? In his words, “I think marketing...
In Service with and for Others
While I was in seminary in Kentucky, students were required plete a relatively extensive service project that assisted and helped the poor and marginalized in munity. My group volunteered at a teen pregnancy center, others at nursing homes, or with organizations like Habitat for Humanity. At the pregnancy center we led job training, financial classes, and other practical skills for work and the home. A different group went another direction, they passed out petitions that called upon the federal government...
The New Martyrs
People light candles below a wooden cross at a site south of Moscow where at the height of Josef Stalin’s political purges 70 years ago firing squads executed thousands of people perceived as enemies munism. (AP) “Martyrdom means a great deal to Orthodox people,” writes historian James Billington in “The Orthodox Frontier of Faith,” an essay collected in “Orthodoxy and Western Culture,” a volume of essays published in honor of Jaroslav Pelikan (St. Vladimir’s Seminary Press, 2005). The 20th Century’s...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved