Home
/
RELIGION & LIBERTY ONLINE
/
The fallacy of capitalism’s ‘race to the bottom’
The fallacy of capitalism’s ‘race to the bottom’
Sep 13, 2025 1:02 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
Merry Christmas(*)
I have just returned from a week of holiday rest, and began tackling my 250 lb. email inbox. Flipping through a number of Christmas greetings and Fruitcake (Xmas spam), I came across a quick message from a dear friend, an email of the sort where the message is in the subject line, and the text is left empty (save mon signatures or disclaimers). My friend is a lawyer, I respect him very much, but I had to laugh at how...
2006 in Review, 2nd Quarter
Our series on the year in review continues with the second quarter: April “Surprise! Evangelical Politics Isn’t Univocal,” Jordan J. Ballor So from issues like immigration to global warming, the press is eager to find the fault lines of evangelical politics. And moving beyond the typical Jim Wallis-Jerry Falwell dichotomy, there are real and honest disagreements among evangelicals on any number of political issues…. May “How Do You Spell Relief?” Jordan J. Ballor If Congress really wants to address the...
Remembering Gerald Ford
The Acton Institute’s offices are right across the Grand River from the Gerald R. Ford Presidential Museum (and what will be Ford’s final resting place). Having passed these sites every day for several years on my walk to work, news of the ex-president’s death was especially poignant. National Review Online offers an interesting symposium on Ford’s presidency and legacy. From the other side of the ideological divide, Newsweek provides several retrospective pieces. A striking thing about Ford that I hadn’t...
2006 in Review, 3rd Quarter
Our series on the year in review continues with the third fourth of 2006: July “Isn’t the Cold War Over?” David Michael Phelps I’ve got an idea for a new . Titled, Hugo and Vladi, it details the zany adventures of two world leaders, one of whom (played by David Hyde Pierce) struggles to upkeep his image of a friendly, modern European diplomat while his goofball brother-in-law (played by George Lopez) keeps screwing it up for him by spouting off...
Recidivism and Reform: Competing Views of the State’s Role in Prison
In this week’s mentary, I reflect on the past year’s developments for InnerChange Freedom Initiative, a ministry of Prison Fellowship. In June a federal judge in Iowa ruled against IFI’s work at Iowa’s Newton facility. In his ruling (PDF here), the judge wrote that the responsibility bating recidivism is “traditionally and exclusively reserved to the state.” This means that since reducing recidivism is a “state function,” anyone working bat recidivism is by definition a “state actor.” Panopticon blueprint by Jeremy...
Movie Review: An Inconvenient Truth
Several weeks ago now I was offered a review copy of Gore’s Inconvenient Truth. After watching it on a cross-country flight in November I elected to let Gore’s expos’e sink in a bit before I pasted my thoughts more or less permanently on the web. Thanks in advance to Rachel Guthermann of Special Ops Media for being patient with me on posting the review. It’s probably fitting to end the year with a nod to this influential movie; it’s pelling...
Single-payer Schemes=Supply Shortages
Go to this page to watch a short video highlighting the story of one man’s fight against Canada’s health system. The film is focused on the defects of socialized medicine and so, naturally, does not deal with the serious problems existing in other systems (such as the United States). But it is an effective display of a problem that every attempt to manipulate prices encounters: how to make supply meet demand. ...
2006 in Review, 4th Quarter
Our 2006 year in review series concludes with the fourth quarter: October “Do You See More than Just a ‘Carbon Footprint’?” Jordan J. Ballor It’s a fair question to ask, I think, of those who are a part of the radical environmentalist/population control political lobby. It’s also a note of caution to fellow Christians who want to build bridges with those folks…there is plex of interrelated policies that are logically consistent once you assume the tenets of secular environmentalism…. November...
Never a Countdown on Effective Compassion
The “10 years after welfare reform” articles of this past summer are old news, of course. Not surprisingly, indications were that, like any public policy, reform hadn’t been the all-time poverty solution, but that policies had, in fact, helped a significant number of people to move themselves to self-sufficiency. A recent Wall Street Journal series highlighted the broad range of issues related to moving out of poverty. panion piece to the December 28 entry, “Economists Are Putting Theories to Scientific...
Who Really Cares for the Poor?
Syracuse University professor Arthur Brooks challenges perceived mainstream social orthodoxy in his new book, Who Really Cares: America’s Charity Divide – Who Gives, Who Doesn’t and Why It Matters. For generations it has been assumed that political and social liberals are generous towards the poor while conservatives are proverbial tightwads. At least since the days of Charles Dickens’ Scrooge this has been the popular view. Liberals continually remind us that they are the ones who really care about welfare since...
Related Classification
Copyright 2023-2025 - www.mreligion.com All Rights Reserved