A race to the bottom occurs between nations when competition becomes fierce in a particular area of trade and manufacturing, resulting in the dismantling of regulatory standards. This is often seen as negative, but can also eliminate unnecessary red tape. The World Trade Organization has contributed to this race, making labor laws vulnerable. Multinational corporations can now move their operations to countries with the cheapest labor, affecting labor laws, particularly in developing countries.
A race to the bottom is a socio-economic concept that occurs between nations. When competition becomes fierce between nations in a particular area of trade and manufacturing, nations receive a greater incentive to dismantle currently existing regulatory standards. Such race can also occur within a nation (such as between states or counties), but this occurs much less frequently because the federal government enacts legislation that slows down or stops race before its effects become too pervasive .
The term is often used pejoratively, to describe the elimination of what is seen as beneficial legislation: environmental safeguards or workers’ rights, for example. It should be noted, however, that in many cases a race to the bottom proves to be a force for good by eliminating unnecessary red tape or grafts.
In the modern era, a sharp increase in down bids has been seen as a direct result of the World Trade Organization and its policies. By actively removing what it sees as barriers to trade (often including labor and environmental laws), the WTO initiates a push towards more “free” trade, which quickly escalates into the dismantling of rules so that countries can compete better.
It can be seen that with the global push towards free trade in the 1990s, labor is now very susceptible to the race towards the underlying model. With an extremely large pool of labor to draw from around the world and a virtually unlimited ability to move capital, multinational corporations can now freely move their operations from one country to another, following the cheapest labor. This in turn affects labor laws, particularly in developing countries, where things like a minimum wage or overtime pay create a major barrier to cheap labour. Race, therefore, dictates that more and more nations (again, particularly in developing countries) will do away with their labor laws.
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