A race to the bottom is a socio-economic concept that occurs between nations. When competition becomes fierce between nations over a particular area of trade and production, the nations are given increased incentive to dismantle currently existing regulatory standards. Such a race may also occur within a nation (such as between states or counties), but this occurs much less frequently because the federal government has recourse to enact legislation slowing or halting the 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 instances a race to the bottom proves to be a force for good by eliminating pointless bureaucracy or graft.
In the modern age, a sharp increase in races to the bottom has been seen as a direct result of the World Trade Organization and its policies. By actively eliminating what are seen as barriers to trade (often including labor and environmental laws), the WTO begins a push towards "freer" trade, which escalates quickly into the dismantling of standards so that countries can better compete.
It may be seen that with the global push towards free trade in the 1990s, labor is now very susceptible to the race to the bottom model. With an extremely large labor pool to draw from worldwide and a virtually unrestricted ability to move capital, multi-national corporations may now freely move their operations from country to country, following the most affordable labor. This in turn affects labor laws, particularly in developing countries, where things such a minimum wage or required overtime pay create a large barrier to lowest-cost labor. The race, therefore, dictates that more and more nations (again, particularly in the developing world) will eliminate their labor laws.
