The ‘Race To The Bottom’ Trap: Why Companies Produce Low Quality Products

Ever wonder why companies keep producing low quality products that are not only bad for people but the planet as well? I do. In fact, I’ve thought about it since I was a kid. But it wasn’t until my early twenties when I began pondering how we could redesign society to make it better did I learn why this happens in our current world.

The race to the bottom trap is a concept that can help us consider how our current societal infrastructures incentivizes companies to engage in this type of behaviour in order to continue operating ‘successfully.’ In this case we’ll define success as gaining financial wealth.

This concept also helps us pull our minds out of the idea that companies are just evil and unethical and allows us to begin seeing the bigger problem at hand a little bit more clearly. If we can truly identify any problem and the various ways the problem connects with other areas of society, we can begin solving problems at their core.

Race To The Bottom Trap

Investopedia defines this concept as,

“The race to the bottom refers to a competitive situation where a company, state, or nation attempts to undercut the competition’s prices by sacrificing quality standards or worker safety (often defying regulation), or reducing labor costs.”

You’ve likely recognized this happening in our world. Apple changes its quality of components to save money and compete in the marketplace better. The result is a more expensive product that is worse, not to mention the story of Apple’s sweatshop like conditions in China where their phones are made.

Let’s look at a hypothetical example. Four companies begin making breakfast cereals for children. At the onset of their ventures, the companies are using high quality ingredients, maybe even organic, to make their cereals. There are no sugars, added color or nasty preservatives. As time goes on the companies are making money competing with one another but eventually the shareholders of one company start to feel a little antsy during an economic downturn and want more returns on their investments.

In order to appease shareholders, that company decides they’re going to cut costs to increase profits. They change out their high quality wheat for a cheaper GMO counterpart. They add high fructose corn syrup and artificial colors to the mix by adding colorful marshmallows to the cereal. This not only drives down the cost of their once high-quality product but now also creates an addiction to the product in the children who are eating the food. Heck, adults might even get involved. Expanded market!

In an attempt to keep up with now dropping profits, the other companies begin following suit and coming up with their own ways to save money with their cereals. After all if they don’t, they will lose the game of making money and staying in business. So, insert lower quality ingredients, research sugar addiction and implement best practices, and find a way to get kids identified with nice mascots on the boxes. Of course this sort of happens one step at a time. Stretching our ethics and morality with each step.

This game will go on and on until the quality of the food is eventually so bad while at prices in alignment with what consumers will and can pay. But being lost is a generation of kids who are not well-nourished and who are addicted to sugar or high-fructose corn syrup. Profits win and the collective health of society loses.

You might argue that by running business this way we employ more people and therefore people with money means and increase in quality of life. But the problem with that argument is it fails to recognize we’re playing a rigged game that we invented and one that we can change. The primary reason why we continue with our current game is because we’ve been convinced this is the best we can do. We accept this as the vast majority of us don’t even question or understand how our systems are rigged.

Vote With Your Dollar?

You might also feel that voting with your dollar is the way to go. And perhaps in some cases this might work. This may also be a way to solve short term problems that occur, but is it truly a long term solution?

Voting with your dollar means accepting higher costs associated with high quality products, – perhaps a standard of products that should be what we aim for to begin with.

If consumers decide to vote with their dollar in one area of the marketplace, are they going to have enough money to vote with their dollar in other areas of the marketplace? Most likely not. In fact, the vast majority of people can’t even afford to ‘vote with their dollar’ given the state of local and planetary poverty. Thus, a large market for low quality products will always exist.

Another key design within our economic system is that the rich will always get richer and the poor will always get poorer. Inflation will always make it so that voting with your dollar becomes more and more difficult every year that goes by. Can we expect something different from this system?

The Solution?

This is the hardest part of this discussion. It’s primarily because it invites people to forget everything they know, have studied and come to learn how to master about being a cog in the wheel of our system.

The solution to a problem like this isn’t necessarily centred around lobbying government to subsidize organic ingredients so the breakfast cereal companies can offer a higher quality cereal at a lower price. Perhaps this type of action can create an isolated short term solution, but what other problems will arise from switching where subsidies go? Who will get mad next? Do people want to be taxed more?

Attempting to solve that one isolated problem is likely to create more problems elsewhere given the design of our current society. We need to think about a new system all together. And then put a plan in place to transition towards it quickly.

Wholesale discussion around redesigning society is where we are at. As someone who has been thinking about this for almost 20 years, it’s exciting to see how many people around the world are embracing this reality as well.

As much as that seems like a difficult discussion because most people can’t imagine a society outside of what we currently have, it is our only option. Instead of spending hundreds of hours in large meetings and events talking about how we can make minor changes within our existing systems, which most of the time will just create more problems, perhaps we could bring minds together to talk about an entirely different redesign of society that puts quality of life and human thriveability at the top of the list of priorities.

Our current society does not prioritize quality of life for all humans. It does not prioritize the thriveability of the planet, animals and humans either. For humans, little thought is put into emotional health, mental health, spirit or joy. We’re workers. Producing widgets and keeping the economy continually growing. How does one expect a world to produce a high quality of life when it’s literally not the priority of the societal structures it’s built upon?

Where Do We Start?

Where does this all start? Well, a shift in the way we analyze problems is certainly one thing that needs to happen. Instead of seeing things simply on the surface level and rushing to identify the isolated issue, can we stretch our minds to see how issues are connected? Can we move beyond political ideologies to see other ways of looking at problems? Do we truly take the time to understand another person, each other’s experiences and what life is like for each of us?

I believe many of these qualities to be the foundation of our way beyond many of the challenges of today. But it will take a focused intention to grow these qualities and capabilities within ourselves in order to get there.