Actually, this has a bunch of different factors missing. For instance, American workers are among the most productive per wage-hour in the world. So we don't have to "race to the bottom." Instead, we can offer a better product (harder-working, more productive, better-trained employees) at a higher price. Then China gets to be the Geo Metro of the labor market, and we get to be the Mercedes-Benz. The idea that there is no differentiation in the product (the labor) being sold is one of the key problems with the "race-to-the-bottom" model.