The race to the bottom was predicted by Malthus, Bentham, Ricardo and Marx. Smith and Keynes were optimistic about being able to avoid it, and Mill noncommittal. It has been on since the very beginning, and has been recongnized as a real phenomenon or a future risk since the beginning of modern economics.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman