'Shark Tank' Inventor Loses Big to 'Buy American' Fallacy

[falconplayer11]

Thought you all would enjoy this article. If you haven't seen Shark Tank, it's a show where entrepreneurs/inventors bring their ideas before a panel of billionaire investors and try to get them to invest in their enterprise. Donny McCall, inventor of Invis-a-Rack, recently lost a $100,000 deal because he refused to outsource, claiming that doing so would not help his country and his hometown.

http://hanseconomics.com/2012/02/12/reality-tv-inventor-loses-big-to-buy-american-fallacy/

Thoughts? Obviously, there the idea of "Made in America" is rousing, but it can be very destructive economically.

 

[axiomata]

I saw that episode and it was painful to watch the guy refuse to acknowledge what the market was willing to bear.

He thought he was making Americans richer but in actuality he made the whole world, including Americans, poorer since we don't have access to his invention.

 

[falconplayer11]

He didn't even offer a defense of his position. He was very stubborn.

 

[jkr]

sooooo no more jobs then?

 

[Mark37snj]

The full ramifications of outsourcing are starting to pile up. I have a friend who has a business in China doing language translation. He said because China is becoming so corrupt and it's red tape has expanded dramatically he is now losing money and will half to shut his business down soon if it does not turn around. It's one thing to deal with one countries laws, regulations, logistics, and corruption all within your home country, its another thing to half to deal with it in foreign countries.

http://articles.latimes.com/2011/feb/15/business/la-fi-hiltzik-20110215

http://www.evolvingexcellence.com/blog/2011/02/the-outsourcing-lesson-of-boeing-part-1.html

 

[falconplayer11]

The full ramifications of outsourcing are starting to pile up. I have a friend who has a business in China doing language translation. He said because China is becoming so corrupt and it's red tape has expanded dramatically he is now losing money and will half to shut his business down soon if it does not turn around. It's one thing to deal with one countries laws, regulations, logistics, and corruption all within your home country, its another thing to half to deal with it in foreign countries.

http://articles.latimes.com/2011/feb/15/business/la-fi-hiltzik-20110215

http://www.evolvingexcellence.com/blog/2011/02/the-outsourcing-lesson-of-boeing-part-1.html

Obviously outsourcing can be done poorly. But outsourcing can also be done very profitably.

 

[GeorgiaAvenger]

I remember this. He sounded like a great man, but ignorant.

He doesn't understand that if he outsourced he would create more American jobs, as opposed to doing nothing.

 

[Brian4Liberty]

Hopefully this guy will be successful making this product in the US.

 

[RonRules]

The Ron Paul solution is to get rid of the minimum wage.

 

[rockerrockstar]

I think outsourcing is bad. I think getting rid of minimum wage is bad too. We should support American made goods. Apple should have made iphone and ipad in America. They charge enough for the devices they could make them here. Kinda like the super expensive clothing that is made in foreign land. Don't tell me they could not make them in America. We should not have to compete with workers in foreign lands that have no protections that is why we should have tariffs.

 

[heavenlyboy34]

I think outsourcing is bad. I think getting rid of minimum wage is bad too. We should support American made goods. Apple should have made iphone and ipad in America. They charge enough for the devices they could make them here. Kinda like the super expensive clothing that is made in foreign land. Don't tell me they could not make them in America.

Stick around, and you'll learn better than to think that.

 

[falconplayer11]

I think outsourcing is bad. I think getting rid of minimum wage is bad too. We should support American made goods. Apple should have made iphone and ipad in America. They charge enough for the devices they could make them here. Kinda like the super expensive clothing that is made in foreign land. Don't tell me they could not make them in America. We should not have to compete with workers in foreign lands that have no protections that is why we should have tariffs.

You're wrong.

 

[Charlie Harris]

Some of you honestly don't understand economics. Outsourcing will create jobs here in the United States, but it will create more consumption jobs rather than manufacturing jobs. A consuming economy is a shrinking economy.

 

[Chainspell]

I think outsourcing is bad. I think getting rid of minimum wage is bad too. We should support American made goods. Apple should have made iphone and ipad in America. They charge enough for the devices they could make them here. Kinda like the super expensive clothing that is made in foreign land. Don't tell me they could not make them in America. We should not have to compete with workers in foreign lands that have no protections that is why we should have tariffs.

/points a finger at the newbie

 

[Greg Buchanan]

The current foreign trade tariff is 1%, this should probably be around 20%, if a foreign nation can still compete, more power to them. Same story for out-sourcing labor, force companies to pay minimum wage.

 

[specsaregood]

Stick around, and you'll learn better than to think that.

pfft. free trade is incompatible with a global fiat debt currency.

 

[noxagol]

A lot of companies here in America will buy parts from foreign locations and make the final assembly here in the states because it is cheaper to do so. If you draw back on their ability to get the foreign made parts, you cut back on their ability to do business.

An example:

 

[Anti Federalist]

Thought you all would enjoy this article. If you haven't seen Shark Tank, it's a show where entrepreneurs/inventors bring their ideas before a panel of billionaire investors and try to get them to invest in their enterprise. Donny McCall, inventor of Invis-a-Rack, recently lost a $100,000 deal because he refused to outsource, claiming that doing so would not help his country and his hometown.

http://hanseconomics.com/2012/02/12/reality-tv-inventor-loses-big-to-buy-american-fallacy/

Thoughts? Obviously, there the idea of "Made in America" is rousing, but it can be very destructive economically.

Good for him.

 

[sparebulb]

Good for him.

Ditto

Here is his website. It looks like a good product. http://invisarack.com/

 

[MooCowzRock]

I think outsourcing is bad. I think getting rid of minimum wage is bad too. We should support American made goods. Apple should have made iphone and ipad in America. They charge enough for the devices they could make them here. Kinda like the super expensive clothing that is made in foreign land. Don't tell me they could not make them in America. We should not have to compete with workers in foreign lands that have no protections that is why we should have tariffs.

Take a couple of economics classes, Comparative Advantage is the key topic you want to pay attention to. The theory essentially explains how protectionism in trade hurts Americans. It protects current American producers, but its bad for the world and bad for foreign producers and bad for American consumers. In the end, you end up with a dead weight loss, a loss of potential gains that you could have had otherwise. As much as it seems intuitive that keeping these jobs in America is the best thing for Americans, it is actually a fallacy and hurts us in the long run. It makes us less competitive in the world, increases prices, slows down advancement into new technologies and new industries.

Here is the wiki on it which will explain the concept:

http://en.wikipedia.org/wiki/Comparative_advantage

A very very good book I would recommend reading is this if you want a very short, but very effective and easy to read explanation of Comparative Advantage in a less theoretical context:

The Choice: A Fable of Free Trade and Protectionism