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

  1. #1

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

    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/...rican-fallacy/

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



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  3. #2

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    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.
    Last edited by axiomata; 02-14-2012 at 11:56 AM.
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  4. #3

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

  5. #4
    Member jkr's Avatar
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    sooooo no more jobs then?

  6. #5

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    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...ltzik-20110215

    http://www.evolvingexcellence.com/bl...ng-part-1.html
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  7. #6

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    Quote Originally Posted by Mark37snj View Post
    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...ltzik-20110215

    http://www.evolvingexcellence.com/bl...ng-part-1.html
    Obviously outsourcing can be done poorly. But outsourcing can also be done very profitably.

  8. #7

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    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.

  9. #8
    Master Skeptic Brian4Liberty's Avatar
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    Hopefully this guy will be successful making this product in the US.

    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Corporate-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
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  10. #9

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

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    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.
    Last edited by rockerrockstar; 02-14-2012 at 06:02 PM.

  12. #11

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    Quote Originally Posted by rockerrockstar View Post
    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.
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  13. #12

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    Quote Originally Posted by rockerrockstar View Post
    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.

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    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.

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    Quote Originally Posted by rockerrockstar View Post
    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

  16. #15

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    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.

  17. #16

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    Quote Originally Posted by heavenlyboy34 View Post
    Stick around, and you'll learn better than to think that.
    pfft. free trade is incompatible with a global fiat debt currency.
    Quote Originally Posted by Edward Snowden;
    So its, I would say; illustrative that the president would choose to say, "someone should face the music" when he knows the music is a show trial.

  18. #17

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    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:
    "Anarchists oppose the State because it has its very being in such aggression, namely, the expropriation of private property through taxation, the coercive exclusion of other providers of defense service from its territory, and all of the other depredations and coercions that are built upon these twin foci of invasions of individual rights." -Murray Rothbard

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    Needs a bigger boat Anti Federalist's Avatar
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    Quote Originally Posted by falconplayer11 View Post
    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/...rican-fallacy/

    Thoughts? Obviously, there the idea of "Made in America" is rousing, but it can be very destructive economically.
    Good for him.
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  20. #19

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    Quote Originally Posted by Anti Federalist View Post
    Good for him.
    Ditto

    Here is his website. It looks like a good product. http://invisarack.com/
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  21. #20

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    Quote Originally Posted by rockerrockstar View Post
    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

  22. #21

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    Quote Originally Posted by MooCowzRock View Post
    Take a couple of economics classes,
    Just wondering... the people that created our current debt crisis and economic situation, the same ones that couldn't see it coming and thought everything was great... those guys; did they take these couple of economics classes you speak of?
    Quote Originally Posted by Edward Snowden;
    So its, I would say; illustrative that the president would choose to say, "someone should face the music" when he knows the music is a show trial.

  23. #22

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    Quote Originally Posted by specsaregood View Post
    Just wondering... the people that created our current debt crisis and economic situation, the same ones that couldn't see it coming and thought everything was great... those guys; did they take these couple of economics classes you speak of?
    Probably, but that doesn't mean they understood them...;P

  24. #23

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    The Shark Tank investors speak out of both sides of their pie-holes. The next episode or two after the ladder rack guy was given the bum's rush, the Sharkies were all clawing to invest with a guy who invented a plastic device that assists people to learn to play the guitar. This inventor manufactured his product entirely in the US and the Sharkies were all patting themselves on the back for supporting american manufacturing and creating US jobs. These creeps practically accused the ladder rack guy of being a racist for not wanting to manufacture in China, even after he cited valid concerns such as quality and loss of intellectual property.
    "You're a far more horrible person than she (Bristol Palin) will ever be." angelatc

  25. #24
    Master Skeptic Brian4Liberty's Avatar
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    Shop around. There is nothing more key than that. The knee-jerk dogma that outsourcing is always a better option is no longer the reality. And it will be less and less as time goes on.

    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Corporate-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul


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    Master Skeptic Brian4Liberty's Avatar
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    Quote Originally Posted by sparebulb View Post
    The Shark Tank investors speak out of both sides of their pie-holes. The next episode or two after the ladder rack guy was given the bum's rush, the Sharkies were all clawing to invest with a guy who invented a plastic device that assists people to learn to play the guitar. This inventor manufactured his product entirely in the US and the Sharkies were all patting themselves on the back for supporting american manufacturing and creating US jobs. These creeps practically accused the ladder rack guy of being a racist for not wanting to manufacture in China, even after he cited valid concerns such as quality and loss of intellectual property.
    Agree. It's a freaking TV show, it's not reality.
    Last edited by Brian4Liberty; 02-15-2012 at 12:45 PM.

    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Corporate-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul


  27. #26

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    Shop around. There is nothing more key than that. The knee-jerk dogma that outsourcing is always a better option is no longer the reality. And it will be less and less as time goes on.
    Sometimes its a better option, and other times its not.

    In a free market, we can test this theory. In the long run, if outsourcing is indeed bad, companies that do it will fail and those that don't will succeed.

    If outsourcing is good, companies that do it will succeed and those that don't will fail.

    Let the free market decide.

    Of course, opponents of free trade don't want the market to decide, because the market will decide against them and in favor of outsourcing. No different from socialists that want to redistribute income because they don't like the way the market does it.

  28. #27

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    Quote Originally Posted by rockerrockstar View Post
    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.
    It's not possible for Apple to make an Ipad in America and still compete.

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    Master Skeptic Brian4Liberty's Avatar
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    Quote Originally Posted by Jandrsn21 View Post
    It's not possible for Apple to make an Ipad in America and still compete.
    Pure dogma and opinion. There is no proof of that. There are a lot of variables.

    "Foreign aid is taking money from the poor people of a rich country, and giving it to the rich people of a poor country." - Ron Paul
    "Beware the Military-Industrial-Financial-Corporate-Media-Government Complex." - B4L update of General Dwight D. Eisenhower
    "Debt is the drug, Wall St. Banksters are the dealers, and politicians are the addicts." - B4L
    "Totally free immigration? I've never taken that position. I believe in national sovereignty." - Ron Paul


  30. #29

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    Quote Originally Posted by rockerrockstar View Post
    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.
    Most of the reasons/justification for outsourcing boils down to profit margin. How much is necessary. Well that depends on who is running the company. Yeah there are some products that cannot compete with virtual slave labor found in the foreign countries. But there are many that are, it all depends on WHO is determining what the minimal profit margin is necessary. But moraless CEO's sitting around $50,000 rare wood conference tables know their jobs and bonuses depend on them getting the maximun profit margin possible. One area that is often overlooked in these discussions is trade agreements. We do not trade with every country in the world and they do not all trade with us. We have no true Free Market/Trade system. All imports and exports are determined by trade agreements. No country has the RIGHT to sell their goods in our lands and vice versa regardless if their company headquarters is located in America, regardless if they can produce it cheaper than us. Trade agreements skewed by selective tariffs which determines what type of Free Market we have and all that cheap labor benefits overseas will go right out the window along with their arguments if no trade agreement is reached with that country. Free Market then dictates that its better to make goods in America at higher price because the lower cost products cannot be sold here. Trade Agreements come first, then Free Market principles. Trade Agreements are the RULES that Free Markets half to follow.

    All Trade Agreements that the US makes should be in whats in America citizens best interest. But they are not and have not been for a long time and I have no interest in defending such a rigged Free Market system which inherently puts American workers LAST because of American worker wage requirements. I don't recall any part of the Constitution that says we have to trade with ANY country let alone ones that cheat. We are not required to raise the living standards of foreign workers. There is no higher law that says American workers MUST adopt a pay wage that is comparable to the rest of the worlds wage rate. Most of the world has a virtual SLAVE labor wage. Just because you can get virtual slave labor wages in foreign countries does not mean they should be allowed to sell in America under the guise of Free Markets because we have a rigged Free Trade system with countries cheating and not playing by the same rules that we are. You think other countries are gona allow their workforces to be decimated because American workers can do it better and/or cheaper.

    America is one of the only DUMB ASS countries that allows the backbone of their economy to be destroyed like this and yell from the roof tops that the Free Market is working. You have countries practicing in currency manipulations, back room deals with our leaders to sell out our workers in trade agreements, a system now designed to redistribute American wealth overseas because HONEST labor cannot compete with virtual SLAVE labor. But if it has any hint of Free Market in it then it must be defended at all costs. We have NO truely Free Market in the world, the system is rigged against American workers. Trade Agreements come before Free Market principles, and all of Americas Trade Agreements have sold out American workers because our leaders have sold us out for their personal gain and ideology. The powers that be are using the so called Free Market (rigged against US workers) to redistribute American wealth overseas because the labor is cheaper and using the Free Market as a smoke screen so the rich and powerfull can get the biggest dividend on their stocks porfolios.
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  31. #30

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    Quote Originally Posted by specsaregood View Post
    Just wondering... the people that created our current debt crisis and economic situation, the same ones that couldn't see it coming and thought everything was great... those guys; did they take these couple of economics classes you speak of?
    This is a subject that most economists agree on. Both free market economists and pro-govt intervention economists.

    The division of labor is a fundamental part of what makes us as humans so prosperous. International trade (and outsourcing) is simply the division of labor on a bigger scale.

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