Thursday, December 18, 2008

On Pianos and Automobiles

Jeffrey Tucker at the Mises Institute has written an interesting article on the U.S. piano industry and its parallels to the current problems facing the U.S.automotive industry. As he points out,
Today the highest-price good that people buy besides their houses is their car, and this reality leads people to believe that we can't possibly let the American car industry die.... What about the time before the car? Look at the years between 1870 and 1930. As surprising as this may sound today, the biggest-ticket item on every household budget besides the house itself was its piano. Everyone had to have one. Those who didn't have one aspired to have one. It was a prize, an essential part of life, and they sold by the millions and millions.

As it turns out, the piano industry followed a pattern similar to that of the automotive industry: At one time U.S. pianos were the best and the economic conditions in the U.S. permitted piano manufacturers to be successful exporters. After 1930, piano sales began a decline lasting until after WW II. In 1960, foreign producers (notably Japanese producers) began competing and by 1980 only Steinway remained as a domestic piano manufacturer.

Was there a bailout of the U.S. piano industry? No. Rather, the market for U.S. made pianos largely collapsed due to economic pressures. Should the U.S. and Canadian governments bailout U.S. car makers (the Canadian government has offered loans to those producing in southern Ontario, contingent on U.S. support)?

In the end you have to ask, is it really worth trillions in subsidies, vast tariffs, impositions all around, just to keep what you declare to be an essential industry alive? Well, eventually, as we have learned in the case of pianos, this is not essential. Things come and things go. Such is the world. Such is the course of events. Such is the forward motion of history in a world of relentless progress generated by the free market. Thank goodness that FDR didn't bother saving the US piano industry! As a result, Americans can get a huge range of instruments from all countries in the world at any price they are willing to pay.

Today government is even more arrogant and absurd, and it actually believes that by passing legislation it can save the US car industry. It can subsidize and pay for uneconomic activities, and pay ever more every year. The government can also pay millions of people to make mud pies because mud pies are deemed to be an essential industry. You can do this, but at what cost and what would possibly be the point? Eventually, even the government will have to accord itself to the reality that economics reminds us of on a daily basis.

1 comment:

Gordon said...

So true Rob. Because, as in the Dirty Thirties (so named for the coal stains left on the ivory keys by West Virginian miners, so eager to show off their purchase of a piano that they rushed to the bench before the needed scrubbing with lye), the automobile is a luxury. In no way are our cities mapped out with the car in mind. It's not like back then they arranged for subdivisions with sufficiently wide and flat roadways to allow for easy transport of the piano. And like in the 30s, it will be a simple task to let the cars that people already own to rust and die, because there is no cost to not having a car.

"this is not essential"

Thus Spoke Zarathustra

We will just ride kazoos to work. The poor will use comb and tissue.