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. Between 1870 and 1930, the biggest-ticket item on every household budget besides the house itself was its piano. The entire American piano industry rose up, conquered all, and went away, as Japan, Korea, and China took up the task. There was no great calamity. FULL ARTICLE
Source link: http://blog.mises.org/9081/the-end-of-the-us-piano-industry/
The End of the US Piano Industry
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Greg,
Mr. Tucker is performing an economic analogy. He is not arguing in front of Congress. He is doing this as a learning exercise for those of us who are trying to better understand Austrian Economics, and its application to the real world.
As others have pointed out here, the article was well written and informative. It provides and interesting and fun perspective on how the market could work in the auto industry were our government less intrusive. I personally find hope in his example since the piano industry has continued to evolve over all these years, despite the changes in consumer demand and the people who supply the pianos.
Mr. Tucker’s analogy holds because demand for cars has shifted, just as demand for pianos did in the past. In addition, the cost of supplying pianos in made in the USA has caused pianos made here to go up in price thus making them less competitive in the market. The same is now happening to the Auto Industry. These economic laws apply to every good, despite what that good is. To use an old econ 101 example, it doesn’t matter if you’re measuring guns or butter, the laws of supply and demand work the same way… same goes for Piano’s and Cars.
I know this is obvious to the regulars here, but:
http://jim.com/econ/chap14p1.html
Greg: “If you take this approach in front of Congress or the American people, it would go no where….. Spend less time comparing one industry with another in history and spend more time researching the bills and proposals. Then forecast the effects of these on the market.”
I do think this criticism is valid. And I do think Austrians and libertarians miss these opportunities often.
Chris Jordan: “A high percentage of piano tuners are commenting today. Where do they all come from?”
Out of the woodwork. (Ba-dum cha) : )
Finally, as a creature of habit, where would I be every morning without my freshly ground Starbucks coffee, spot by the window, and peter helbich’s pall parrot-like contribution. Talk about “where do they come from?…”
But like a crazy uncle we hide from the guests, if it were absent, I suppose I’d miss it.
Cheers.
F.
Very interesting comparison. Shall we use the same metaphor for the American investment bank industry? It, too, has ceased to have a market. Why did we not let that industry expire?
S. Diering, I can’t speak for “we,” but Congress (not we) is attempting to resuscitate a number of firms that work in the investment banking market.
The market cannot expire anymore that communication can expire, or trade can expire. So long as two individuals will exchange promises or goods, the market exists.
Don’t equate the health of a corporate entity that benefits moronic limousine liberal CxOs with “the market.” Yuh, I know, they all want you to believe that “they” are the “market” so that “we”, as you put it, prevent them from expiring.
By the way, anybody hear Donald Trump being interviewed by Greta Van Susteran the other day? What a charlatan. No, not Greta! How sad that he’s given the time of day. Goes to show you that you can accumulate wealth beyond a pharaoh and still not have the sense to utter an accurate comment or articulate an novel assessment.
He provided the example of the investment banking industry receiving a government bailout and then using those funds to buy a Chinese bank rather than reorganize its debt. Okay, fair criticism. Next? He just kept reiterating his comment, like an Alzheimer’s patient, waving this herring around the room, over and over and over again.
Then he went on to say that “nobody can get credit, not the richest man in the world, not me, not you, you make a good salary, you can’t get any credit…..”
I must be on Mars. I don’t have the wealth of his housekeeper and I just acquired a note for my small business, my brother got a loan for his new car, and my buddy remortgaged his home. A new plaza is being built down the street, and an office building in the next town is being constructed mainly on leveraged capital.
I guess credit means something different when you’re building hotels. Then again, he often refers to his hotel bankruptcies as a “success.” No kidding.
You’re fired, Donald.
One argument for the auto bailout is simply this: America needs to have manufacturing capability. One would cite WWII as an example. Ford auto plants were turning out all sorts of military equipment and vehicles to help win the war. The argument continues in saying by letting these firms go, the plants will be sold off or let to rot. Either way our industrial base withers.
Whether you agree or not is not the point. The piano industry (to my knowledge) did not produce tanks and jeeps in our time of need so I’m not buying the FDR bailout comparison.
But I disagree with the national defense argument for saving these companies. We (the U.S.) have many defense firms like General Dynamics who purchased Chrysler Defense. Chrysler designed the M1A1 tank and I would assume similar actions would take place should Ford and GM die. The assets worth saving will be saved.
Will people buy more cars next year if there is a bailout of the Big 3 than if there is no bailout ?
Will the economy stop going down with a bailout or without it?
“The American piano industry was the greatest in the world, not because the Americans came up with any new and great manufacturing techniques, though there were some innovations…” One such innovation, which some might regard as a great manufacturing technique, was the introduction of the assembly line. This occurred in the piano manufacturing village of Steger, Illinois, a full decade before Henry Ford developed that technique (for the assembly of magnetos in his Model T). The production capacity of the Steger factories surged to a claimed 100 per day.
In 1893 German immigrant John V Steger came to the community then called Columbia Heights, which lay on the line between Cook and Will Counties, bought one of the existing piano factories, paid $400 for the privilege of renaming the village after himself, bought the second factory, and started a third. One of his daughters married piano-tuner Henry G Johnson (my father’s double-cousin) and, in due course, Henry became general superintendent of all three factories.
According to a publication of 1912, entitled The Story of Seger, Ill.; A Labor Tragedy, by William Geppert (p. 55) “Henry Johnson organized the Steger factories so that it is possible to use unskilled labor on the class of goods being produced there. Each man does only one thing, one part of a process, and no great amount of practice or skill is required to learn how to do it.”
Part of the “tragedy” was that (p. 123) “Steger was one of the first manufacturers in the Middle West to displace native or German-born labor with what is commonly termed ‘Guinea [Italian and Greek] labor.’”
Johnson resigned in 1911 after receiving two bullets, through the arm and the back, on a dark October night while walking home. Geppert was found guilty of blackmail and sentenced to 2 years in prison and fined $2000 in 1913. Steger drowned mysteriously in his own factory reservoir on a Sunday afternoon in 1916. His piano business went bankrupt in 1926. The advent of the phonograph and radio was blamed.
Just in the interest of factual accuracy:
Way up there, I posted about companies besides Steinway still making pianos in the U.S. It seems my information on Baldwin — a true icon of the American piano industry — was a few days out of date. It hasn’t been widely publicized yet, but they just ceased production at their plant in Arkansas. Baldwin, owned by Gibson Guitars, will now be making all its pianos in China.
http://www.trumanndemocrat.com/story/1484097.html
As a recording studio owner and multi-instrumentalist, I’ve seen the rapid growth and advancements in technology, particularly in the past 10 years, to the point that anyone with a decent computer can purchase a sample library for less than the cost of a cheap electric piano. In playback or recordings, you virtually cannot tell the difference between a “real” piano, and a “sampled” piano, because you ARE listening to a recorded Steinway ‘D’, or a Bosendorfer, or a Yamaha C7 when you hear a “sampled” library. I’m not a rich man, so why would I spend thousands upon thousands of dollars for ONE piano when I can get the sampled library of (often times) 3 or 4 world class pianos for less than $400?
Of course, who wouldn’t want a beautiful grand piano sitting in their living room? The only thing a ‘real’ piano offers vs. the ‘fake’ is the actual resonance and vibrations, which are so hard to emulate. Technology is a good thing, but it’s also a negative aspect. Times change, and our tools change, but as long as we’re making music, and certain traditions are kept alive, that’s the important thing.
Having worked in the music industry for well over 40 years I was always amazed how this industry always was in reverse of the general economy. In inflationary times our business always went extra strong and we were always working overtime to keep up with the demand.In this present economic downturn something is far different this time and business is down in general across the board.
Executives at Steinway musical have seen fit to treat lifelong workers with contemp and morally bankrupt behavior to try and sustain the bottom line.
As witnessed by what is happening across America ,greed and coruption by corporate executives are contributing to the downfall of this nation.
Having worked in the music industry for well over 40 years I was always amazed how this industry always was in reverse of the general economy. In inflationary times our business always went extra strong and we were always working overtime to keep up with the demand.In this present economic downturn something is far different this time and business is down in general across the board.
Executives at Steinway musical have seen fit to treat lifelong workers with contemp and morally bankrupt behavior to try and sustain the bottom line.
As witnessed by what is happening across America ,greed and coruption by corporate executives are contributing to the downfall of this nation.
Corporate execs desperately need to start reading W. Edwards Deming… Heck, even in Japan the pianos aren’t really any better than vintage American pianos. Nobody is innovating anymore.
I did enjoy this article, but I have to say it might be the worst comparison of things that I have come to see. This information could not be more off. I understand that the piano industry was big, but it does not even touch the impact of the automobile and every day life. Just another un-educated article.
A piano dealing friend of mine once said that the problem with the piano industry is that you sell a family a piano, then don’t see them again for 80 years. They are durable and get “handed down” in families. Lots of used ones still have music left in them, thus selling well in recessions.
The piano, by the way, is as important to musical life as the auto is to everyday life. All non-keyboard majors in music school must study piano in order to understand theory (harmony) on a practical level and be self-sufficient in their score study and preparation when they become singers, choir directors, band directors, etc.
That’s one of the things that killed the piano market… so many pianos were sold, and such high quality pianos at that, that the market is saturated with used instruments. Why buy a new steinway when you can have a fully restored vintage steinway or chickering at less than half the price?
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