Peavey on Undercover Boss--an unexpected ending

[Biz Prof]

Often the folks that are in charge tend to learn how to manipulate the rules (with clever lawyers and accountants).....If not outright buying favors...... rather that build a better product or customer satisfaction. Had Detroit (and other industries) only put as much attention into THEIR business rather than descending upon DC to try to stifle the competition to their "monopoly", we would all be better off today. IMHO, of course.

Reminds me of Francis Ford Coppola's cinematic take on Preston Tucker and his David-versus-Goliath battle against the Big Three.

[velorush]

Before anyone judges a company for outsourcing (disgusting and frustrating as it may seem), one should watch the documentary, "Death by China". After having worked for manufacturing industries myself, I've realized that we've opened Pandora's Box, and now many (not all) companies (depending on product and/or industry) are forced to move or else go out of business from an inability to match import prices. These days, it's less about greed and more about sheer survival.

The thing is, people cannot have their cake and eat it, too. Either we bring jobs back and pay thousands more for a product that may only cost hundreds now, or we can have our cheap goods and live with the lost jobs. But the gross disparity of labor costs between the USA and Asia will not allow for us to have both.

It would hurt in the short term, but eventually everyone would get use to the higher prices and wages, BUT the profits sound not be shipped abroad.

This was an argument my dad presented me when I began buying Japanese cars back in the early '90's. The argument began with 'you should buy 'merican to support

'merican workers.' My response was I should buy the best car on the market and allow my consumer sovereignty to stimulate domestic brands into making better cars. Then came the 'sending profits overseas' argument to which I explained profits go to shareholders. The view that Toyota (at the time) was owned by a couple of Japanese guys was naive. I owned shares of Toyota (ADR) in a mutual fund and he other Americans could too. Conversely, shares of Ford, GM and Chrysler were owned by foreign investors as well as domestic.

Later, as we moved into the '00's my 'foreign cars' actually became domestic cars (got a Honda made in Alabama and a Nissan made here in Tennessee) and his 'merican truck and car actually became foreign (made mostly in Canada and Mexico). These things matter not to me as, again, consumer sovereignty dictates my purchase. The excellent thing is (as I rode to mountain biking trails this weekend in a Ford F-250), 'merican-branded cars have come along by leaps and bounds in terms of quality. Yes, there are notable issues, but there are with other 'foreign' brands, as well. My point is, the quality differences seems to be becoming less and less an issue - it is my firm belief reduced demand is what stimulated the domestic brands to do better.

I always wonder whether companies who ship jobs overseas considered applying themselves to a higher end market and keeping the manufacturing in America, but I can't think of one who has done that.

Once those jobs are gone, they will never return. I'm one of those who feels lost jobs in America should represent much higher import tariffs on the product when it comes back.

So you prefer higher prices? Tariffs simply punish the low-cost producer AND the consumer. They create an artificial bubble in which the high cost producer can continue to exist without modifying their practices. Get the gub'ment out of the way and allow the market to stimulate efficient effective production of all goods and services. The only caveat is it has to work on both sides of the ponds. We can't have a free trade environment here while other countries subsidize their production. If you study the economics of that situation, it does eventually work itself out through trade imbalances and currency exchange rates, but it can take too long to do so.

Just my opinions.

I think you're missing one key point - most purchases made today are based upon one key element ONLY - price-point. The vast majority of the crap on Walmart/Target shelves are not there because they represent the pinnacle of production quality. They are there because of profit margin and price-point. If we remove quality from the discussion, American goods could easily compete with made-in China crap TODAY if prices were aligned. The idea that tariffs are a 'bad idea' is a free-market fallacy when 'free-markets' really don't exist, do they? Asian governments heavily subsidize and 'protect' their business interests through unfair trade practices all-day, every day. Japan does it, China does it, they all do it. Except the USA, however.

In what way was the point missed? Those items are on the shelf because people voted them there (by buying them). The quality is deemed (not by me, but by the marketplace) as acceptable. I do not understand your statement "if we remove quality from the discussion, American goods could easily compete with made-in China crap TODAY if prices were aligned." Isn't your point American products are of higher quality?

The market is reflecting the acceptability of (your valuation) lower quality goods at the price point (i.e., an 'it's good enough for me' mentality'). Yes, higher quality products are admirable, but if the higher level of quality were valued by consumers they would be chosen in the marketplace.

Hamer guitars is an excellent example. Hamer were of (IMO) superior quality to say, Gibson guitars, but as prices increased the market said 'yes, they are of higher quality, but the market did not accept the premise the additional quality was worth the price premium. Should the government of Connecticut have then stepped in and said, "Hamer, your goods are of superior quality - we hereby put a tariff on all inferior guitars being shipped in from those lowlifes at Gibson in Nashville?" I don't think so, but maybe other do.

On another note: did Gibson not receive tax abatement and other governmental benefits from Davidson County and Nashville (i.e., subsidy)? What about the ancillary plant in Memphis and Shelby County - abatements?! Ah! Unfair trade!

[ARM OF HAMER]

I only wanted to own one Peavey guitar and that was an original Odyssey............... been there and done that and I never had any interest in anything else.

[Biz Prof]

On another note: did Gibson not receive tax abatement and other governmental benefits from Davidson County and Nashville (i.e., subsidy)? What about the ancillary plant in Memphis and Shelby County - abatements?! Ah! Unfair trade!

Correct. Very similar to the sort of rent-seeking behavior that Hartley engaged in, as well. A well-informed consumer can see how a firm's behavior squares with the rhetoric of its executives', and then make a decision as to whether he participates as a willing buyer. Apparently, Henry J. has courted many, many willing buyers....I'm not one of them.

[velorush]

On another note: did Gibson not receive tax abatement and other governmental benefits from Davidson County and Nashville (i.e., subsidy)? What about the ancillary plant in Memphis and Shelby County - abatements?! Ah! Unfair trade!

Correct. Very similar to the sort of rent-seeking behavior that Hartley engaged in, as well. A well-informed consumer can see how a firm's behavior squares with the rhetoric of its executives', and then make a decision as to whether he participates as a willing buyer. Apparently, Henry J. has courted many, many willing buyers....I'm not one of them.

The point I hoped wouldn't be lost is that "foreign" is a relative term. Connecticut is foreign from Tennessee (especially in the original intent of our founding and in particular, the context of the Constitution's Commerce Clause) and Tennessee's tax abatements represent what could be considered an unfair subsidy from a foreign government to a concern in Connecticut (for all I know, Hamer could have received similar treatment on its move to Connecticut; it worked as an example for the comparison). Connecticut could (theoretically, the aforementioned Commerce Clause, in spite of bastardization over the past decades, was originally intended to forbid exactly such action) put up a tariff on Tennessee guitars to counter such subsidy - prices would rise for Connecticut consumers and Hamer would have existed in an environment of artificially inflated prices.

Purely an academic exercise due to the considerations stated. Purely a boring exercise to probably everyone but me.

[LucSulla]

So are we more:

or

on this issue?

I jest! Ah the Nullification Crisis - still good for a laugh!

And Hartley Peavey has that weird "I respect what you did, but I don't trust you farther than I can throw you" vibe that Sam Phillips always gives me. Maybe it's because I am from Mississippi and no well the smell of Southern Bullshit when it is being sold.

[Never2Late]

In what way was the point missed? Those items are on the shelf because people voted them there (by buying them). The quality is deemed (not by me, but by the marketplace) as acceptable. I do not understand your statement "if we remove quality from the discussion, American goods could easily compete with made-in China crap TODAY if prices were aligned." Isn't your point American products are of higher quality?

The market is reflecting the acceptability of (your valuation) lower quality goods at the price point (i.e., an 'it's good enough for me' mentality'). Yes, higher quality products are admirable, but if the higher level of quality were valued by consumers they would be chosen in the marketplace.

Hamer guitars is an excellent example. Hamer were of (IMO) superior quality to say, Gibson guitars, but as prices increased the market said 'yes, they are of higher quality, but the market did not accept the premise the additional quality was worth the price premium. Should the government of Connecticut have then stepped in and said, "Hamer, your goods are of superior quality - we hereby put a tariff on all inferior guitars being shipped in from those lowlifes at Gibson in Nashville?" I don't think so, but maybe other do.

On another note: did Gibson not receive tax abatement and other governmental benefits from Davidson County and Nashville (i.e., subsidy)? What about the ancillary plant in Memphis and Shelby County - abatements?! Ah! Unfair trade!

My point was that US-made products were equal, or better quality than Chinese products. US-made products are, in many cases, no longer available for purchase anymore because they could not compete with the Chinese-made products based on PRICE. And that's it. Had Chinese-made products and US-made products been available at the SAME price-point, then the consumer has a choice. Right now, there is NO choice - if the Chinese-product had a tariff levied against it, making its price equal to the US-made product, then those US-made products might still be available for-purchase. You seem to equate price-point with quality. That's false - two products, made with different labor-rates, can be of equal quality but have different costs associated with each. Tariffs don't address quality issues - they address differences in LABOR RATES to manufacture products between countries of different standards of living.

Unless, of course, you'd like to see the United States become a Third-World country to compete with the labor rates found in Vietnam and Bangladesh...because that's where we're going.

[Toadroller]

Damn, Velorush, you've been reading your Rothbard!

[Uncle Thor's Hamer]

The thing is, people cannot have their cake and eat it, too. Either we bring jobs back and pay thousands more for a product that may only cost hundreds now, or we can have our cheap goods and live with the lost jobs. But the gross disparity of labor costs between the USA and Asia will not allow for us to have both.

I'm not smart enough to know how to do the calculations, but the basic price tag is not the full cost of an import. Let's take the $500 import guitar. Something like $400 of that purchase price is exported to Asia. It pretty much never comes back. The guitar wears out, breaks, goes to the landfill, thus becoming worthless. The loss of that $400 is permanent from our economy. Not only does our national wealth decrease, it also costs jobs, which is a multiplier effect.

Which is where a Ph.D. economist is needed to figure out the real numbers of the cost of imports.

Contrast it to the same guitar Made In USA. Maybe the cost of purchase is $750. But all of it stays here. The guy in the paint shop buys clothing for his kids, the lady in the final inspection department buys a ticket to ride on my employer's airplane. So the wealth stays here and multiplies. Fewer people on the federal dole, too.

I always try to buy American whenever possible, though it sure gets tough sometimes to find.

[LucSulla]

Which is where a Ph.D. economist is needed to figure out the real numbers of the cost of imports.

I am very good friends with the son of one of the top economists in the U.S. and have, over the years, read many, many economists from the classics like Smith, Keynes, and Menger to newer folks like Friedman and (even more recent) Krugman.

I would suspect that if you asked a Chicago School, an Austrian School, and a Keynesian economist all the that question, you would get three different answers. Maybe a little different; maybe a lot different.

I have a lot of respect for economics and dabble in it in my own research. It is, in my opinion, by far the best operationalized social science, but it is still social science. As such, there are plenty of confounding variables to separate schools of thought and provide each with a wealth of studies to support their points. That isn't to say that economists have no insight to offer - I believe they very much do. But you won't find overwhelming consensus on a lot of these bigger issues - immigration, offshoring, etc. You can even see where different schools have dominated government policy and how the pendulum tends to swing back and forth between state-capitalism and neoliberalism (or whatever new hip terms are for the same old government-planned vs. market-driven economies that are at least as old as the Roman Republic in a lot of ways).

My personal opinion is that we are just an unfortunate few generations living through the birth pangs of whatever is coming next. Or maybe that is good fortune. I suppose it is all perspective.

[dhuber]

My first electric was a Peavey patriot. The amp was built into the case however I never used the case amp. It was not a bad guitar but after a while I realized I did not like the narrow fingerboard. I still own a Peavey Classic 100 Head, Peavey Classic 30 Head modded, and Peavey Classic 30 Combo modded. I use my Peavey Classic Amps 99% of the time. I've come close to buying a Peavey Classic 20. Yes I noticed a few years back most of Peavey's stuff said "Made in China" Crate did the same thing, I don't even know what Crate calls themselves now or if they are still around. Thanks for posting this information.

[LucSulla]

Blackheart amps are made by the same company that owns Crate now, though I don't know if they all come from the same place or are kept separate from each other. LOUD Technologies is the parent corp.

[velorush]

In what way was the point missed? Those items are on the shelf because people voted them there (by buying them). The quality is deemed (not by me, but by the marketplace) as acceptable. I do not understand your statement "if we remove quality from the discussion, American goods could easily compete with made-in China crap TODAY if prices were aligned." Isn't your point American products are of higher quality?

The market is reflecting the acceptability of (your valuation) lower quality goods at the price point (i.e., an 'it's good enough for me' mentality'). Yes, higher quality products are admirable, but if the higher level of quality were valued by consumers they would be chosen in the marketplace.

Hamer guitars is an excellent example. Hamer were of (IMO) superior quality to say, Gibson guitars, but as prices increased the market said 'yes, they are of higher quality, but the market did not accept the premise the additional quality was worth the price premium. Should the government of Connecticut have then stepped in and said, "Hamer, your goods are of superior quality - we hereby put a tariff on all inferior guitars being shipped in from those lowlifes at Gibson in Nashville?" I don't think so, but maybe other do.

On another note: did Gibson not receive tax abatement and other governmental benefits from Davidson County and Nashville (i.e., subsidy)? What about the ancillary plant in Memphis and Shelby County - abatements?! Ah! Unfair trade!

My point was that US-made products were equal, or better quality than Chinese products. US-made products are, in many cases, no longer available for purchase anymore because they could not compete with the Chinese-made products based on PRICE. And that's it. Had Chinese-made products and US-made products been available at the SAME price-point, then the consumer has a choice. Right now, there is NO choice - if the Chinese-product had a tariff levied against it, making its price equal to the US-made product, then those US-made products might still be available for-purchase. You seem to equate price-point with quality. That's false - two products, made with different labor-rates, can be of equal quality but have different costs associated with each. Tariffs don't address quality issues - they address differences in LABOR RATES to manufacture products between countries of different standards of living.

I can see I've completely failed to make my point. I do not equate price and quality. Practice (not theory) has shown for the typical consumer, price trumps quality when quality is perceived by the consumer to be "good enough" for their purposes. If the typical consumer thought quality trumped price for the vast majority of the, for example, WalMart mix of products, that mix would be comprised of a majority of domestically produced goods. We know that is definitely not the case.

I've a great example from my own life (well, my prior life). When I was a banker I wore banker shoes. Now, something about commercial middle market bankers: they've got to dress like they make a fortune, but they don't. Only one brand would do for the wise banker, Allen Edmonds. Why? They cost a bleeding fortune (at least to a CMM banker, $450 a pair is a lot of scratch), and there are tons of similar shoes at a much lower price point [some of whom used to be made domestically but, and you'll like this part of the illustration because it mirrors our conversation, moved production overseas to the detriment of quality, but to the benefit of allowing lower prices] but nothing matched the quality over the long haul. I have pairs of AE shoes that are going on twenty years old. How can they hold up that long? Because they are hand made in Wisconsin by some of the last surviving craftsmen in the USA. When they wear out, you send them back to Wisconsin and those same craftsmen rebuild your shoes for a fraction of the new price. They dang near last forever!

Now, why isn't AE out of business - all of their competition did what we've discussed so many domestic firms doing. In this case (and for me and some, nay, more importantly enough, bankers, lawyers and the like) quality trumps price for this product.

Unless, of course, you'd like to see the United States become a Third-World country to compete with the labor rates found in Vietnam and Bangladesh...because that's where we're going.

Okay, now you're just throwing bombs. In what way has the USA fallen behind due to reducing the cost of products? We are able to buy much more due to the use of low-wage labor to produce "good enough" products. In answering, do not be tempted to conflate the present economic malaise (not getting political at all, we'll blame it completely on cyclicality) with reduced standard of living.

In the 19th century farming was ubiquitous in the US. Most everyone farmed at least a little, but most did a lot. As industrialization began to take hold, people moved off of farms and into life around producing things. Growing food was 'outsourced' to larger and larger farming concerns and some of it (eek!) offshore (well, to the extent farming lobbies would permit it - another discussion for another time, and please don't take that as in any way political; it's both sides all the time). This scared the crap out of the populists of the time and they really made hay politically by making such statements that "we've got to protect the family farm." Why? Does ground lay fallow when mom and pop sell the farm, move to town and get (then) factory jobs? No, someone buys the land and continues production.

What are former factory workers doing today? If they aren't retired, they're working in information technology, specialized production (see our interesting discussions of 3D printing (that I'm still trying to get my head around), see also the Shishkov area of this Forum) and all sorts of entrepreneurial concerns. We're not at the end of the world; we're at a shift in economic function. We protect the "old way" to our detriment - have any idea how cheap food would be today if the populists had failed to get the first "farm bill" approved (we've got to protect those family farms! And now we've go to protect those family (?) factories)? There are many areas of specialized production where, like the AE shoes, the consumer demands quality and will pay the price. There are other products where design is best performed domestically but why not move production to the lowest price producer able to meet the quality requirement.

Damn, Velorush, you've been reading your Rothbard!

I take that as a complete compliment. I am a die-hard unapologetic Austrian since I first read Hayek (Friedrich, not Selma, ) way too many years ago. My gosh, just read "The Road to Serfdom" today. Europe is exactly as he predicted! In what, '46? I was in college in the 80's - our professor asked each of us in class, "are you a Keynesian or a Monetarist?" Pffffffft! There are only two choices? As if!

The thing is, people cannot have their cake and eat it, too. Either we bring jobs back and pay thousands more for a product that may only cost hundreds now, or we can have our cheap goods and live with the lost jobs. But the gross disparity of labor costs between the USA and Asia will not allow for us to have both.

I'm not smart enough to know how to do the calculations, but the basic price tag is not the full cost of an import. Let's take the $500 import guitar. Something like $400 of that purchase price is exported to Asia. It pretty much never comes back. The guitar wears out, breaks, goes to the landfill, thus becoming worthless. The loss of that $400 is permanent from our economy. Not only does our national wealth decrease, it also costs jobs, which is a multiplier effect.

Which is where a Ph.D. economist is needed to figure out the real numbers of the cost of imports.

Contrast it to the same guitar Made In USA. Maybe the cost of purchase is $750. But all of it stays here. The guy in the paint shop buys clothing for his kids, the lady in the final inspection department buys a ticket to ride on my employer's airplane. So the wealth stays here and multiplies. Fewer people on the federal dole, too.

I always try to buy American whenever possible, though it sure gets tough sometimes to find.

I think you really should take a while and really consider what happens to that $400. What do they do with that $400? If the guitar wasn't worth $400 to the consumer, they wouldn't have purchased it in the first place. In fact, they must believe it was worth more than $400 because no one would trade $400 for $400, illiquid for liquid. This is the zero-sum game that too many want to present. It is a falsehood. Now, what's a, say Chinese, person going to do with US$400? It doesn't take a PhD. It's simple logic in a thought problem.

Now, there are issues with my premises (premisi?). If you read the old school guys you'll understand that traditional market proponents (I refuse to use the term "Capitalist" because of who coined the term) always believed as I do: a true market cannot exist without ethical participants. Slave labor is not ethical; violation of copyrights and patents is not ethical; etc., etc.

Guys, I enjoy discussing economics as that itch hardly ever gets scratched any more, but this is a guitar forum. I invite any of you to PM me to discuss this further, but why don't we get back to guitars?!

[dhuber]

Loud, yep that rings a bell.

I just watched the episode and wow that rings true. I'm an electronic technician. Started in a mom and pop two way radio shop. I've seen a lot of workers really good at a specific job just like that young man assembling amp and speaker cabs. Things at work change and they're laid off. Wow that's sad. It makes me wonder how long America will enjoy it's comfy standard of living when it has just become a consumer economy not producing any real durable goods.

I hope you're statement above is right. Something in my gut tells me a country has to produce real goods to survive. But yes I'm going back to guitar talk. I'll always be playing through a Peavey Classic of some sort.

[LucSulla]

There is a revolution coming in the way things are made anyway. I suspect within the next couple of decades, most things will be manufactured relatively locally on demand anyway, making all this offshoring business far less important. It will probably mean the end of swathes of unskilled labor as well, so prepare for a new generation of Luddites as well.

[Biz Prof]

LucSulla makes the central point eloquently. If, given my level of disposable income and expectations, I want to buy a T-style guitar--a relatively simple, bolt-on Tele design--then I'm sure as hell not going to fork over $2,000 for a new Fender AVRI '52 when I can get a similarly-equipped MIM version for about $1,400 less. The MIM quality is more than just "good enough" to me for what I want in a Tele...and I've played both (Hell, I've built a partscaster T-style that I like as much as any USA Tele I've played over the past decade). Obviously, a fair number of blokes are buying the AVRI '52 at full scratch, so...good for the buyers and for Fender! If/when those buyers disappear, Fender will either change or suffer. Peavey has chosen to change and adapt, rather than write its own epitaph. That's the beauty of leaving the market unfettered. If thousands of us guys/gals had both the interest in the products and the willingness to regularly part with the kind of cash needed to support a totally USA-based product line made by Peavey (or Hamer, for that matter), then those firms would have people hard at work meeting the demand.

Times change, consumer tastes shift, markets emerge/grow/contract, and economies cycle. Some corporate players change nothing; others morph into something different or completely new. The market decides who wins and who loses. Lucky for many of us, Mike Shishkov took the most viable parts of the Hamer product ideal and started a new company based on that blueprint. I'm rooting for Mike to succeed, but ultimately, the market's receptiveness to his work will be the judge.

[FGJ]

In what way was the point missed? Those items are on the shelf because people voted them there (by buying them). The quality is deemed (not by me, but by the marketplace) as acceptable. I do not understand your statement "if we remove quality from the discussion, American goods could easily compete with made-in China crap TODAY if prices were aligned." Isn't your point American products are of higher quality?

The market is reflecting the acceptability of (your valuation) lower quality goods at the price point (i.e., an 'it's good enough for me' mentality'). Yes, higher quality products are admirable, but if the higher level of quality were valued by consumers they would be chosen in the marketplace.

Hamer guitars is an excellent example. Hamer were of (IMO) superior quality to say, Gibson guitars, but as prices increased the market said 'yes, they are of higher quality, but the market did not accept the premise the additional quality was worth the price premium. Should the government of Connecticut have then stepped in and said, "Hamer, your goods are of superior quality - we hereby put a tariff on all inferior guitars being shipped in from those lowlifes at Gibson in Nashville?" I don't think so, but maybe other do.

On another note: did Gibson not receive tax abatement and other governmental benefits from Davidson County and Nashville (i.e., subsidy)? What about the ancillary plant in Memphis and Shelby County - abatements?! Ah! Unfair trade!

My point was that US-made products were equal, or better quality than Chinese products. US-made products are, in many cases, no longer available for purchase anymore because they could not compete with the Chinese-made products based on PRICE. And that's it. Had Chinese-made products and US-made products been available at the SAME price-point, then the consumer has a choice. Right now, there is NO choice - if the Chinese-product had a tariff levied against it, making its price equal to the US-made product, then those US-made products might still be available for-purchase. You seem to equate price-point with quality. That's false - two products, made with different labor-rates, can be of equal quality but have different costs associated with each. Tariffs don't address quality issues - they address differences in LABOR RATES to manufacture products between countries of different standards of living.

I can see I've completely failed to make my point. I do not equate price and quality. Practice (not theory) has shown for the typical consumer, price trumps quality when quality is perceived by the consumer to be "good enough" for their purposes. If the typical consumer thought quality trumped price for the vast majority of the, for example, WalMart mix of products, that mix would be comprised of a majority of domestically produced goods. We know that is definitely not the case.

I've a great example from my own life (well, my prior life). When I was a banker I wore banker shoes. Now, something about commercial middle market bankers: they've got to dress like they make a fortune, but they don't. Only one brand would do for the wise banker, Allen Edmonds. Why? They cost a bleeding fortune (at least to a CMM banker, $450 a pair is a lot of scratch), and there are tons of similar shoes at a much lower price point [some of whom used to be made domestically but, and you'll like this part of the illustration because it mirrors our conversation, moved production overseas to the detriment of quality, but to the benefit of allowing lower prices] but nothing matched the quality over the long haul. I have pairs of AE shoes that are going on twenty years old. How can they hold up that long? Because they are hand made in Wisconsin by some of the last surviving craftsmen in the USA. When they wear out, you send them back to Wisconsin and those same craftsmen rebuild your shoes for a fraction of the new price. They dang near last forever!

Now, why isn't AE out of business - all of their competition did what we've discussed so many domestic firms doing. In this case (and for me and some, nay, more importantly enough, bankers, lawyers and the like) quality trumps price for this product.

Unless, of course, you'd like to see the United States become a Third-World country to compete with the labor rates found in Vietnam and Bangladesh...because that's where we're going.

Okay, now you're just throwing bombs. In what way has the USA fallen behind due to reducing the cost of products? We are able to buy much more due to the use of low-wage labor to produce "good enough" products. In answering, do not be tempted to conflate the present economic malaise (not getting political at all, we'll blame it completely on cyclicality) with reduced standard of living.

In the 19th century farming was ubiquitous in the US. Most everyone farmed at least a little, but most did a lot. As industrialization began to take hold, people moved off of farms and into life around producing things. Growing food was 'outsourced' to larger and larger farming concerns and some of it (eek!) offshore (well, to the extent farming lobbies would permit it - another discussion for another time, and please don't take that as in any way political; it's both sides all the time). This scared the crap out of the populists of the time and they really made hay politically by making such statements that "we've got to protect the family farm." Why? Does ground lay fallow when mom and pop sell the farm, move to town and get (then) factory jobs? No, someone buys the land and continues production.

What are former factory workers doing today? If they aren't retired, they're working in information technology, specialized production (see our interesting discussions of 3D printing (that I'm still trying to get my head around), see also the Shishkov area of this Forum) and all sorts of entrepreneurial concerns. We're not at the end of the world; we're at a shift in economic function. We protect the "old way" to our detriment - have any idea how cheap food would be today if the populists had failed to get the first "farm bill" approved (we've got to protect those family farms! And now we've go to protect those family (?) factories)? There are many areas of specialized production where, like the AE shoes, the consumer demands quality and will pay the price. There are other products where design is best performed domestically but why not move production to the lowest price producer able to meet the quality requirement.

Damn, Velorush, you've been reading your Rothbard!

I take that as a complete compliment. I am a die-hard unapologetic Austrian since I first read Hayek (Friedrich, not Selma, ) way too many years ago. My gosh, just read "The Road to Serfdom" today. Europe is exactly as he predicted! In what, '46? I was in college in the 80's - our professor asked each of us in class, "are you a Keynesian or a Monetarist?" Pffffffft! There are only two choices? As if!

The thing is, people cannot have their cake and eat it, too. Either we bring jobs back and pay thousands more for a product that may only cost hundreds now, or we can have our cheap goods and live with the lost jobs. But the gross disparity of labor costs between the USA and Asia will not allow for us to have both.

I'm not smart enough to know how to do the calculations, but the basic price tag is not the full cost of an import. Let's take the $500 import guitar. Something like $400 of that purchase price is exported to Asia. It pretty much never comes back. The guitar wears out, breaks, goes to the landfill, thus becoming worthless. The loss of that $400 is permanent from our economy. Not only does our national wealth decrease, it also costs jobs, which is a multiplier effect.

Which is where a Ph.D. economist is needed to figure out the real numbers of the cost of imports.

Contrast it to the same guitar Made In USA. Maybe the cost of purchase is $750. But all of it stays here. The guy in the paint shop buys clothing for his kids, the lady in the final inspection department buys a ticket to ride on my employer's airplane. So the wealth stays here and multiplies. Fewer people on the federal dole, too.

I always try to buy American whenever possible, though it sure gets tough sometimes to find.

I think you really should take a while and really consider what happens to that $400. What do they do with that $400? If the guitar wasn't worth $400 to the consumer, they wouldn't have purchased it in the first place. In fact, they must believe it was worth more than $400 because no one would trade $400 for $400, illiquid for liquid. This is the zero-sum game that too many want to present. It is a falsehood. Now, what's a, say Chinese, person going to do with US$400? It doesn't take a PhD. It's simple logic in a thought problem.

Now, there are issues with my premises (premisi?). If you read the old school guys you'll understand that traditional market proponents (I refuse to use the term "Capitalist" because of who coined the term) always believed as I do: a true market cannot exist without ethical participants. Slave labor is not ethical; violation of copyrights and patents is not ethical; etc., etc.

Guys, I enjoy discussing economics as that itch hardly ever gets scratched any more, but this is a guitar forum. I invite any of you to PM me to discuss this further, but why don't we get back to guitars?!

While one may value a product/service enough to part with the cost of that product/service, it doesn't necessarily follow that one believes the product/service to be worth more money than its price tag. In the case of a guitar, it may simply be that one can't make music by "playing" that $400. In other words, simply because I value playing the guitar more than I value holding $400 in my hand, it doesn't logically follow that that value is one of a monetary nature. There are, after all, different kinds of "value" that are not pecuniary (e.g., ethics, beauty, etc.). So while I'm aware that no one would pay a dime for, say, my child's drawing, I may not part with it for a certain sum, not because I believe it to be of a higher monetary value, but simply because the sentimental value is more important to me than the money. Now I'm not suggesting that it's never the case that one's incentive to purchase a product/service is because he takes it to be of a higher monetary value than the price tag. I'm only arguing that one cannot assume it to be the case in every instance. After all, we're dealing with human behavior, which is often unpredictable.

It's also not true that our economic situation is the result of simple market forces. The very same reason you don't like tariffs (a sentiment which I share with you) is one of the reasons for outsourcing, i.e., government intrusion. Regulations, taxes, labor laws, et. al, are also incentives not created by a free market which drive business overseas.

While one can raise the example of our auto industry which was failing to compete due to poor products, that's really a myopic and unrealistic assessment of the state of production in the US. Most purchases of foreign products are not due to those foreign products being either better or "good enough". Many such purchases are out of necessity because those industries do not exist domestically in order to produce US-made equivalents. In other cases, people are not able to afford the higher-costing Americam-made products, so the cheap import is all they can afford.

Additionally, while it's true that people must adapt to changing technology which might render their respective jobs obsolete, that's not the only thing with which domestic workers must compete. Certainly automation and computing has eliminated some jobs, but most domestics jobs are not lost to technological advancements. Most jobs are lost to outsourcing.

Finally, when outsourcing was fairly new and we were still a manufacturing economy with money to spend, those cheap goods really did raise our standard of living. Unfortunately, as jobs disappeared, that chicken has come home to roost, and now people have less money to spend. So while many may have garages filled with cheap crap that raises their standard of living in one sense, many persons will never be able own their own garage in which to place all of that stuff. And let's not forget that all of that cheap crap with which we enjoy our standard of living is not purchased with real money, but with a drowning credit which Americans collectively can never pay.

Frankly, tariffs are not the answer, because that represents the same government meddling that only makes things worse. If anything, deregulation and tax incentives would do more good than tariffs. Anything to remove government meddling can only help.

[stratokatsu]

I should have explained my earlier thoughts more fully. I thought what I said was leading to a clear point, but I should have stated it instead of leaving it unsaid.

When I asked whether any company had tried to remain an American manufacturer by raising the quality of their product to levels in which they would compete with better goods and pay a fair wage to an American worker, I said I couldn't name one. I was subsequently asked if I preferred to pay higher prices.

No... I guess I'm like everyone else in that I consider price to a large extent. As the old joke says, "God must have loved the poor people because he made so many of them." The guitar market for American made high quality guitars is not large. The market for the Asian products we see is apparently where manufacturers see the future dividends for their shareholders.

Further, I feel the quality of the Asian made guitars we are seeing has improved massively over the past 20 years. I know people who bought Asian guitars and returned 2 or 3 until they got one that worked properly or didn't have finish issues. It's almost never that way any longer.

Further again, how many of us consider resale value of a guitar, leading us to buy American? Do those American made guitars actually appreciate? Some do, some don't. If you buy a $500 guitar and a few years later you get 1/2 that back as a sale or trade in, you've lost $250. If you buy an American guitar for $2500 and sell it or trade it in, what are the odds you will get 90% back? Anything less than 90% return and you've lost more on the American product than the Asian product.

I don't think most people can reconcile that if they are in a position like me, a hobby player who just plays at home. And I think that circumstance represents an awful large majority of us.

As much as I would like to see America fully employed in jobs that satisfy the individual and pay a fair wage, and without turning this into a political discussion, I have to admit the guitar makers really didn't do anything more than look for ways to satisfy a market demand.

[FGJ]

Well, incentives are a tricky thing to interpret. One might interpret a guitar manufacturer's motive as trying to satisfy a market's desire for cheap guitars. On the other hand, that manufacturer may not really have the consumer's desires in mind as much as the fact that he's losing sales to other guitar manufacturers who benefit from cheap labor costs. So while it may appear to be a matter of semantics since the manufacturer's actions are similar in both cases, what motivates him is not necessarily so obvious. He may actually want to cater to higher-income customers who are willing to pay for American-made guitars, but, if there are not enough of those customers to go around, his desire to remain in business forces him to seek foreign production.

The thing is, economics is largely driven by incentives, and what provides an incentive for one person to react one way may not motivate another to behave in like manner. Again, human volition is what prevents economics from being an exact science.

[TBP]

The plant closing is unfortunate. I have enough random thoughts that I could pretty much write a rambling dissertation, but that would just annoy most people. But a few things.

I think it's been discussed and touched on, but remember that most of Peavey's market is the lower to mid range, which has a lot of very low priced competition. Also, the decent quality tube amp market is struggling (find the thread with LucSulla's bargraphs from the NAMM annual report, for instance) with much of the market getting hammered by the influx of modelers and very inexpensive amps. Even if that weren't the case Peavey's Classic 30 and Delta Blues retail for more than Fender's Mexico-made Hot Rod Deluxe and Blues Jr, so the market is tough.

(As an aside the growing public consciousness over environmental choices makes it odd that we also have so many electronics designed to be thrown away and replaced rather than repaired).

I have to admit, however, that I did develop some bias against Peavey. Back in my high school/early music school days I'd often take note of sound equipment. Many times I heard something I thought sounded awful or particularly harsh I'd see the Peavey logo. Of course now I realize that the sound was mainly due to poorly skilled people using the equipment, but my 19 year old brain made an association that's been difficult to shake. I suppose that selling at the more affordable end of the market--and being bought by people yet to develop decent skills--risks being associated with poor sound. Given some of the attitudes about the company I don't think I'm alone in having made that unfortunate association. (Similarly my first impression of Line 6 was hearing poorly played, treble heavy "Enter Sandman" riffs blasted through the company's amps).

Damn, this is turning into a rambling dissertation anyway. I'll just say this and shut up: personally I do consider where a product was made when buying, especially with more creative things such as musical instruments. Most of my guitars are made in the US but I'm not really in the "buy 'merican" camp as much as I'm in the "try to support companies that treat their employees well or at least have some assurance this wasn't made by people who were miserable" camp. (As far as I know I'm the only person in that camp.) So while I can't research that much detail about everything (although I too often do) I can make some reasonable guesses.

[dragan]

I never was a pv fan , it was the " pretty good for the money " of the 70s . I dont think it ever overcame that stigma . I do feel bad for people that were let go and meridians economy though . I just hope that the future " Luddites " find a way to make an honorable living above the poverty line and the new economy does not relegate the less intelligent (of which I consider myself )to a life of servitude to the" well educated"

[tbonesullivan]

Peavey was always an interesting brand. They made good stuff but often it was hard to find in stores, pushed into a corner by "house brands" and "higher end" brands.

It's sad to see that the plant closed, but that seems to be how things are going now. Maybe they had a small financial crisis that made it inevitable.

[Sparky]

I had a peavey backstage 20 amp when I was a kid. It was indestructable. Not loud enough to gig, but a fun little bedroom amp. Not too long ago, I owned two Peavey guitars, both usa made. I sold the HP Special, which was a lot like the earlier EVH model. The one I kept, a Jerry Donahue signature omniac, is the best sounding tele I've heard in its price range. The problem now, is that the epic 1200 year drought here in CA has twisted the extravagantly figured birdseye maple neck, and it would cost almost as much as the guitar is worth to fix it. Peavey no longer has any replacement necks and they have a proprietary bolt pattern on the heel.

I'm going to take some measurements and see how they compare to Fender. If the dimensions pretty much match, maybe I'll get a Fender neck, plug the existing holes, and drill new holes where the Peavey body locates the screws.

Due to financial issues, I've been selling off most of my gear. The omniac is the last electric I own. I really enjoyed playing it before it went all Chubby Checker on me.

[cynic]

^ you can buy a replacement neck without pre-drilled holes at any DIY guitar parts resource.

[stratokatsu]

When Tomterrific used to hold his annual Labor Day jam, affectionately called Normanstock, he used to loan me a 30 watt Peavey amp. That thing was clean at the highest volumes I'd ever seen. Down the road I had an American made Peavey Telecaster copy. I paid all of $150 for it, though they have sort of been discovered now and prices rose.

I haven't got much more experience than that with Peavey stuff, but I was sort of impressed at the time.