An Industry Worth Fighting For

I’ve read a lot of libertarian drivel over the years (legalize all drugs, withdraw from NATO), but this piece from the Ludwig von Mises Institute (discussed in a Washington Times column on March 30) really takes the cake.

Jeffrey Tucker of the Institute suggests that we really shouldn’t worry too much about the collapse of the American auto industry, pointing to the experience of another industry in which America was dominant for decades which collapsed with few repercussions. Wait for it . . .

The piano industry.

Here are relevant excerpts from Tucker’s piece:

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.

That too was new. Americans before 1850 mostly imported their pianos. American manufacturing was nearly nonexistent. After 1850, that changed dramatically with the flowering of what would become a gigantic US piano industry. The Gilded Age saw a vast increase in its popularity. By 1890, Americans fed half the world market for pianos. Between 1890 and 1928, sales ranged from 172,000 to 364,000 per year. It was a case of relentless and astounding growth.

* * *

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, but because the economic conditions made it most favorable to be manufactured here.

* * *

All of this changed again in 1930, which was the last great year of the American piano. Sales fell and continued to fall when times were tough. The companies that were beloved by all Americans fell on hard times and began to go belly up one by one. After World War II the trend continued, as ever more pianos began to be made overseas.

* * *

Does anyone care that much? Not too many. Have we been devastated as a nation and a people because of it? Not at all. It was just a matter of the economic facts. The demand went down and production costs for the pianos that were wanted were much cheaper elsewhere.”

* * *

In the same way, many people will bemoan the loss of the US car industry and wax eloquent on the glory days of the 1957 Chevy or what have you. But we need to deal with the reality that all that is in the past. Economics demands forward motion, a conforming to the facts on the ground and a relentless and realistic assessment of the relationship between cost and price, supply and demand. We must learn to love these forces in society because they are the only things that keep rationality alive in the way we use resources. Without them, there would be nothing but waste and chaos, and eventual starvation and death. We simply cannot live outside economic reality.

OK, I’ll take the bait: Sure we can. At a minimum, we must at least ask the question – what would happen if we had no motor industry?

Would the West be a safer place – would the liberty that libertarians rightly prize be more assured – if the world’s motor industry were concentrated in China, as today’s piano industry is? Having a piano industry doesn’t help America win wars, but a motor industry and the engineers it employs are essential. (I vaguely recall from French class a short story by Guy de Maupassant about the Franco-Prussian War in which a piano figured, but that one didn’t end up too well for France.) Would it be good to have an even worse trade balance with China than we already do? What of our North American partners – because the “domestic” auto industry, manufacturers and suppliers, is pretty well integrated across NAFTA?

And what would Austrian economists propose happen to the over 700,000 people – nearly a quarter of a million fewer than a year ago – who work in the car and auto-parts manufacturing industries? And the 1.1 million people who work in dealerships? The market will take care of them? What are they supposed to do? What of their families?

“Economic facts” are important, but so too are political facts. Not the least of these is America’s position in the world. Give up manufacturing, and where is our economy? Not everyone can work at Goldman Sachs. Not everyone can work in a “green job.”

Granted, the American auto industry has made huge and costly mistakes. Whatever our position on bankruptcy, restructuring, government control, and the like, however, surely we can all agree that we cannot simply abandon this industry and its associated industries to its fate. It is too important a part of the economy. Did the piano industry ever have this dominance in our economic life?

Adopt the Mises Institute’s views, and America’s economic future will resemble Billy Joel’s “Mr. Piano Man” even more than it already may.