Economists call that the theory of comparative advantage. Even though two countries can both produce musical instruments, the one that can produce quality products cheapest will be the net exporter of those products.
The U.S. is not the loser. Consumers win by buying cheaper. And the U.S. manufacturers just have to specialize in what they do best e.g. aerospace, software, autos, movies, music, etc.
http://internationalecon.com/v1.0/ch40/40c000.html By the way, I am willing to bet that most "U.S." music companies, even good ole boy Peavey has the actual manufacturing done in China or another southeast Asian country. The design, engineering and marketing can be done here but the actual assembly is usually done overseas. America is not too competitive when it comes to basic assembly line electronic component labor.
"Another sign of the times is that Peavey has subcontracted manufacturing to China Ð but the design is still American, and proud to be so!"
http://www.sonomag-worldedition.com/Sono_int21/Peavey.html [This message has been edited by blink_ers (edited 05-10-2003).]