Veblen Not Very Good

Some things are beyond irony.

Florsheim used to be one of the great American shoe makers. In an era where most clothing products were made in this country by people earning some sort of semi-living wage, Florsheim occupied the position of shoemaker to the middle class. When I started selling Fords in 1995, one of the senior salespeople bragged to me that he "always wore new Florsheims". Neither East Coast trad like Alden nor Middle West upscale like Allen Edmonds, Florsheim cost less than either but still provided a pretty decent, long-lasting, repairable shoe for a world where grown men did not wear sneakers to work.

Today's Florsheims are made in India. This "Veblen" normally sells for $179 but is available for less at Sierra Trading Post. Still, one has to wonder why it costs even that much. A new pair of Allen-Edmonds costs about $379 for the high-end lined calf stuff. The average wage in India is about one-tenth of what it is here, and surely the shoemakers are below the average. Materials are cheaper there as well. Factory space is cheaper. Environmental regulations are conspicuous by their near absence.

Let's be charitable and say that it costs one-fifth as much to make the shoes in India. Therefore, these should be seventy-dollar shoes, not one-hundred-and-seventy-dollar shoes. Where's the price gap? In the profit to the American importer, clearly. Could the shoes sell for seventy dollars profitably? I'd wager so.

But Florsheims at $70 wouldn't sell as well as Florsheims at $179. Which means that they are, at least in part, so-called "Veblen goods", products which sell in part based on the perceived exclusivity of their price. Sub-two-hundred-dollar men's shoes are pretty scruffy in general so these aren't true Veblen goods; perhaps Edward Green might be the Veblen-good shoe, since it isn't four times as good as an Alden yet easily sells for four times the price.

Still, there's something funny about a shoe being called the "Veblen". As you can see, however, the market is busy taking some of that price adjustment back. Florsheim Veblens, still plenty in stock at a forty percent discount!