Yes, it is economics. I dont know Michael Linder, but I can break it down with just the numbers you put up. Premal Chedda (Smokers Haven) sells the pipe for $650. That means Michael got probably $300 for it. Take out $65 for the briar and ebonite to handcut the stem. Now we're down to $235. But realistically at least 1-3 blocks out of 10 will be rejected due to flaws, fissures, cracks, sandpits. So, he really has more than that tied up in each pipe.
But lets say he does make 125 pipes a year (I dont know) and they are all sold for this same profit margin, thats under $30,000 a year. Sounds like an OK living, but he also has $20,000+ in tools and equipment to maintain.
Plus being able to drop thousands of dollars at a time to restock raw materials.
Even if he makes more than $30,000 when its said and done, he's not raping anyone with his prices. Thats just what it takes to make a decent living at this and he will never get rich doing it.
Most people who buy American made pipes know they are supporting the pipemaker with their purchases, but thats not the only reason they drop this kind of money. I think they believe the pipes are worth the money, or they would just smoke Dunhills etc.