Why are bass guitars so expensive?

You get what you pay for.

A good Bass Guitar has some pretty sophisticated electronics in it as well as finely machined hardware. Additionally there is a lot of woodwork involved, and in order to produce a quality product, you have to start with quality material which is also not expensive.

However, that being said, bass Guitars and guitars in general have actually gotten quite a bit cheaper in the last 10 years or so. Advances in production techniques have allowed the cheaper makers to make a much higher quality product than they used to. For less than $300 you can usually find a very serviceable and playable bass.

That's not to say that the $1000 American made basses don't still have their advantages... but a 2009 cheapy is usually a much better quality instrument than its 1999 (or 1989) equivalent would have been.