Why do better MC cartridges cost a fortune?

A big part of the problem may be economies of scale.

Back in the 70's, everyone that listened to music at home, owned a turntable, arm and cartridge. There were hundreds of companies making cartridges at all price points. The skill for building cartridges was more widespread and parts were mass produced.

Today, cartridges, especially MC, are a niche market (inside a niche market). Getting parts made, skilled assemblers, skilled designers, etc is quite a bit tougher, and therefore, more expensive. 

Now, I am not saying these are the only factors, but I am sure they account for part of the high prices. 

Though a side issue raised by willemj, it requires a response. Willem, you are entitled to your opinion regarding CD players vs. turntables, but you are ignoring one kind of important fact: an LP won't fit into a CD player's disc tray. I have a lot of music on LP, music I'm not going to through out even if CD players did sound better than LP players. Which they don't, by the way.

bdp24 +1!

Dave,
You are a big thinker.

I heard that too, that you can get at least some Japanese cartridges directly from Japan. Sometimes, even buying from the UK is less expensive. American prices on imports are often bloated because..you know why. Yes, $10k for a great cartridge that would last 20 years would be acceptable to me. Not the case.
As for the mystic surrounding this..to a degree maybe for some.
If you have great turntable, tonearm and phono stage, sure, you just get the cartridge you think will be best for this set-up and your taste. Still, the price appears to be disproportinally high for many. Bazaar economy laws of course apply, but this doesn't mean that the thing itself has such a high intrinsic value.