There is a psychological side-effect to starting out cheap. At least, I
have this problem, so I assume I am not alone. The initial investment gives
you a mind-set which makes it hard to part with large amonts of money as a
follow-up. After buying a very inexpensive lathe, it is very tempting to
buy the $9.95 set of gouges, and the $20 chuck.

It is true that an experienced craftsman can make a mortar and pestle using
only a hatchet. But, what about a beginner? Working with the worst lathe
in the world, the worst tools in the world, and no experience to carry you
forward, what is going to happen? Either, you will have poor success, and
quit, or you will develop a hunger for better stuff, and end up replacing
everything.

I also am very familiar with the joy of upgrading. If you have the money to
start with "nothing but the best," in my opinion, you will never really
appreciate what you have, and will have missed some of the pleasures of the
craft.