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Diamonds Are Bullshit

1088 points| danielpal | 13 years ago |blog.priceonomics.com | reply

734 comments

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[+] kyrra|13 years ago|reply
(person I know) worked for GE (General Electric) on their industrial diamond production process back in the 90's, and I got to hear lots of fun stories from this.

Diamonds that are man-made[1] are stronger (fewer imperfections) than those that are mined from the earth. Because of this, industrial diamonds tend to be man-made. (for reference, industrial diamonds when cutting hard materials, such as metals).

While working on these diamonds, GE decided to start investigating making consumer level diamonds that could be sold for jewelry. They were able to produce diamonds that would have excelled when compared to natural diamonds (when it comes to the 4 Cs). One of the fun things was they could add various gases to the manufacturing process to create diamonds of various colors. There is still a decent cost associated with producing diamonds this way, so they probably would have still been expensive, but not at the levels that De Beers was charging at the time.

At this point GE started to look into what would happen if they would have actually gone down this line, selling consumer-level diamonds. After a little investigation, the GE lawyers and upper-management decided to kill off the idea as it would not have been worth the hassle. De Beers started a small campaign that was discrediting man-made diamonds, and it would have gotten a lot worse if GE even tried to enter the market. GE decided it was not worth the hassle, and killed the consumer-level diamond project.

De Beers has created an artificial market and they are doing what they can to prevent anyone else from entering their market. Most companies don't want to deal going up against them, so they just leave De Beers to run around gouging consumers.

[1] http://en.wikipedia.org/wiki/Synthetic_diamond#High_pressure...

[+] maratd|13 years ago|reply
> so they just leave De Beers to run around gouging consumers

That's kind of missing the point. If diamonds were 5 bucks a piece, women would no longer be interested in receiving rings bejeweled by them.

A woman wants a man who is financially secure. If you can't afford a shiny rock, you can't afford what's coming after it either, so there's no point.

[+] eli|13 years ago|reply
I remember reading this very good Wired article [1] ("Armed with inexpensive, mass-produced gems, two startups are launching an assault on the De Beers cartel. Next up: the computing industry.") and assuming we were on the verge of a major disruption. But that was 10 years ago. Anyone know why it didn't quite work out that way?

[1] http://www.wired.com/wired/archive/11.09/diamond.html

[+] dreamdu5t|13 years ago|reply
It's not an artificial market, it's a real one, for real diamonds. Nobody has to buy them.
[+] SeanDav|13 years ago|reply
Pretty much if you buy a diamond you are a victim of a rather successful campaign that De Beers have been running for decades in order to limit the availability of diamonds and create an artificial scarcity.

De Beers should have been investigated for cartel / monopoly practices but they just too well politically and economically connected.

They are bit like the American Rifle Association only on steroids and then some. Rather untouchable.

[+] guylhem|13 years ago|reply
I see people talking about various things like the (1) (2) (3) arguments for a women to evaluate a man : (1) is the ability to provide; 2) is the willingness to forgo other things (opportunity costs to talk economics) (3) "is demonstrating to the woman's peers her husband's social standing." (signalling)

Raynier posted this deep down in a reply which might be lost to you if you don't read all the comments. It would be a shame to miss it. Read it, along with the reasoning where he says such criterias would be perfectly valid for his own daughter: https://news.ycombinator.com/item?id=5404423

It seems perfectly valid, yet I could not disagree more. We are forgetting a important (4) : you fund atrocious wars and dictatorships. That's a strong negative externality.

When you see a diamonds, instead of seeing a shiny rock, you should see part of a human soul instead, a fraction of a person who died in vain for this worthless piece of rock you want for your wives or daughters to "sustain the tradition".

If social convention required 1 pound of flesh taken by the knife on a living human, would you insist on it, for the sake of the tradition? (I fear many would - after all, it matches the 1,2,3 requirements)

If social convention requires a diamond, which you know very well will cause war, death and misery, and if you did not say yes to the previous question, why are you insisting on it?

It strikes me as illogical, inconsistent. Either you believe that human life is more important than tradition, or you don't. I can understand diverging opinions, I can hardly understand inconsistency in a system of belief, so I'm very sad to see intelligent replies advocating this 1,2,3 argument while missing the huge downside #4 is.

Maybe someday the sale of things containing "natural diamonds" will be banned - just like the sale of things containing bald eagles feathers.

IHMO, it should: as much as I love the market and freedom, sometimes externalities are just too big to be ignored - especially when there is also a monopolist in action, and perfect substitutes like man made diamonds.

[+] robotmay|13 years ago|reply
One of my favourite customs for propositioning marriage has, unfortunately, largely died out.

In Wales, and I believe parts of Scandinavia (which opens up interesting theories as to vikings bringing the custom to Wales), a man would propose with a spoon: http://en.wikipedia.org/wiki/Lovespoon

To me that is infinitely more expressive and thoughtful than purchasing a transparent rock. Maybe it's because I currently live in Wales, or the fact that I carve spoons for fun, but there's a romance there which I just can't see in a ring.

Unfortunately the pressures of society (especially not helped by Disney fairytale romances) seem to have brought us to the point of no return. My girlfriend knows that diamonds are worthless, but I know that were I to propose without one that there would be a part of her which felt like she was missing something; even if she didn't want to feel that way.

[+] eli|13 years ago|reply
Forgetting about diamonds for a moment, I think there's something nice about a ring: a symbol of commitment that everyone can see. Only bummer is that it's not customary for a man to wear one before marriage.
[+] arbuge|13 years ago|reply
"So here is a modest proposal: Let’s agree that diamonds are bullshit and reject their role in the marriage process. Let’s admit that as a society we got tricked for about century into coveting sparkling pieces of carbon, but it’s time to end the nonsense."

Hear hear, but good luck convincing zillions of single women that they'll be the first generation in living memory to miss out on their carbon.

[+] jpdoctor|13 years ago|reply
The carbon is a proxy (which is missed in the article, among other things.)

It's social signaling. Or to put it another way: How many $$ can your man throw away without incurring pauperhood?

[+] stephengillie|13 years ago|reply
I'd rather have someone convince zillions of single women that they'll be the first generation in living memory not to get duped by JP Morgan in 1938.
[+] nitrogen|13 years ago|reply
I'm of the opinion that it's easier to lead people toward something better, rather than away from something bad. So instead of overpriced compressed carbon, how about paying for unique designs with rationally priced materials instead?
[+] randomdata|13 years ago|reply
Technically speaking, marriage is as ridiculous as the diamond that symbolizes it. If you want to hang on to the symbol that marriage represents, why not include the symbolic diamond as part of that? Sure, it is just worthless carbon, but it doesn't need to be anything more.
[+] joeblau|13 years ago|reply
This article is interesting. I remember in Geology class when our teacher explained that you could make synthetic diamonds for a fraction of the price of a real diamond. He then asked all the women if they would rather have a natural diamond or a synthetic diamond, and almost all of them raised their hands. He then went on to explain that it was like the difference between natural ice and ice made in a freezer. He asked the question again and almost all the women still voted for natural.

That day I realized the power of the diamond marketing engine.

[+] YokoZar|13 years ago|reply
Your teacher was asking the wrong question. Ask these same women if they'd rather have a larger diamond at what would be twice the cost were it not for technology, and they'd probably agree.

If we want to help fix this diamond bullshit, we've got to reframe the discussion. It's not about natural vs synthetic, it's about cultured diamonds vs blood diamonds.

[+] jld|13 years ago|reply
I did a fair amount of research on this when shopping for my wife, and couldn't find any decent sized (say, larger than ~1/2 carat) clear synthetic diamonds. There were some options in yellow or pink, but I didn't find a thriving manufactured diamond industry I thought I would find.

Regardless, even if I had, manufacturers of gem grade diamonds wouldn't need to undercut the price of natural diamonds by much. The cartel has done all the hard work raising the price for them already. Market them at 90% of natural diamonds and reap the rewards.

[+] jquery|13 years ago|reply
But your geology teacher wasn't even correct. You can't make synthetic diamonds with similar color characteristics to natural diamonds at a fraction of the price. In fact, colorless synthetic diamonds are more expensive.
[+] cobrausn|13 years ago|reply
Sure, and we all know it. But from her perspective, you probably waste all kinds of time and money on other inane bullshit for yourself. So if you actually cared, you wouldn't mind spending a bit so she gets a shiny rock to wear around. Why shouldn't she get this one thing?

Also, how is this any different from fashion? Both are nearly useless raw materials that have been transformed and shaped into something people will pay money to own and wear (signaling). For diamonds, you get conflict in Africa. For fashion, you get sweatshops in Asia.

[+] wutbrodo|13 years ago|reply
This is very similar to fashion in the amount of sense it makes as a consumer. The reason this is more interesting is because of how striking it is as what essentially amounts to a conman's (DeBeers et al) success story, on a gargantuan scale. On top of that, people who buy into fashion are pretty much aware of what's going on, but I'd be willing to bet that a LARGE amount of people (myself included, until ~my late teens) are unaware that so many of the "hallowed traditions" surrounding diamond rings are marketing nonsense dreamed up a few decades ago.
[+] stephengillie|13 years ago|reply
If she wants it so badly, why doesn't she buy herself one?

If she doesn't have enough money, then she should work until she does. Or she should provide something of equivalent value, at which point this becomes a business negotiation.

[+] chrischen|13 years ago|reply
I've been to a clothes factory in China. Probably nowhere near as bad as conflict can be.
[+] EvaK_de|13 years ago|reply
I tried to get an impression of how (American) women think about this, so I went ahead and posted this article in a wedding-related forum. The forum's population is about 99% female (including me). Usually the tone there is very civil and opinions are well-balanced. Members treat each other with resepct.

But his time it's completely different: the reactions are crushing! I was bashed and put down like never before on the web, although I never even suggested that I agree with the author's opinion. They even went so far as to scan my older threads. They found one from half a year ago, where I pointed out another article with a similar topic, and then began to bach me in this dead topic, too.

Meanwhile it seams that the mods have closed the old thread, and I have deleted the new one myself since the bashing was getting me down.

What is it that makes american women so aggressive, when it comes to criticizing diamonds? I don't get it.

Living in Germany, I never quite understood how you can restrict a whole culture to believe so fiercely that a piece of compressed carbon is so very meaningful.

Link to the closed thread: http://boards.weddingbee.com/topic/mens-view-on-engagement-r...

[+] toast76|13 years ago|reply
Trying to argue against engagement rings is like arguing against internet censorship. Your opinion is tainted before you open your mouth because the only people who could possibly oppose such things are cheap bastards or pedophiles, respectively.

If you refuse to buy a diamond, it's because you're cheap or don't love "her" enough. No amount of hand waving or sensible logic will make up for the fact that you'll just look like an asshole.

There's no logic in love, just shut up and buy her the damned ring.

[+] sjtrny|13 years ago|reply
If your other half says that it's because you don't love them enough you need to get a new partner who doesn't behave like a 10 year old.
[+] ohsnapman|13 years ago|reply
The most important lesson I learned recently is how little impact logic actually has on real world discussions. Way too much of what we do is driven by emotion.

So, given that, instead of trying to use logic to sway someone who needs a ring, what are some tactics that appeal to emotion that can work?

[+] arethuza|13 years ago|reply
When we got married 22 years ago my wife was about to go into law school and I was living on a pittance doing a PhD - so we didn't spend much money on rings.

These days, although she still has her original engagement and wedding rings she doesn't wear them. What she does is buy rings every year or two and designate these as her "official" engagement and wedding rings...

The particularly amusing thing is that she never spends much money (I checked this morning and the rings she is currently wearing cost £12 and £55). However, they were bought in interesting places (Marrakech and Krakow) and look great - in particular her current "engagement" ring (cost £55) - has huge clear stones. Because she is now a successful commercial litigation lawyer everyone assumes they are real, although when people ask she tells the truth. Everyone assumes that because she could afford a real ring her fake ring must be real.

[+] estebank|13 years ago|reply
Well, they are real, as long as they really are in her finger they are as real as any expensive ring or a ring that came with the cereal. :)
[+] DanBC|13 years ago|reply
It's a bit weird to see people so against diamonds (something they don't want and don't need) and happily using dead Africans in their discussion, but when you start talking about gold or rare earth minerals that shiny gadget isn't bullshit, it's an important tool. (Never mind that a machine from 5 years ago is for almost everybody just as capable.)
[+] 3pt14159|13 years ago|reply
The underlying reason that so many are against it isn't really the bleeding africans; it is the underlying sexist tones of "The man will provide" "The man must do something that goes against his rationality to make the woman happy" "It shouldn't matter to the man that De Beers is manipulating the market, the man will provide" "It should not matter that synthetic diamonds that are not noticeably different to the naked eye can be made for a tenth of the price"

The real reason isn't the blood diamond aspect. It is the male equivalent of "get in the kitchen and bake me a pie", except social expectation is for men to do the things that are expected of them, regardless of the inherit fairness or rationality.

[+] ankeshk|13 years ago|reply
DeBeers today controls 35% of the diamonds. They are not big enough any more to control and manipulate diamond prices - as they used to before. Diamond prices are still high, and rising because of the demand.

The demand in countries like India and China is rising. Diamonds and jewelry is the modern dowry. http://en.wikipedia.org/wiki/Dowry

Its inherent value is that it shows people that the family is well to do.

Things may change with the advent of artificial factory made diamonds (already showing up, but not in big quantities). But it won't ruin the diamond prices, just create two diamond categories. It should follow the trends that the pearl industry followed after the advent of cultural pearls.

Source: my Dad is a diamond trader.

[+] kamaal|13 years ago|reply
>>Diamonds and jewelry is the modern dowry

Don't know if you are an India. In India jewellery is the most ancient form of dowry.

Modern dowry is more like Cars, Flats etc.

[+] unreal37|13 years ago|reply
Also the artificial diamond makers have been doing a good job of keeping their prices artificially high to match.[1] They're not selling cheap diamonds (yet) so not serious competition to the big players. A 1 carat synthetic diamond still runs like $3,000.

[1]http://gemesis.com/create/ring/diamond/

[+] Helianthus|13 years ago|reply
It is the demand that I am unhappy with.
[+] junto|13 years ago|reply
I'd really rather not marry the kind of woman that expected a large overpriced shiny rock on her hand so that she could show-off to her friends, which once married is then a piece of (relatively) worthless jewellery that will sit in a box until she dies and her child inherits it.

Luckily the woman I chose to marry, preferred that our money would be better spent on putting a roof over our heads and paying for our children's education.

At the end of the day, the people that sell diamonds being mined out of the earth, are a bunch of scum, trading on the poverty and blood of (mostly) war torn Africa.

I would have serious doubts about any woman, that feels that their necessity for an expensive shiny stone, is worth the suffering of others.

[+] locusm|13 years ago|reply
What about the precious metals that go into your smartphone? Those same "bunch of scum" generally are responsible for digging that out the ground too. Love an idealist, so unpractical though.
[+] rwhitman|13 years ago|reply
Please don't remind me about this. I'm pretty sure every guy knows all this already and unless you have a super hippy / progressive girlfriend (and even then..) you will ultimately find out that even the most rational women could give a crap about the economic / social realities of the diamond market and still "need" a diamond of X carat in order to impress their family and friends.

DeBeer's wins. Either you get over it, or you end up heartbroken or with a very grumpy fiance.

[+] tsotha|13 years ago|reply
The funny thing is it's not just the guys who realize this. It's the women too. One day there will be a preference cascade and everyone will look at each other and ask "Why are we spending so much money on semi-precious stones?" But until that day...
[+] Joeboy|13 years ago|reply
> I'm pretty sure every guy knows all this already

No! I really don't! I kind of imagine that as a middle-class British guy I'm not too far from modal HN culture, but this sounds totally bizarre and alien to me.

[+] evmar|13 years ago|reply
Walmart recently ran a survey about expected costs of engagement rings and found Americans' expectations have been changing.

http://news.walmart.com/news-archive/2013/02/04/walmart-surv...

(Disclaimer: I work on the tool they used to conduct the survey, which is why I know about it.)

[+] mertd|13 years ago|reply
Was it done on Walmart shoppers? That would be a huge selection bias.
[+] cageface|13 years ago|reply
Actually I consider diamonds to be a very valuable anti-indicator. If I meet a woman that insists on a diamond worth three months of my salary as a token of my commitment I eliminate her as a marriage prospect.
[+] robomartin|13 years ago|reply
> this obligation only exists because the company that stands to profit from it willed it into existence

No it does not! It exists because idiots go along with this senseless idea. It's the same idiots that jump in line like little marketing-driven robots every Valentina's day and every other holiday. It's almost as if people have an API call for "time to shop for some senseless shit".

In our own case, no diamond ring, no jewelry at all. We bought a frigging house, we spent a couple of weeks in the Caribean and a few weeks in Europe. There is no way a diamond or jewelry can compare to that. Oh, yes, no getting down on one knee either. What a demeaning way to start a relationship. If you want to show respect do it with the actions you take every day, not empty marketing-driven cargo-cult gestures.

As for my own daughter, we are going to teach her that a moron who spends his life savings on a diamond ring is just that and someone who can't reason his way out of a paper bag. What a horrible financial decision.

In jest now. Perhaps one could launch a marketing campaign to make people give programming courses as engagement gifts. Talk about a life-changing gift.

[+] tokenadult|13 years ago|reply
There is no reason to be ethnocentric here. There are plenty of world cultures in which a woman wears a simple gold ring after marriage. On the other hand, if you want to get into a serious discussion with your significant other, try violating cultural assumptions about who should pay for the wedding--it isn't necessarily the father of the bride, as it historically was in Anglo-American culture. Sometimes what the groom saves in buying jewelry for the bride is spent on the groom hosting a wedding banquet for all of the bride's relatives and friends.
[+] linuxhansl|13 years ago|reply
Oh man. I had this discussion with my now wife.

The diamond ads even go as far as suggesting what percentage of your income you should spend on a wedding ring (oh and of course there has to be an engagement ring).

There is even guilt instilled if you do not spend that much; as if your love and commitment is somehow measured in the price of the wedding ring.

Don't fall for this bullsh*t.

[+] nullc|13 years ago|reply
One of the most awesome things about this is that there is a tremendous profit reward from diamond consumption brainwashing— so tons of money flows into doing it.

Profit available from stopping it? Probably none unless you're going to just replace it with another kind of brainwashing.

Often the truth is simply out competed by manipulation in the market because the truth belongs to everyone and can't be monetized well.

After seeing my girlfriend's Facebook session plastered with wedding crap and her recently married friend's Facebook plastered with baby crap it became clear to me how potentially harmful to society as a whole this grand brainwashing infrastructure— all of these advertising platforms invading every moment of our lives— we've built is… and I try to stay as far away from it as I can. Because that is all I can do: I certainly can't outspend it.

[+] estebank|13 years ago|reply
I'd love travel companies to start trying their luck with this market...