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Have You Ever Tried to Sell a Diamond? (1982)

theatlantic.com

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Re: Have You Ever Tried to Sell a Diamond? (1982)

#161

Post by ngm-hn »

Most of the article seems critical of the diamond industry. Have they not done people a service by providing them with a nice product that they can enjoy?

There are certainly moral problems with how they built their empire, but why are clever marketing and aggressive pricing bad things? The former is simply how you tell people about new products. Remember diamonds went from being owned by almost no one to being owned by lots of people. If those rings make them happy, then why is it our business?

How is DeBeers marketing any different from Apple marketing?

Of course, the article does do a good job in warning people that their diamonds may have little resale value. But that's a risk most buyers are willing to take. After all, most non-divorced people don't sell their wedding and engagement rings.

Re: Have You Ever Tried to Sell a Diamond? (1982)

#162

Post by robflynn »

HorizonXP wrote: post #26

Wow, absolutely brilliant. I can't believe this article popped up on HN's front page tonight. I just got back from looking at engagement rings with my girlfriend. I've known about this monopoly for a while, and so has she. Heck, one of the first movies we watched together when we first started dating 7 years ago was Blood Diamond. Here's the conversation we had while in the jewellery store tonight. Me: "Sweety, I rea…

My girlfriend wants a Winnebago type thing instead of a diamond, presumably so she can go somewhere if I become especially annoying. ;)

Re: Have You Ever Tried to Sell a Diamond? (1982)

#163

Post by MindTwister »

brc wrote: post #32
HorizonXP wrote: post #26

Wow, absolutely brilliant. I can't believe this article popped up on HN's front page tonight. I just got back from looking at engagement rings with my girlfriend. I've known about this monopoly for a while, and so has she. Heck, one of the first movies we watched together when we first started dating 7 years ago was Blood Diamond. Here's the conversation we had while in the jewellery store tonight. Me: "Sweety, I rea…

>Honestly, as a community of people in the startup ecosystem, we could stand to learn a thing or two here. Yup. Bang on. Apple does a line in 'oh, but you didn't get an Apple' better than anyone else (they aren't a startup but once were) >I swear, De Beers has probably pulled off the greatest marketing stunt in the history of humanity The Australian Meat & Livestock board came up with a marketing idea. On Australia D…

In Denmark we have J-dag, where the christmas Tuborg beer is released. Its always on a Friday and you can be 100% sure that every bar, in every city is filled to the brim with people drinking the first christmas Tuborg of the season.

Re: Have You Ever Tried to Sell a Diamond? (1982)

#164

Post by Symmetry »

confluence wrote: post #123
jonnathanson wrote: post #18

It's a fascinating piece, for a number of reasons. The first, and perhaps most interesting, is that the story behind the De Beers cartel is well known . Perhaps not in this depth, but still, it's no secret. Pretty much everyone knows they exercise a monopoly on diamond production and distribution, artificially keeping prices high. And yet, nobody takes the red pill and opts out of the illusion. Call it the power of t…

Free markets always tend towards monopoly/oligopoly/cartel structures in the long term - because the firms that do so retain their pricing advantage (profits) and the firms that don't - die. I have to think that the idea of free/natural markets has to be one of the greatest tricks ever pulled by anyone at any time (next to communism). Markets are artificial and restrictive for a reason - they're created by government…

I think you've got this wrong. Any firm that defects from the cartel will tend to gain market share at the expense of all the firms that remain in the cartel. Thus, its really the firms in that remain in the cartel that die. So the whole thing looks a lot like a Prisoner's Dilemma game played between the firms looking to cartelize.

Now, they might do things like sign contracts between each other to prevent defection, or buy each other's stock to make defection less profitable than profitable than playing along, but then you have to worry about disruption from outside the cartel. Or you could forcibly cartelize industries like FDR tried to do with the National Recovery Administration if the government really wants an industry to be profitable when it wouldn't otherwise be.

And when I think of successful cartels in history I think of DeBeers and OPEC and... well, those are the only two I could name that lasted longer than a few years.

Re: Have You Ever Tried to Sell a Diamond? (1982)

#165

Post by confluence »

Symmetry wrote: post #164
confluence wrote: post #123

Earlier quoted context omitted.

Free markets always tend towards monopoly/oligopoly/cartel structures in the long term - because the firms that do so retain their pricing advantage (profits) and the firms that don't - die. I have to think that the idea of free/natural markets has to be one of the greatest tricks ever pulled by anyone at any time (next to communism). Markets are artificial and restrictive for a reason - they're created by government…

I think you've got this wrong. Any firm that defects from the cartel will tend to gain market share at the expense of all the firms that remain in the cartel. Thus, its really the firms in that remain in the cartel that die. So the whole thing looks a lot like a Prisoner's Dilemma game played between the firms looking to cartelize. Now, they might do things like sign contracts between each other to prevent defection,…

Any defecting firm will also lose a great deal even with the market share gain - hence why there were so few long term winners after the dot com boom. You'll notice that a lot of the firms that did this have survived and raised prices above inflation utilizing monopoly power - just like I stated above.

Re: Have You Ever Tried to Sell a Diamond? (1982)

#166

Post by kaybe »

patio11 wrote: post #91
HorizonXP wrote: post #26

Wow, absolutely brilliant. I can't believe this article popped up on HN's front page tonight. I just got back from looking at engagement rings with my girlfriend. I've known about this monopoly for a while, and so has she. Heck, one of the first movies we watched together when we first started dating 7 years ago was Blood Diamond. Here's the conversation we had while in the jewellery store tonight. Me: "Sweety, I rea…

She even told you her true requirement, which is to look good for her girlfriends. (Watch what happens when ladies announce an engagement or look for the ring shot on Facebook, then tell me I'm off base.) You did not sell her a product which would make her the envy of her girlfriends. "Cheaper than their rings" is the opposite of a victory condition. Don't sell cheap. Sell authentic, sell natural, sell one-of-a-kind,…

If you have some time, you can go to Brazil (eg state of Bahia, near Chapada Diamantina where many diamonds are found), talk to people in the villages (Spanish works, Portuguese is better) and buy a raw diamond they found.

Polishing will make it smaller by about half, and at least I cannot judge the purity and value of a raw diamond just like that, but the story and experience of getting it and the knowledge of its ethical origin are enough of offset that in my opinion.

edit: If anyone needs directions, just ask.

Re: Have You Ever Tried to Sell a Diamond? (1982)

#168

Post by dfc »

intended wrote: post #106
YokoZar wrote: post #74

Earlier quoted context omitted.

You could do the economist thing and try to phrase it in terms of opportunity cost. That is, by insisting on a diamond, she's giving up a moissanite stone that's 5 times the size; by insisting on an uncultured diamond she's giving up a diamond that's twice the size (and more pure to boot).

This is the intersection between Macro economic theories (op cost) and consumer behavior. And that too, one of the most emotionally charged decisions people make in their life times - marriage. I would be extremely hesitant about using that particular gambit.

"This is the intersection between Macro economic theories (op cost) and consumer behavior."

This is as Micro as it gets. And why do you think oppurtunity cost is restricted to Macro?

Re: Have You Ever Tried to Sell a Diamond? (1982)

#169

Post by Symmetry »

confluence wrote: post #143
htf wrote: post #140

Earlier quoted context omitted.

> Free markets always tend towards monopoly/oligopoly/cartel structures in the long term - because the firms that do so retain their pricing advantage (profits) and the firms that don't - die. Can you give any example? > Free/natural markets are probably one of the greatest lies ever sold. What do you mean? Free markets are not a lie. There are tons of free markets. If I buy bread at the supermarket, I can choose amo…

Any industry that makes money will tend towards this in one form or another. This does not mean that there are no competitors or independents not making money - it merely means the vast majority of the market is consumed by a few companies/brands who set the prices and keep price floors. Bread is an example of a cartel structure reinforced with marketing, economies of scale (monopoly) and previous consumer buy in. Yo…

Oh, I see you're using a definition of Cartel that's rather different than the standard one[1]. If you just mean that commodity producers more or less converging around a price without an explicit agreement between them to inflate that price than of course every commodity ends up being a "cartel" and you'd have a hard time finding an economist who would disagree with you.

[1]http://en.wikipedia.org/wiki/Cartel

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