Diamonds: Luxuries Because They Are

The New York Times has a couple of paragraphs here about 'manufactured' diamonds becoming ever-more indistinguishable from 'natural' diamonds. The article mentions the fact (there ought to be a word for a fact that's presumed to be generally unknown but is actually well known to many people --- to the extent that sharing it won't impress that many people that you'd want to impress. I'll work on finding such a word.) that diamonds are not particularly rare, but are expensive because people think they're rare.

In one of my papers (currently titled Luxury Markets, Antitrust, and Intellectual Property: An Introduction), I refer to the idea (not my own!) that luxuries are not necessarily expensive because they're inherently rare, but are rare because they're expensive. There are a couple of ways to apply that notion to diamonds. If diamonds were easy to come by in the natural world and many people could sell them, then they'd most likely be relatively affordable. If sellers of diamonds had a way to distinguish their diamonds from the diamonds of other sellers, then some sellers might choose to market their diamonds as luxuries: to jack up the price so that only an elite few could afford them and hope that those elites would buy the arbitrarily expensive diamonds so that others would respect them and their elite status. But diamonds are, basically, fungible. It's not as if someone can stick a logo on a diamond or, with the possible exception of proprietary cutting techniques, make a diamond identifiable as coming from a particular seller. So what's happened instead is that we have a cartel that stifles competition. In a nutshell, almost all naturally occurring diamonds are controlled by a small number of private companies or government-backed entities who agree to set high prices and limit the number placed on the market. There is little competition.

But with the world of high quality manufactured diamonds an interesting possibility arises. What if there were a way to make a diamond that had all the physical attractiveness of a natural diamond, but actually was branded or marked? Maybe there are little logos on each of the facets, or maybe deep inside there's some symbol, or maybe when you move it in certain ways or expose it to certain light a particular effect presents.

If this can happen, then the natural diamond cartel may be in trouble: manufactured diamonds that are absolutely indistinguishable from natural ones will create competition in the 'generic' diamond market. There may still be genuine prices differences depending on size and quality and the relationship between consumers and vendors, but there will be a vast supply: a diamond will be little different from any other bauble.

Manufactured diamonds, on the other hand, will also be able to be marked and made differentiable from other diamonds (both natural and manufactured). A properly marketed luxury artificial diamond (not natural diamond) might be able to obtain luxury prices similar to, if not more than, what today's diamonds command. After all, if people pay a premium for a Tiffany diamond that is exactly the same as a diamond you could get from Blue Nile, imagine what they'd pay if Tiffany had a way to mark their diamonds so that their customers would know that society would be able to recognize that the expensive-looking diamond actually was expensive, and that the person wearing it was thus worthy of respect (or at least their bank account was).

I'm trying to think of examples of product categories where natural and some manufactured versions compete on one level, and some manufactured versions are marketed as luxuries. It's late, I'm tired, and I'm drawing blanks. Oh. Water! Maybe it's not quite the same, because there are some natural waters that are priced pretty exorbitantly, but if you consider distilled water to be 'manufactured' and spring water to be 'natural', I think that some aspect of the phenomena I hypothesize is playing itself out in the bottled water market.

Anyway, it was fun to write on something that had little to do with the Bar.

Just Because I Don't Read About Enough Illegal Acts While Studying for the Bar

Rick Seaney reminds us, with a convenient chart that he promises to update, of all the fees (over and above your ticket price) that airlines hit you with these days.


A Link to a Paper I Wrote

At the Antitrust & Competition Policy Blog, D. Daniel Sokol posted a link to one of my (as yet) unpublished papers (Luxury Markets, Antitrust, and Intellectual Property: An Introduction). I would like to publish it, and am willing to rework as necessary. If anyone's interested :-).


School CAN teach creationism

Some nutjobs insist on harming the United States by keeping our children ignorant of science, as the New York Times reports.

The reporter writes that courts "prohibited the outright teaching of creationism and intelligent design".* He is wrong (or should be). Schools can teach pretty much any topic they want. They can teach reading, writing, mathematics. They can teach band. They can teach arts and crafts. They can teach gym. They can teach civics. They can teach religion. They can teach history. They can teach politics. They can teach creative writing.

Let's compare history and creative writing. A history class teaches what happened in the past. It might begin with a section on the tools and methods of history and discuss some criticisms of mainstream history. And then it will move on to present history. A creative writing class might teach methods of writing and the characteristics of a good story. It might also involve reading a lot of pieces of creative writing and discussing them, or even writing a number of creative pieces and discussing those.

Creationism and science can be analogized to lots of different things. But I'll compare science to history and creationism to creative writing. Schools teach the science we have, not that science we wish we had. Schools can teach the creationism we wish we had, just like they can teach the creative writing we wish we had. Schools can't teach creationism as true, or as science, because it's not. But they can teach it as an example of propaganda, or creative writing, or politics. It can be studied and critiqued. It can even be taught as a historical phenomenon, as could, for example, the publication of 1984. But the contents of 1984 are not historical truth, and the substance of creationism is not science.

Schools can teach just about anything. In the right context.

* I like to put the punctuation outside the quotes because I'm not quoting that punctuation. It's my own.