De Beers a government backed monopoly?

[Tyco]

I read in a book by Rothbard that the DeBeers diamond monopoly and/or cartel which allegedly lasted 100 years was only possible because they were not operating in a free market. He stated that in South Africa ('in particular') diamond mines were owned by the government and leased to miners/producers. Even if you found a diamond mine on your property, it would swiftly be nationalized. De Beers, he said, were conveniently the only party the government would deal with.

Now, that makes total sense, the problem is I cannot find any evidence that this nationalization claim is true. Anyone know?

[Zip]

I read in a book by Rothbard that the DeBeers diamond monopoly and/or cartel which allegedly lasted 100 years was only possible because they were not operating in a free market. He stated that in South Africa ('in particular') diamond mines were owned by the government and leased to miners/producers. Even if you found a diamond mine on your property, it would swiftly be nationalized. De Beers, he said, were conveniently the only party the government would deal with.

Now, that makes total sense, the problem is I cannot find any evidence that this nationalization claim is true. Anyone know?

I don't know about the nationalization but I read that DeBeers constricted the market for years in an attempt to drive up the price of Diamonds (and subsequently their own profit), just to realize after they relaxed the flow (and price) that they would make more money selling diamonds cheaper to more people.

Sometimes companies can become as stupid as governments, they are "lucky" they had that enforced monopoly otherwise someone would have put them out of business.

[John McVey]

There's more to it than just a monopoly on mining and physical distribution. IMSM there are laws on the books of many nations that effectively make it illegal to market lab-created diamonds as being diamonds, or must somehow include demeaning terms in any advertsing, or something like that. A number of years ago, when I first learned of macro-sized lab-created diamonds I had fun coming up with cool marketing ideas for them. I had wondered why something like what I had thought up hadn't already been used, but it turned out that the reason was that my ideas were illegal under the demeaning laws. In a real free market laws like these would not exist. There is no fraud - lab-created diamonds are still genuine diamonds and do exactly the same thing (both for jewellery and as industrial products). The consumer has no inherent right to know where a particular diamond came from, only that when she says she wants diamond then she gets diamond as she asked for.

Bonus points for those who can cross-link the principle behind these laws with the fetish for organic food.

JJM

[Steve D'Ippolito]

I'd go so far as to say it would be fraud to say an artificially produced diamond was "natural", though, and people might for some reason choose to value the natural ones. And of course it would be fraud to call a cubic zirconia a diamond, diamonds are carbon. (Talk about having all of the value be in the form, not the substance!)

Other than that, this is actually sillier than the organic food fetish since I could at least imagine the methods of raising food affecting its taste, and I could certainly imagine some additives being a low grade or subtle detriment to ones' health. Mind you it hasn't been proved to my satisfaction, but the notion isn't flat out ridiculous on the face of it.

[Tyco]

I found this article

http://thedailybell.com/575/Edward-Epstein...ond-Racket.html

first part is an interview with the author of a diamond-trade exposé, who concludes that De Beers was not a monopoly but a cartel, and that advertising is the main reason for the continuing illusion of diamond value/scarcity

the editor of the webpage, however, disagrees on this point and says De Beers WAS a monopoly if it could exert this monopoly-like power on the price of goods. he goes on to argue the cartel MUST have been backed by government actions, but only because that's what Austrian economics dictates. he offers no actual evidence, taking us back to square one...

[John McVey]

I'd go so far as to say it would be fraud to say an artificially produced diamond was "natural", though, and people might for some reason choose to value the natural ones.

Certainly, but that's not what most people care about - and the issue wouldn't even arise until lab-created diamonds were frequently used for jewellery (they're already heavily used in industry for saw blades etc) and there was an express desire for natural as a counterreaction. My point remains that if the jewellery just says "this is X-carat diamond" without saying where the diamond came from then he has done no wrong and the customer has no comeback regarding that diamond's origin. Only if it was expressly stated as being of a certain origin and it actually wasn't does the customer have a case (and our moral estimate of the customer's preferences are a separate matter).

And of course it would be fraud to call a cubic zirconia a diamond, diamonds are carbon. (Talk about having all of the value be in the form, not the substance!)

No dispute there.

Other than that, this is actually sillier than the organic food fetish since I could at least imagine the methods of raising food affecting its taste, and I could certainly imagine some additives being a low grade or subtle detriment to ones' health. Mind you it hasn't been proved to my satisfaction, but the notion isn't flat out ridiculous on the face of it.

In concrete practice, yes, and there are indeed genuine taste and cooking-performance issues on how foods are created (see what Diana and Monica have said on the matter, for instance) - but that's not the moral principle behind it in its mainstream application. And, as far as I can see in many cases the taste benefits are trivial and greatly exaggerated to be but a prop for organicism, with only occasional major differences (others can correct me, but how chickens are raised greatly affects how batter using their eggs performs in the oven). Most organic-foodies I've run across, like vegans, prattle on about morality and environment blah blah blah, deifying the natural and denigrating the human influence because it is human influence.

JJM

[Steve D'Ippolito]

Certainly, but that's not what most people care about - and the issue wouldn't even arise until lab-created diamonds were frequently used for jewellery (they're already heavily used in industry for saw blades etc) and there was an express desire for natural as a counterreaction. My point remains that if the jewellery just says "this is X-carat diamond" without saying where the diamond came from then he has done no wrong and the customer has no comeback regarding that diamond's origin. Only if it was expressly stated as being of a certain origin and it actually wasn't does the customer have a case (and our moral estimate of the customer's preferences are a separate matter).

I think we are actually in agreement there--I was deliberately bringing up a contrasting situation to the one you were talking about.

In concrete practice, yes, and there are indeed genuine taste and cooking-performance issues on how foods are created (see what Diana and Monica have said on the matter, for instance) - but that's not the moral principle behind it in its mainstream application. And, as far as I can see in many cases the taste benefits are trivial and greatly exaggerated to be but a prop for organicism, with only occasional major differences (others can correct me, but how chickens are raised greatly affects how batter using their eggs performs in the oven). Most organic-foodies I've run across, like vegans, prattle on about morality and environment blah blah blah, deifying the natural and denigrating the human influence because it is human influence.

Yup. The true organic foodies fetishize "natural" qua "natural". Monica, Diana, et. al., are after it where they see a significant *actual* difference. What's funny is in science the word "organic" merely means it has carbon atoms in it. Petroleum is an "organic compound" and *all* food (save salt) would be "organic."

For that matter the overwhelming majority of the atoms in our food are "natural" and *all* of them were before we started playing with fission. Somehow that doesn't impress these clowns though.

[Tyco]

the De Beers cartel continues to puzzle me

does anyone have thoughts on these two points:

- even if they owned and controlled the supply and retail of diamond jewels, they still don't have a monopoly because the actual market, jewels, is much bigger than just diamonds

- there's no way you can consider De Beers a monopoly as every consumer has the opportunity to resell their diamonds (ie. it's not like oil which gets used up, or transport which is a service)

[Tyco]

found evidence of one interesting piece of legislation:

"This ecological disaster (little or no rehabilitation has been done since mining started 80 years ago) has been conveniently hidden from the public eye because this section of coast is a restricted area. Access control to it is strictly enforced by law. In South Africa, the possession of rough diamonds is illegal and could cost you years of jail time."

but not quite sure what to make of it