Manufactured Scarcity: Diamonds And Other Crap You're Paying Too Much For

I don't know if it's because of wedding season or what, but I've seen a lot of coverage of diamonds lately. You may remember that I have my own opinions about diamonds, and deliberately don't have a diamond engagement ring. Women who want the look of the clear, shiny rock without the guilt or expense of diamonds have had the options of cubic zirconia or moissanites for years. But did you know there are lab-grown diamonds out there? I had no idea! They are chemically identical to and pretty well indistinguishable by gemologists from natural diamonds. Best of all, they can also be cultured in different shapes--like flat, as for a window of a spaceship. Science is so awesome. That's a diamond I can get behind, even if the whole engagement ring thing leaves a sour taste.

White lab-grown diamonds are still roughly the same price as their mined counterparts, but colored diamonds--yer pinks, yer yellows, yer browns, all of which command a premium among mined diamonds--are about 15% cheaper for lab-grown specimens. The technology to produce high-quality stones is fairly new, though, and I expect those costs to decrease as the process is further refined. Meanwhile, the natural versus synthetic gemological divide is blurred even further by tinkerers who use modified mopeds to "cook" the naturally occurring impurities out of gems to artifically heighten their clarity. (Abstract only on the New Yorker's site; grab it from the library, it's a fascinating read on the global gem trade).

DeBeers, which controls the vast majority of diamond sourcing around the world, has spent the last several decades bottlenecking the diamond trade to create an artificial global sense of diamond scarcity and thereby to inflate prices. (Aside: as I sit here typing, one of DeBeers's "A diamond is forever" commercials just interrupted my date with Anthony Bourdain as we eat our way through Argentina. Bite me, DeBeers. I want to get back to the food.) Diamonds aren't rare; thanks to the industrious underlings who figured out how to jerry rig a moped, high-clarity diamonds aren't even rare now that they can be made out of something of much lower quality. Truly: who would buy these rocks at these prices if they knew just how common they were, when there are adequate, in some cases identical, substitutes that are less pricey? Why?

But diamonds are not the only area in which people pay for rarity, even if they are one of the most extreme (and most extremely silly). Plenty of people want to pay to be "in the club" whatever that club may be. Whether it's impulse buying the last Wii on the shelf because it could be yours and no one else's or, my personal downfall, reflexively purchasing imported or limited release 7-inch records of a song I already own, rarity--or exclusivity, or scarcity, or "hipness," or whatever term you want to use--is alluring. But it's pretty much the opposite of as close as we can get to objective value. Rarity does not create intrinsic value. Be suspicious. Be very suspicious.