Blood diamonds

Before it was a movie title, it distinguished a type of diamond. Blood Diamond was a diamond industry term, a Scarlet Letter, to characterize an uncertain, perhaps blood-tainted, provenance. To be specific, a diamond bought from a rebel controlled region of the third world where the diamonds are traded illegally, meaning outside the market share of the diamond cartel, because a diamond sold without profiting the traditional diamond merchants is an illegal diamond. Don’t you find that odd?

The price of diamonds is kept artificially high as a result of the diamond cartel. By a tradition of laws, the Antwerp merchants have managed to make anyone else’s trading of diamonds illegal, enforcing their monopoly. If you were to discover a diamond mine and did not want to do business with the Antwerp monopoly, you’d be considered an international criminal. In the turmoil of a civil war, if you seized a mine, by definition owned by one of their partners, the cartel would label your merchandise bloody.

The diamond cartel/monopoly is reeling, so we hear, from the Hollywood release of the movie Blood Diamonds. Not because it enlightens the public about the diamond market, but because the movie embellishes upon the unpalatable stigma of blood diamonds. Diamond sellers are worried that their business will be tarnished by their own ugly creation, in this case the severed limbs of the people of Liberia forced to work in the diamond mines by feuding rebels. The merchants are selling those same diamonds after all, it only depends on who sold which to whom.

Therefore the industry is stepping up its reassurances that showroom products are guaranteed not to be blood diamonds. There are stamps of authenticity, for example, which would be lacking on blood diamonds. Really? Do you imagine they hold huge bonfires to destroy contraband diamonds like so much unwanted weed? A blood diamond captured from diamond smugglers becomes a plenty-fine diamond, once again profitable to the cartel. The logic being that the diamonds were confiscated, thus no money went to reward their bearers, thus no bloodletting was given a monetary encouragement.

Even if this was true, it doesn’t address what blood diamonds are about.

The diamond cartel was a fortuitous monopoly to grow out of a few merchants’ control of the then known diamond mines. It’s a throwback legacy of the early trade monopolies granted by kings to encourage exploration and trade. The Portuguese were once given the exclusive right to trade around the horn of Africa, then later around the horn of America. The advantage was held later by the Spanish, the Dutch and the English. The Dutch East India Trading Company was a corporate example, the Hudson Bay Fur Trading Company another. We’ve long since outgrown the need to grant exclusives to conquering explorers. Except for diamonds.

The diamond monopoly upholds diamond prices which is sort of in everybody’s interest, the everybody who owns a diamond. Unregulated, it’s calculated that diamonds would lose half their value, maybe more were diamonds to lose their “a diamond is forever” allure.

There’s another common interest which I’ll address in a moment.

For now, imagine the cartel/monopoly concept if it had been granted for automobiles. Daimler Benz would be producing expensive cars for the wealthy and Henry Ford’s Model-T would be a blood-car. Only the rich would be driving cars and policemen would be chasing the poor in illegal vehicles.

Today’s monopolies are granted through patents and copyrights. Artificial rights which ensure high prices and that the poor are left out. As this applies to medicines and technology, the price differential becomes inhumane. Aids drugs are a tragic example.

The other important reason we tolerate the diamond monopoly is to maintain stability for the ownership class within the globalized economy. Diamonds are one of the few commodities which compete with a global currency. Drugs are another. The movement of value, as represented by diamonds, can fuel economic activity outside the control of banks and regulatory agencies. Commodities represent real value, as compared to currency which represents but a representation. As a result, diamonds which are easily concealed from government tax collectors, can readily be used to fund counter-government activities such as rebellions and emancipations. Bad for business.

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Eric Verlo

About Eric Verlo

On sabbatical
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1 Response to Blood diamonds

  1. Avatar Marie Walden says:

    Oh, darling! Thank goodness that I understand the murky complexities of you. . .yes! yes! yes!

    I think that rather than blood red which could, after all, be mistaken for a ruby or, even more embarrassing a garnet, I’d like a yellow diamond. . .size 4. . .brilliant cut. . .at least a carat (two months salary is what they suggest and I’m on board with that).

    I’ve called the little church in Cascade and, yes, Thanksgiving weekend is available. Thank you for asking. I promise to cherish and love you forever!

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