Pub. 14 2019 Issue 1

www.ucls.org 4 Issue 1 2019 / UCLS Foresights Thoughts from the Chair I have been thinking a lot over the last few months —maybe longer — about the concept of value. Not just economic value, but the larger concept, theunder- lying idea of value. Perhaps the easy path to that idea is by contemplating and extrapo - lating from the principles of economic value. A few years ago, I read an inter- esting book titled Stoned: Jewelry, Obsession, and How Desire Shapes the World, by Aja Raden. It obviously is not a book on surveying, business, or even one of those self-help/inspira- tional books. I don’t even remember how I heard about it. The author tells a few stories from history that illustrate her point about the idea of value: What it is, how it is determined, and how it has changed. Two stories stand out in my mem- ory. One is about diamonds and the other is about pearls. First, diamonds. She tells the story of De Beers. The creation of the cartel, the purposeful unification of different mines and companies (De Beers is not a single company), the creation of an effective monopoly, and perhaps most brilliantly, the extended marketing campaign of all time. She quotes Nicky Oppenheimer, chairman of De Beers, “Diamonds are intrinsically worthless, except for the deep psychological need they fill.” Since 1870, over 4.5 billion carats have been mined, which is actually too many. Diamonds are not even close to being a rare stone. If they were able to hit the market based solely on the eco- nomic principles of supply and demand, they would truly be worthless. The “psychological need” they fill is based on a false perception of rarity and de - sirability that was cleverly created by two women of a New York marketing firm. We all know the famous slogans; diamonds are forever and diamonds are a girl’s best friend. We’re taught to value diamonds based upon their cuts, carats, and clarity. All of these ideas were manufactured and part of the marketing campaign. Diamonds are not forever. The di- amond engagement ring has only been a “necessary luxury” for about eighty years. We take the tradition of a dia - mond engagement ring for granted, as if it were as old as marriage itself. It is not. In fact, it is only as old as the mi- crowave oven. “So, what do you do when you’ve invested heavily in an endeavor and then realize that you may have backed the wrong horse? Simple. Do what Rhodes and Oppenheimer of De Beers did after they cornered the market on diamonds. They realized there were so many stones that they were prac- tically worthless. Therefore, they lied and tried to make their lie a reality by making everyone else believe it. It is called PR. Whether the story is about the alleged scarcity of diamonds or the boundless treasures of the New World, it’s all about good old-fashioned spin.” In addition to the obvious mar - keting, the strategy involved loaning massive diamond necklaces, tiaras, and other diamond pieces to royalty in Europe and movie stars in America for weddings, premiers and other events, and the deliberate discussion of the jewelry on display in the radio and print discussions of those events. Today we call this complimentary copy and a cam- paign through “influencers." It was crazy, new, and innovative at the time. In contrast to diamonds, she tells some of the story of the rise and fall of Spanish economy power and govern - ment. Spain extracted more gold and silver from the New World than was in Europe at that time. That big an influx created an imbalance. They crashed the whole thing. They did not understand that wealth was not gold and silver. They did not have a centralized system that controlled the release of those metals into the market as the famous cartel does with diamonds. Even if the crown had held back from trying to spend the metals, the crews and captains certainly would not. They did not understand or have access to the spin-doctors of Mad- ison Avenue. She does not tell the story of alu - minum, but I like it and it’s relevant. It used to be that if you were lucky enough to host royalty for dinner, may- be the King is coming to your Lordship’s castle, you broke out the gold plates and dishes. But if the Emperor was coming to dinner, you better be setting out the aluminum dishes and utensils. Aluminum was so precious that a bar of the metal was exhibited alongside the French Crown Jewels at the Exposition Universelle in Paris in 1855. The metal was used as an or- nament and part of the lightning protection system to cap the construc - tion of the Washington Monument in JEFFERSON SEARLE, PLS 2019 UCLS CHAIR