Rethinking Diamond Engagement Rings in the Current Financial Crisis
I think it's time we rethink the tradition of giving diamond engagement rings. Not only have changes in socio-economic and marital conditions compromised the tradition of giving diamond engagement rings, but to say the least, the tradition is somewhat absurd and counter-productive.
To clarify, I am not against the giving of a ring for a marriage proposal. Rather, I contest the socially-pressured expectation that a man purchase an excessively expensive diamond engagement ring prior to betrothal. I have nothing against a symbolic gesture to show and reflect the beauty of an engagement to be married. However, I am against the societal perpetuation of the concept that males should feel compelled to purchase an excessively expensive, useless, worthless, miniscule piece of stone just to definitively prove their love and devotion to a women. Maybe it is time that the tradition of giving diamond engagement rings gets phased out.
This may be news to some readers, but at one point in recent history, no one gave diamond engagement rings prior to getting married. While betrothal rings have been given since the Roman era, the "tradition" of giving diamond engagement rings began in the late 19th century and really began to take off in the 1930s. Thanks to a very successful advertising campaign by the diamond company De Beers in the 1930s and 1940s, today men in America feel socially pressured to purchase a diamond ring for their girlfriend in order to be "officially" engaged. It is very unfortunate that our recent ancestors fell for this advertising ruse by De Beers.
Unlike gold or silver, diamonds do not really have any intrinsic value per se. A significant number of the world's diamonds are owned by De Beers as De Beers cornered the market on diamonds long ago. As such, De Beers effectively controls the value of diamonds in the form of an artificial monopoly. Congressman Ron Paul recently hinted on the comparison between gold and diamonds during an exchange with Federal Reserve Chairman Ben Bernanke. Ron Paul: "Why don't [central banks] hold diamonds?" Bernanke gave the lackluster response that central banks hold gold because of "tradition". The simple fact is that diamonds as found in engagement rings and other pieces of jewelry are not like gold or silver. And if I had to guess, central banks most likely do not hold diamonds as a key asset because they understand that the value of diamonds is manipulated arbitrarily by those who control the international diamond market; the "diamond standard" if there were one would be dictated by De Beers.
I am not going to get into some of the more immoral, exploitative, and bloody aspects of the diamond trade for the purposes of this article, but to say the least, we have to wonder whether supporting such practices as a society and culture is worthwhile.
Of course, diamonds can have industrial purposes for things like drill bits, but equating diamonds with precious metals like gold and silver is not accurate. Unlike gold and silver, the value of diamonds can be manipulated arbitrarily courtesy of the international diamond market dominated by De Beers. I can understand, respect, and admire De Beers' marketing of diamond engagement rings as a means to promote business and commerce, and the marketing campaign may have worked in the world of the 1930s and the 1940s to their benefit. However, given our current socio-economic situation, perhaps we should give the tradition another look.
Is the giving of a diamond ring for engagement a worthwhile tradition? Perhaps my perspective is because of my personality type in not understanding and grasping the "value" of tedious social rituals and perhaps I am biased in that I have been engaged twice in my life, but I find the "tradition" of diamond engagement rings to be quite silly. The problem is that most individuals cannot see the silliness behind the tradition because the tradition itself has been engrained into our socio-cultural mindset.
Imagine that some nation somewhere has a tradition that when a woman gets engaged, her husband-to-be usually buys her a purple three-cornered hat for her to wear. The hats can come in different sizes and can be decorated flamboyantly in various ways to denote higher or lower values. More expensive hats may look like purple peacocks and plainer hats without frills may be less expensive. But either way these three-cornered hats are very expensive because the Tyrian purple ink used in making the hats comes from a rare species of snail that flourishes only in Mediterranean regions. And yes, one company has a monopoly on the supply of this rare species of snail; we will call the company Tyriani. Owing to a successful marketing campaign, Tyriani is able to market these purple three-cornered hats to the point that every female wants a purple three-cornered hat when she gets engaged. In reality, these purple three-cornered hats are excessively overpriced and of no practical use. This is basically what happened in the history of diamond engagement rings. Just as the giving of a purple three-cornered hat for engagement is absurd, so too the giving of a diamond engagement ring is absurd.
When the "tradition" of giving diamond rings for engagement was promulgated and aggressively marketed to Americans in the 1930s and 1940s, the social and economic environment was radically different. Men were expected to work as the sole breadwinner to provide for their families, and women stayed at home. This is not the case today for many couples where both individuals work outside the home. Going along with the change of gender labor roles, a comparable change in our time period for the giving of a diamond engagement ring would be for both the man and the woman to contribute to the diamond engagement ring's purchase. But alas, that aspect of an evolving and more equitable society is not addressed in marketing campaigns and jewelry advertisements for some reason.
Even further, in the time period of when the diamond engagement ring "tradition" became popular, the socio-cultural environment was radically different from ours today. People did not have computers, mp3 players, and the Internet in the 1930s and 1940s. Where a computer or a new car may be more valuable to a young couple preparing for marriage, societal and cultural attitudes reinforced by the media continue to act as if the giving of a diamond engagement ring has been a quasi-religious tradition from time immemorial, and that is simply not the case.
Where marital and child-rearing traditions are changing, it is time for American society to see the reality that socially pressuring a young man to purchase an excessively expensive, useless, miniscule item for the woman he loves in anticipation for marriage is absolutely absurd. There is no other word than "goofball" to describe a societal practice where a man with not a lot of money and a struggling career is expected to pay an exorbitant sum of money for a little piece of stone and metal. It is goofball to think in this day and age that males who are just starting out and trying to establish their careers have the funds for such a nonsensical practice. This is true especially given the current financial crisis where many young men do not have jobs and do not have thousands of dollars to spend on a useless item; the practice is absurd. Even further, with rising divorce rates and changing attitudes towards marriage, one has to wonder whether such an expensive purchase is worth the heavy financial risk.
Let us think of the opportunity cost (the loss of potential gain from other alternatives when one alternative is chosen) in a man's purchasing a diamond engagement ring prior to marriage. In light of the current financial crisis, a young man preparing for marriage may be better off taking that money that would be used for a diamond engagement ring and using it towards a new car or a down payment on a house. A young man may be better off using those funds to create a college fund for a child on the way. If a young man spends $3,000 to $4,000 for an engagement ring, that may be a greater amount of money than the young man's grocery bills for the year!
I ask you, which would you rather have, two years worth of groceries or a little piece of stone and metal? And now I ask you, if your daughter was about to get married to a young man with little money (which is to be expected given the current financial climate), would you rather that the man spent thousands on an engagement ring or would you rather that the man spent that money feeding and clothing your daughter and your future grandchildren? Of course, one may have concerns when people who cannot afford to get married and have children get married, but love and passion know no financial bounds.
Being that I was raised in the US, I for one feel socially and culturally pressured to purchase a diamond engagement ring for betrothal. This feels like a quasi-religious tradition. And by my playing along with the silly socio-cultural practice of purchasing a diamond engagement ring, I am partly to blame for its perpetuation. Nevertheless, I think it's time we rethink the practice. The entire phenomenon is rooted in a marketing ruse, and now many males today are paying a hefty price for it. Of course, we have come a long way from where a man would have to give a lamb or a cow to his future in-laws as a bride price, but still, at least you can eat a lamb or a cow.
There comes a time when traditions (even fabricated ones) die out. With marital and child-rearing practices in American society changing over time and with the global financial meltdown, perhaps in the future the purchasing of diamond engagement rings will be left for only those who are very wealthy -- similar to how in ancient times only the very wealthy could afford to wear Tyrian purple clothing.
Then again, perhaps giving diamond engagement rings will never go out of style. Perhaps if the US economy rebounds, the specter of depression economics will subside, societal attitudes towards marriage will change, young people will decide to get married, people will be able to afford expensive rings, and the tradition will continue far into the future to the point of truly being a tradition from time immemorial. However, in light of our ongoing economic issues and changing societal attitudes towards marriage & finance, it becomes hard to see such a situation occurring.
When it comes to love, there is a difference between (1) the one you love wanting something that is quirky-yet-expensive & so you buy it for her because you love her and (2) a socially promulgated & perpetuated practice that imposes a staunch financial burden on males in anticipation for marriage for no practical reason. Yes, it may make sense at times for individuals to spend a lot of money on the one they love despite any negative financial impact, but arbitrary socio-cultural mandates brought about by marketing campaigns are unnecessary and suspect. Given any possible financial inability and recklessness involved with the practice, it may be better for the tradition of giving diamond engagement rings to be phased out by the market itself. Perhaps in the future, the diamond industry can compensate for this by aggressively marketing new traditions such as "Homecoming diamond bracelets", "retirement diamond rings", "25th anniversary diamond rings" or even "50th anniversary diamond rings". Again, I can understand and respect De Beers' marketing campaign and I want to make it clear that I cannot fault the diamond/jewelry industry for wanting to market their product, but the burden now placed on young males trying to make their way in the world should call into question the validity of the practice going forward.
It does not make sense to socially mandate struggling young males to purchase excessively expensive items that are of no practical use. We could extend the discussion of the prospects of financial inability and recklessness to more practical issues like marriage and child-rearing as well, but that is an article for another day. We could also extend the discussion into questions of the viability and worth of the institution of marriage going forward and Western norms regarding the commercialization of the marriage ceremony itself, but those too are topics for another day.
The fact of the matter is that societal attributions of value can be arbitrary and nonsensical. Nevertheless, when the market is left to work on its own, in time the market speaks truth regarding the true value of things and economic actors respond accordingly. And if you do not believe that, well, then I have a tulip to sell you for $5,000.
"God grant the philosopher insight into what lies in front of everyone's eyes."
~Ludwig Wittgenstein, from "Culture and Value"
Traders who believe that giving diamond engagement rings will never go out of style despite the economic climate might want to consider the following trades:
- Go long on Zale Corporation (NYSE: ZLC), Tiffany & Co. (NYSE: TIF), and Blue Nile, Inc. (NASDAQ: NILE).
Traders who believe that the current global economic climate will force young people to scrap tradition, forgo buying expensive diamond engagement rings, and either not get engaged or buy simplistic gold, platinum, or silver rings instead may consider alternate positions:
- Short the above and also check out gold and silver ETFs.
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