Let it BE: My Dad, Singapore Politics and Identity

After the first by-election Worker's Party rally, my dad came home with these flags.

My dad is ardently supportive of the top opposing game in town now, the Worker's Party. One might be tempted to associate him with the hordes of unintelligible, foul-mouthed, immature online surfers who trawl political internet sites like Temasek Review and leave distasteful trails of cowardly anonymous and unconstructive criticism directed at the PAP in their wake. Conversely, my dad actively attends rallies to offer genuine support, sends encouraging emails to Sylvia Lim (whom he has some degree of personal contact with), does not bother with posting comments on political internet sites (but does amuse himself from time to time with visits to such sites), puts his mouth where his money is by actually not endorsing government (i.e. PAP)-linked products (even if this inconveniences my household), and holds profound and heartfelt reasons for being highly disapproving of the incumbent party.

I had a chat with him today, one of the many chats I believe I should have had but did not because I was a rebellious son most of my life, so I have a lot of ground to make up for. He was chiding me for my absence for a family dinner on Saturday because I missed out on meeting some very old neighbours. They're people I would never recognize because the generation I belong to today tends to be more disconnected from relatives and old family friends compared to generations past. I asked if they were the Peranakan family that stayed next to him at the old private house in Everitt Road with the chiku tree when he was young, and he said no, they were from another neighbouring household, and were Hainanese.

Over an afternoon lull of coffee under the lazy breeze of an overhead fan, I pondered for a moment and asked him, "back then, did people see other people as Singaporeans or as people with differing origins?" In other words, I was asking him about a classic psychological concept, the self-construal, whereby people are defined by how they perceive themselves (often in relation to others). In this case, I wanted to know what comes to mind first when my dad or other Singaporeans back then thought of other people - as Singaporeans or as originating from elsewhere (e.g. Peranakan, Hainanese, etc). What was the automatically defining trait of Singaporeans?

My dad immediately said Singaporeans, definitely. Even though his father was technically an immigrant from Fuzhou, he said that the kind of sentiments today compared to back then are clearly different. Foreigners and immigrants who came in, like my grandfather did in the 1930s, never received incentives for coming to Singapore - they were escaping a hard life elsewhere and were seeking opportunity and had to work equally hard as compared to locals (although there probably wasn't such a clear idea of what a local Singaporean back then was). My dad feels that these days, foreigners are more than welcome to come in, and with such entitlements they will not feel such a strong need to learn local customs and integrate. My dad said that my grandfather had to rough it out really hard and therefore earned his right to be a Singaporean. And perhaps, because of the tumultuous political climate back then against neighbouring countries, there was a greater sense of unity among such differently originating people because they had to work together against external elements and build up the economy. Additionally, households were closer back then - neighbouring families would visit often, look out for each other and their children would play and grow up together. One often could leave the doors open without fear of burglary.

So, my dad thinks that policy-oriented efforts today by the incumbent government to foster integration is bollocks because he doesn't believe it would work. Further, my dad actually doesn't believe the government really cares about integration; foreigners will always be welcome for not-so rosy purposes.

 

To accompany my dad and share in his enthusiasm (I support the WP now but I'm not particularly hardcore - support, to me, isn't all about allegiance) I decided to join him at the third WP rally at the huge Hougang field. I did not regret sweating it out and braving the stuffiness along with thousands of other highly (and rightly) discontented Hougang residents. Throngs of people were gathered to support the party that has stood by them for two decades, and if it isn't so much a preference for the WP in the form of votes for Png Eng Huat, it was to show that there was no way they were going to accept PAP's Desmond Choo running the show in Hougang, especially since the PAP has been punishing Hougang residents by denying them all sorts of residential improvements for twenty years, simply for being a WP stronghold.

There are two sides to everything. One could say that this episode (preceded by the watershed General Elections last year) is divisive and destabilising, and feeds hate and disunity. On the other hand, it is important to acknowledge too that this means many Singaporeans (certainly not all) are shedding their apathy, standing up for something, and perhaps forging an identity that has been otherwise artificially decided for them by the government for over five decades. These are teething pains, but from the spirit I witnessed, I think it means we are growing as a nation just a little bit more.

Just a disclaimer though; I think unintelligible, irresponsible, anonymous, unconstructive online criticism is the most pathetic product I've seen coming out of this entire political saga. It is really disgusting to read comments consisting of nothing but cheapshots and mindless agreeing with many other people who just want something to hate. Maybe another post for another day.

Oh Man, Seriously?

Government has just announced that it plans to bring in at least 100,000 more foreigners to meet the demands of our growing markets.

I honestly have so many reservations about where our ship is being taken. If my qualms are right, then we are sinking - indeed a hole has been punched into the hull since the day the government decided that Singapore's goal would be to develop itself into an economic powerhouse rather than a country with culture and national spirit. Bringing more people on board to pour the water out of a sinking ship won't solve the problem.

The news (and very unpopular public response) comes quite timely along with an interview of Gerald Giam of the Workers' Party on Yahoo! Singapore. The PAP might have gotten it 'right' so far (whatever 'right' means), but we can never be sure where absolute power can be taken. A political system that is healthy always requires checks and balances. I always believe that absolute power never has a pure end.

Singapore might be economically thriving at the moment and we definitely have living standards that are much higher compared to half a century ago thanks to the ruling party. But with economic development and wealth as the ends instead of a proud and thriving national culture, we've given up so many other important things, such as knowing how to relax, investing time in our families, art.

The best thing about how effective the government is? They’ve managed to convince so many people to believe money is indeed more important than all those other less important social and creative pursuits.

And when I refer to the development of culture, I don't mean the one that we tend to associate Singaporean culture with, such as being kiasu, or God forbid, Phua Chu Kang.

A worthy culture is one that we’re willing to be proud of and be a part of. Looking at how so many Singaporeans want to leave the country, I can't really see how our culture is steeped in the right direction. It is somewhat disheartening to see any one out of two typical responses coming from Singaporeans: the unthinking acceptance that what we've got is as good as it gets, or the desire to leave this country that many don't feel a loyalty for. Many Singaporeans shape their worldview around the heavy notion of pragmatism instilled by the government - therefore, many Singaporeans are pragmatically choosing to migrate away.

This post is skimpy - there's a lot more to it than what I've chosen to air. But at least with the potential for bi- or multiparty politics, hopefully more issues can finally appear on the policy-making agenda.


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Has there been a more ripe time than now in recent years regarding civil and public participation in Singapore's current affairs?

Three articles (out of many others) have caught my attention just in the short span of one day:

Future Generations will Pay for the Sins of PAP
Lee Insults Singaporeans - Again
Worker’s Party member: Why more young graduates are joining the opposition

With more sources voicing opinions of this sort, progressive politics might actually finally arrive at our city state's shores.

Whoever Insists His Business Has Nothing To Do With Politics Is Obviously Lying

I was just musing to myself (yet again) how offering a product or service on the basis of an idealistic notion of serving your patrons (and society at large) is just not enough in our modern day and age. In every practical market/industry, there are companies that have firmly established themselves as benchmarks for the quality of the services or products offered, and many of these companies are big-ass corporations.

In other words, it is insufficient to go into business without a workable business model that will cover all kinds of things ranging from finances to logistics to human resources. Going in with a product, even if it's a great one that will benefit mankind greatly, and hoping its weight will carry itself is naive and unrealistic.

With this notion in mind, 'bigness' can be a great advantage to gain for any corporation that wants to firmly root itself in the market and lock out competition. It is terribly difficult for new firms to enter certain markets because it is too difficult to offer products and services on the level that the existing giants already provide for.

Anyone who is decently versed in the supposed virtue of the free market will know that it is an established fact that the more firms in a market there are, the more efficient the market becomes - competition is good for the consumer and society on the whole.

The fact that bigness shuts out competition is a profoundly bad thing. Market moralists will argue all sorts of things to defend the market intellectually, but the truth is that any corporation that becomes big enough tends to become a monopolist.

But while I argue that it is a bad thing that new firms face difficulty in entering markets locked out by big corporations, it does not follow that big corporations should therefore lower their standards or provide handicaps so as to give weaker entrants a chance.

The issue really is in the immense amount of power that resides in the hands of big corporations who now can redefine the rules as consumers become dependent on them, a power that is unchecked because there are few entrants and firms that can provide alternatives for consumers. With bigness comes great power and with great power comes the potential for great sin.

Also, there are tons of reasons why the pursuit of profit at all cost is bad, or why the Milton Friedman argument that the 'only thing businesses should care about is profit' is a dodgy mantra to follow. But here's an important one. Without virtues or ethical principles guiding a company's direction for profits, especially when the company is a monopolist, the company can be easily bought over by politicians.

Should there be any social elite with the capital who decides to further any self-serving agenda, any spineless powerful corporation can hop on the bandwagon to further the interests of that social elite, providing all sorts of support ranging from commodities to marketing to manipulation of consumers, as long as the social elite has sufficient money.

When political power and corporations come together, giving rise to the agenda-setting problems that the United States particularly faces, society can be quite doomed.

Abused Medicine

It is remarkable to me how economists can continue to push on and not be disillusioned about the disconnect between their work and reality. I'm not saying that what economists do are naive, useless or unrealistic. In fact, I think economics should represent the ideal state of affairs of transactions and give-and-take. But there are many things in reality that will always distort economics and affect the elasticity of the supply-demand of some resources.

Off-handedly I can think of the following very basic supply-demand distortions:

Minimum wages/employment
When an industry experiences lessened demand for its good or an oversupply in production, a firm should do something to reduce cost in order to stay afloat, and a part of this is linked to employment conditions. A free market dictates that wages are fluid in order for it to function well and should decrease when costs rise. But the reality is that labour often organises itself to resist such wage-decline and employment changes.

Lack of labour fluidity
In a nutshell, the free market states that the system always remains in equilibrium because of resource mobility. In the arena of labour, when one industry declines, another has to rise and this should pose no problems as labour can relocate itself to fill up the demand in those new industries. But this hardly happens easily. When a worker faces the prospect of leaving his/her current job for another, he/she has to learn new skills and sometimes give up a whole way of life. The global free market also largely overlooks the fact that traveling across borders, implicitly asserted as necessary, poses a great deal of inertia.

Marketing
Another supply-demand curve distortion is marketing. It basically seeks to exploit consumer psychology to somehow keep demand high despite price increases. Price should be an indicator to the consumer of his/her utility for the good, and by right if the good doesn't change, a price increase should reduce consumer demand for it. But because of marketing, the price mechanism is affected and consumers continue purchasing goods despite price increases.

These things often create distortions that have to be compensated somewhere else in the market, but the repercussions aren't often traded off one-to-one, also because the consequences are unforeseen.


There are more I can think of if I decide to stretch my imagination, but the idea of economics being largely idealistic and somewhat utopian remains given how it can be distorted. I'm still for the idea that its role as an objective, neutral and rational prescription for policy or other matters is great, but in the hands of self-interested people with the know-how for exploitation and utility maximization (which just sounds downright political to me) this doesn't quite make sense.

But that's why sometimes I still have my reservations for blaming free markets alone for the plight of the third world, the lower class and the poor - it is really the people who want to run the free market in a political manner that results in the class inequalities of today. Sweatshops wouldn't happen if corrupted governments and their poor regulations can be exploited to keep labour oppressed (recall institutional strength - good legal frameworks - as an importance precursor for free markets), and fast food companies wouldn't be on such a roll if policy wasn't so strongly dependent on commercial interests (recall the separation of the state and economics as cardinally ideal). Seriously, what kind of justification can one conjure up to lobby against improved safety guidelines for workers?

That's why it looks kind of like abused medicine to me; something created in order to cure but instead misused as a drug.

The Giant Corporation: The New Government?

It just suddenly struck me that if the evolution of big corporations (like, REALLY big - think ConAgra, DuPont and Mitsubishi, who have a stake in almost everything from broilers, cattle, crops, flour, automobiles, chemicals, tobacco to shipping) and the reality of their monopoly status is anything to go by, I think we are truly seeing a new form of governance emerging. Actually, if the traditional definition of a state is slightly tweaked, giant corporations won't merely be new forms of governance; they WILL be the new governments.

The Persistence of Realism

Realist literature emphasizing the unexpired role of the state will always draw our attention back to how different states, all essentially representations of governance and power, have robustly existed to this present day. In the process, their intellectual underpinnings have been battered by inquiry and skepticism in the light of capitalism and globalisation, but they have pulled through with little scratches. States still exert their authority on people in our modern day and age (perhaps even more so than ever) and in a remarkable way their physical evolution appears ever so insignificant, despite some changes that people who are only scratching at the surface exclaim about.

For example, some will assert that states have less physical control over people now that violence has lost its trendiness. Let's not consider third world countries for obvious reasons, but even in developed states, their control over populations is still as gripping as ever through non-physical means, such as policy driven by economics - your livelihood is now in the hands of bureaucrats who have ties and interests in certain industries. This is somewhat indirect control, but still as powerful as ever. Still, others may look at the global world today and point out that many global players now have the power to influence a powerful country like the US because of interconnectedness through trade and globalisation. But, do recall that it is precisely a system like this that the US wants and every country that is playing the global trade game today often had no choice but to join in, in the process having their traditions and cultures infiltrated by Americanisation (Ikenberry, 2002). This once again points to the realist nature of state self-interest.

The evolution process of states is remarkably sly and efficient. States waged war a few centuries ago to get power and expand territories because physical power through technological weaponry was the key. Monarchies rose as a result and colonialism became popular as undeveloped countries could be exploited for their resources. Later, the laws established by the international community after World War II outlawed violence and discrimination while upholding human rights and rule of law (paving the way for the spread of democracy while demolishing monarchies, colonialists, autocracies and dictatorships). States didn't sit still on that; to survive they embraced the new ideal - capitalism - and created new routes for conquest by seemingly focusing on economics rather than politics, while at the same time blocking off the surveillance of human rights by using the rule of law as a disguise for legitimacy. Legitimacy creates the moral support for a state to engage in its political dealings - The US was now free to impose itself on undemocratic countries as they were perceived as evil.

It is like how we think that a company that plants its own trees in order to produce paper is being environmentally considerate and therefore not 'bad', when in fact the mass production of the same types of trees in one plot of land (monoculture) is extremely detrimental to the ecosystem and we let it go unchallenged.

And even then, to think of states as now focusing on economics rather than politics seems to fall short of the defining nature of politics and power. I think it is actually more correct to say that economics is now the new form of politics that governments have come to employ in order to further their own interests.

The Growth of the Political Corporation

State and liberty are directly opposed, so they say. Capitalists, liberal economists and right-wing intellectuals will assert the undermining of the state when the free market prevails. When the history of agriculture and cattle farming is observed, such production has evolved from one where the unit of production is the self-reliant family - each family produced its own food from seed to plate with little surplus and with little purchase of capital - to one that consisted of many firms breaking up the production process and a lot of specialisation between a century to half a century ago (which would be argued to be a good example of a properly working free market) to one that is now shaped like an hourglass in our contemporary society - thousands of farmers at the top (production) and millions of consumers at the bottom, with only about four behemoth corporations in the middle controlling the entire process. The power relations are incredibly skewed in favour of these big corporations - one can pretend to imagine how competitive such a market can be. They have plenty of leverage in their hands.

These corporations got to where they are through mergers and acquisitions, in the process carrying out horizontal and vertical integration. It is hard to topple these big corporations because they have resources to waste in order to distort the market in their favour (and, as an afterthought, physical damage to them is not an option since war has been deemed illegal and being cut off from the goods they supply you might kill you). Their place in society has been cemented by their involvement with populations of people through the provision of services. In effect, they have so many dealings in a complex, inter-related web of production such that they have profoundly infiltrated the lives of people and have become indispensable, and interestingly this is much like states do.

This is where it begins to hit me that there is little that distinguishes a giant, integrated and monopolistic corporation from a state - both are revenue-collecting, bureaucratic, conquest-driven, coercive and politically powerful forms of governing/dominating a population. The political power of monopolies and governments require little elaboration. With political power, monopolies and governments have the capacity to reduce the liberties of people through coercion. Monopolistic corporations seek to gain ground and get bigger, as much as governments have been doing through imperialism, colonialism and war in the past. Both giant corporations and governments are characteristically administrative, impersonal and bureaucratic. Most importantly, corporations and governments both seek revenue from the people they 'serve', one through the sale of products and the other through taxation. It is this exchange of services for money that creates a social contract between the service-provider and the people, and in effect a form of state accountability and legitimacy is established. Conquest and taxation has historically been the precedent for states to gain basic legitimacy for existence in the eyes of their own citizens (Tilly, 1975).

At this moment, such a link between a corporation and governance may still seem unclear, but given the free rein that big corporations are increasingly bestowed with now (much of which is, admittedly, earned), there seems little to stop these corporations from casting their nets further and even taking over government functions once the time is right. Already, Big-Four-ish corporations are attempting to control more than just what they initially started out to do. Having more hands in different sectors of the market serves to facilitate the corporation's ability to control and establish power. As Hefferman (1998) argues, "economic power, not efficiency, predicts survival", directly refuting the assertion that it is efficiency which enables a firm to stay afloat in the competitive market. Even if this hypothesis is true though, I wouldn't expect it to happen any time soon - such a new world order would require a thorough remoulding of people's understanding of government before it can be accepted as politics. But we have seen it happen before when people replaced their chiefs with emperors, their emperors with dictators, their dictators with autocrats, and their autocrats with diplomats. Every one of these leaders have been politicians. The new guy might just be the corporate rat - and 'rat' might even be old.

Implications

Have we then created the robot that actually destroys its master when we allow corporations to assume political power? The objective and rational free market may breed a new form of statism if corporations rise to the level of government. Or is this merely another evolutionary path for states to prevail, as we have seen through the ages the rise of monarchies, autocracies, democracies and now corporations depending on what is fashionable (and provides access to political power) at that moment in time?

The important takeaway for me at least is that the corporation could very well completely replace the government one day, and that would be normal. Some might even hail it as 'progress'. It's not the Microsofts and McDonalds'es we're looking at, but rather the ones who can creep right into the very fabric of society such that everything you wear, eat and do has something to do with them. That's what makes corporations like Cargill and ConAgra scary - they're obscure and almost unheard of, but they mastermind the production of many of the things we purchase, from where the crops and cattle are grown to the shipment, transport and logistics, right down to the smallest chemical additives and ingredients in our food. Maybe in the future, the CEO of Singapore Dominance Pte. Ltd. could really be our prime minister, or the head of some Big-4 company could be the hegemonic president of the world. It would probably be some dude who broke down trade walls across the globe and has his fingers in many pies. In that hypothetical future, we would allow some corporate person to make policy decisions for us - who better than a shrewd business man in an economic world huh? It's just the emperor wearing new clothes.

Still, there is something universal (and thus intellectually beautiful) about how it unfolds. At the very heart of it, human nature drives each outcome. States are a spectre of the collective will of power-hungry people.



Bibliography

Hefferman, W. D. (1998). Agriculture and monopoly capital, Monthly Review: An Independent Socialist Magazine, 50(3), 46-61.

Ikenberry, G. J. (ed.) (2002). American Unipolarity: The Sources of Persistence and Decline" in America Unrivalled: The Future of the Balance of Power, Ithaca: Cornell University Press, pp. 285-310.

Tilly, C. (1975). The Formation of National States in Western Europe, Princeton, N.J.: Princeton University Press.

1984

When ideas don't even have to be kept in check by the government because its loyal citizens do it for them, then we are reeeeeeeaaaally.... gone case.

Knowledge Is Power

We can accept that food shouldn't be taken for granted and it is a sin to waste it, because there are millions starving all over the world. That moral line of thought isn't difficult. But what about education? I would liken it to food, and I would never take a chance to learn for granted, because out there, millions of people, particularly children, are denied this valuable chance to learn.

In any case, this story about Babar Ali, the youngest schoolmaster (at 16 years old), and his little unofficial school in India should make the idea a little more salient and heartfelt.

http://news.bbc.co.uk/2/hi/south_asia/8299780.stm


To me, education and knowledge is so important because it liberates people. Enslavement of a people can only happen unchallenged when a population is illiterate and unenlightened. This dates back to past millenia, as language was only propagated exclusively among political elites so that everyone else could be easily utilised as unquestioning slaves. Without the access to language and knowledge, people are relegated to animals as their awareness is undeveloped and they can only rely on instinct and other people, which is dangerous because it then allows powerful men to elicit tyrannious acts at their whims and fancies. Only through an enlightened voice can an idea spread through communication, poetry, music, art and revolution, and only then will a tyrant begin to fear his people.

When idealistic liberals see utopia as the perfect society run by many rational men and a minimal state, this is the realistic beauty of the idea that everyone can think for themselves so that a whimsically intervening tyrant isn't necessary, unfortunately undermined by the reality that human nature doesn't often quite meet the cut because we are still quite flawed. A part of the problem lies with governments who do want their people to be muted, apathetic, fragmented and powerless, because traditionally, government is about power monopoly and consolidation and they thus rationally fear liberty.

And from what I've seen in articles like the Babar Ali story and other accounts of civil society in suppressed African and Middle Eastern countries is that people do thirst desperately for knowledge, sometimes even at the expense of their own safety. We have it here in affluent Singapore as a birth right.

What Babar Ali shows us indeed is that we can be the change we want to see. Let knowledge be the light, and seek it as much as we want to be free.

Affirmation

Here's why economics matters. To me at least, it's not so much the pursuit of a perfect system in which the world can run its resources, because I doubt that there can ever be such a thing, but it's the fact that economics shapes reality because it concerns every layperson. It's the reality of who's getting what part of the pie and how is that part of the pie attained. Am I going to work for it? Am I going to receive it through welfare? Is it going to be taken from me? These questions are going to be answered by the form of politics that my country employs.

Economics, and what kind of economy a tribe, a kingdom or a state is going to have, is the driving force and the legitimacy behind power and politics. Politics is power, because it refers to governance and the legal use of force, and power can only be gained when one controls resources.

The history of man is peppered with battles that have been waged for the attainment of resources. Modern history has seen us shift the basis of power from a physical one to one of economic ideology. The fight between the Democrats and Republicans is essentially due to the difference in economic management - more socialist (and left-wing) or more conservative (and right wing)? The cold war was a battle between capitalism and communism. Americans are dissatisfied with Obama because of the inadequate validity of his economic agenda which have turned out to be rather expensive, ineffective and socialist, which is disappointing in today's world where we are still trying to move on from the Keynesian era of full employment as the goal. Politicians are battling it out every election day to promise better economic packages because this is what matters to the people most - how much less will you be taxed?

Politics exists because power drives the world. Power is about the ability to gain control over people. The control of people is gained through the manipulation of the economy, because people depend on resources.

That's why economics is important, because if everyone knew to some degree the impact that the economy of our state has on our lives, then we would know how to revolt, how to vote and how to decide what kind of country we want to have and live in. We would know the extent of our rights and how to differentiate between a government that is serving us well and a government that is just pulling political bull. We would know if we would rather live in a competitive society or one that redistributes wealth. We would look at the ideologies expounded by our leaders with more enlightened eyes. We would know where on earth we're going.

In Yer Face

This is a little bit like old news, but still.

http://www.thinkcentre.org/article.cfm?ArticleID=2976

The Workers’ Party opposes the Public Order Bill
14 April 2009 by Sylvia Lim, NCMP

The change in definition of “assembly” and “procession” is more disturbing. As the Explanatory Statement to the Bill says, these words are no longer restricted to gatherings of 5 persons or more. This means even ONE person alone can constitute illegal assembly, thus giving the State complete control over an individual citizen’s freedoms.


As a matter of philosophical morality, where does Singapore politics stand? The government's arbitrary power has grown once again, and along with that, citizen freedoms have taken another hit.




Audio Candy:
The Spill Canvas - Self Conclusion

Individual Assignment on De Beers: “The Diamond Business Gets Rough” (2008)

MGMT 003: Business, Government and Society

Individual Assignment on De Beers:
“The Diamond Business Gets Rough”




This paper seeks to address the 1998 article “The Business Diamond Gets Rough” and explores De Beers’ success and challenges, as well as the measures it attempts to put in place in anticipation of these challenges. Next, this paper will consider the questionable ethics of De Beers as well as its influence on the market, and vice versa, and argue that only a small degree of government regulation should be put in place in order to keep such a corporate goliath in check.

De Beers is the diamond industry. Founded in 1888, De Beers is responsible for 50% of the world's rough gem diamond production and covers the whole range of processes involved in mining in Africa. Over the years, De Beers has established an iron grip of production and control over the diamond industry through the Central Selling Organisation (CSO) and controls 70-80% of the rough diamond market. The CSO negotiates with producers on the world stage – both companies and countries – to manipulate global supply and the value of uncut gem diamonds, effectively influencing the market forces of supply and demand in favour of keeping diamond prices high. One way it does this is through the means of its financial muscle, soaking up supply so that the quantity of diamonds in the market is regulated and kept low.

Another factor of De Beers’ success is in its winning marketing strategy. Diamonds have no real practical value other than the fact that they can last for very long, so De Beers has always positioned diamonds as an object of mystique and class to capture life’s moments for eternity. The fact that the slogan “a diamond lasts forever” comes from De Beers’ advertising campaign is testament to its successful marketing and diamonds as precious symbols have since flourished in many cultures that were initially alien to the stone, such as Japan. Leveraging on the emotional aspects of what a diamond entails, De Beers has created a necessity out of nothing, enabling them to fix the prices. De Beers’ powerful marketing creates not only the demand but also the confidence to ensure that it is worthwhile investing in production as diamond-mining is a capital-intensive business. De Beers’ long-term foresight and marketing capability towards market vicissitudes has ensured that supply and demand has remained in their favour thus far.

However, after about a century of dominance, De Beers’ position as a market leader as well as its control on the industry’s demand and supply is being threatened. Other major producers look set to bypass De Beers’ CSO as an intermediary, and ‘junior players’ are developing at a surprising rate. These could result in a flood of diamonds into the market and prices would plummet, and market share can be potentially snatched from De Beers. Furthermore, De Beers has always marketed its product but never itself. Hence, upcoming firms in the diamond business can easily capitalize on De Beers’ marketing efforts of championing the diamond, as the supply of diamonds would no longer just belong to De Beers in such a future.

In anticipation of the possible competition, now that the allure of diamonds has been well-positioned, De Beers is moving itself away from product marketing towards brand marketing by developing technology that will enable the inscription of its brand name in fine print onto gems that flow through its CSO sales. Through brand positioning, it its hoped that consumers will continue to buy diamonds from De Beers based on confidence in the De Beers brand name. De Beers is also looking towards developing a corporate identity to gain focus in the light of shedding its monopoly status and learning how to compete.

There is a huge shout for De Beers to be regulated by governments. Considering De Beers’ incredible leverage, it has artificially kept diamond prices stable, clearly violating antitrust laws in hampering fair market competition. Through manipulative marketing, people all over the world have been psychologically conditioned to want diamonds, which are essentially useless rocks that have no real value, contributing to the perceptual problems that are bred by marketing, the brainchild of the darker side of capitalism. The cut-throat nature of the diamond industry does not simply surface in the glamour of our obsessions and what owning diamonds entails at a social class level, but percolates into the manipulative nature of the CSO’s power and influence over other players as well as at the production and mining level and politics, where slave labour, diamond wars and arms trade are potentially linked to the enterprise (http://www.fguide.org/?p=53).

The movie, Blood Diamond, brought to light many atrocities pertaining to the abuse that the diamond industry, which is essentially what De Beers is all about, brought to Africa and how the trade contributed to upholding the Apartheid (http://www.africaresource.com/content/view/246/90/). These were not mentioned in the article “The Diamond Business Gets Rough”, though they are of noteworthy concern especially when we consider if the government should intervene in such unruly practices. The DeBeers operation is therefore unethical not only towards the end buyers, the public which buys diamonds but also to all distributors and retailers of diamonds in the whole world (http://www.ewtn.com/library/BUSINESS/ANTDEBRS.HTM).

However, despite the obvious lack of ethics from De Beers, not everyone wants the balance that De Beers has put in place to be disrupted. Particularly in Botswana, affluence, education and infrastructure has increased significantly since 1966 (http://forums.csis.org/africa/?p=20) because of the economic infrastructure that De Beers has established. Besides this, there are many other stakeholders linked to De Beers, such as firms dealing with cutting tools. Furthermore, is the developed world ready to forgo their obsession with diamonds and what it means to own one?

We also cannot overlook the advantages of a laissez-faire market system with minimal government intervention as it is viable source of wealth creation and, on the flipside, governmental programmes may not fully satisfy the needs of the people. (http://wmugop.blogspot.com/2007/08/understanding-government-responsibility.html). To further support this view that the free market referees itself well, the fact that new emerging players are threatening De Beers’ grip on the industry shows that over time, even a monopoly will be subject to the rules of the market. Various stakeholders contribute to this as they take active roles in highlighting the negative externalities that come along with De Beers’ monopolistic reign (Gold, 2006).

We also cannot say for sure if governments themselves know what policies best suit the circumstances, as many African governments have proven to be influenced themselves over what the lucrative diamond trade potentially offers, and whether or not the US government can be trusted with the best policies and regulations is questionable, as realists will strongly contend, in the light of their involvement in the UN and the Iraq war debacle amongst others. Even so, the US government anti-trust division has been after De Beers for years, but they have not had much success since De Beers is not within their jurisdiction (http://www.users.drew.edu/jolmsted/econ5/ch13.htm). Pressures from various other angles have proven to be more effective at chipping away at De Beers’ armour.

It can be therefore argued that De Beers should be allowed to run with minimal degree of governmental jurisdiction, while at the same time ensuring that the public can have faith in its dealings by actively engaging in corporate social responsibility. As can be seen, the biggest threat to the continued success of the diamond cartel is not by antitrust laws, but by the fact that new players have entered the market and are increasing the supply of diamonds, refusing to play by De Beers' rules (http://www.users.drew.edu/jolmsted/econ5/ch13.htm). De Beers’ manipulative marketing to create an illusion of scarcity will be attacked if consumers feel overwhelmingly cheated enough to do something about it. This is especially so since it is the affluent who will be more likely to indulge in buying diamonds, and at the same time being the ones more educated and enlightened and, hence, more likely to engage in postmaterialistic activities such as rallying for better awareness.

On the point of postmaterialism and slave labour, there are enough instances to show that the world is moving towards taking a dim view of the exploitation of cheap labour. Thus, no firm will be able to indulge long enough in the process without being met by resistance from civil society. Government regulation would hence be only as necessary as when the efforts taken by the general public are inadequate in stopping such exploitive acts.

It is easy to be emotionally swayed by the unethical practices of De Beers and call for heavy government regulation on such firms, but it is important to consider the repercussions of heavy government intervention on firms and the market. We also cannot overlook the market’s ability to police itself, especially with the active involvement of stakeholders. Hence in conclusion, there is adequate evidence to show that De Beers should be regulated only to a small extent by governments, allowing instead for market forces to police its dealings and ensure that it updates its act for the better.




References:

1. Stanton, L. (2002, February 14). Ten Reasons Why You Should Never Accept a Diamond Ring from Anyone, under Any Circumstances, Even If They Really Want to Give You One. Retrieved March 12, 2008, from http://www.fguide.org/?p=53.
   
   
2. Davey, D. (2006, December 11). Blood Diamond: Russell Simmons and De Beers. Retrieved March 10, 2008, from http://www.africaresource.com/content/view/246/90/.
   
   
3. St. Antoninus Institute (1996, January 4). South Africa’s De Beers: The Most Unethical Corporation in the World. Retrieved March 11, 2008, from http://www.ewtn.com/library/BUSINESS/ANTDEBRS.HTM.
   
   
4. Holm, J. D. (2007, January 8). Diamonds and Distorted Development in Botswana. Retrieved March 12, 2008, from http://forums.csis.org/africa/?p=20.
   
   
5. Allan (2007, August 27). Understanding Government: Responsibility. Retrieved March 12, 2008, from http://wmugop.blogspot.com/2007/08/understanding-government-responsibility.html.
   
   
6. Gold, D. (2006). The Attempt to Regulate Conflict Diamonds, The Economics of Peace and Security Journal, Vol. 1, No. 1, pages 49-52.
   
   
7. Olmsted, J. (2005). Chapter 13: De Beers. Retrieved March 12, 2008, from http://www.users.drew.edu/jolmsted/econ5/ch13.htm.