What price Diamonds?, Wizard Award Winner Options

[Guest_Jox_*]

© Todd Congreve, 2005. I, Todd Congreve, do assert my right to be identified as the author of this work in accordance with Sections 77 and 78 of The Copyrights, Designs And Patents Act, 1988. (Laws of Cymru & England, as recognised by international treaties). This work was simultaneously copyrighted in the United Kingdom of Great Britain and Northern Ireland and the United States of America. This work is posted as an unpublished work in order to elicit critical assistance and other helpful comment, only.

Thanks to Alan, Nina, Fran and Eisa for your crit and comments.

Updated to: 23/06/2005 @ 1719

Ref: TC 0404 AF (22/06/2005)


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Celtic Castle Designs

What price diamonds?
[An Economic Paradox*]
by TC

Local food store:
sparkling water -
ninety-nine pence
for five litres -
in a bottle with
carrying handle.

Antwerp jeweller:
cut diamond -
thousands of pounds
for some sparkles -
in a pretty box with
golden flip-top lid.

Ocean lifeboat:            
fresh water -                
everything I own
for a few drops -
in my begging palms:
don’t wrap it.

(end)

===================

Ref: TC 0404 AE

What price diamonds?
[An Economic Paradox*]
by TC

Local food store -
still water:
eighty-seven pence
for five litres -
in a bottle with a
carrying handle.

London jeweller -
cut diamond:
thousands of pounds
for a few gems -
in a pretty box with
golden flip-top lid.

Ocean lifeboat -              
fresh water:                      
everything I own
for anything -
in the palms of my hands:
don’t wrap it.

(end)


A famous old piece of Economics theory is known as the “Water / Diamonds Paradox.” I hope this poem illustrates it.

For the academic...

Virtually all of Economics is predicated upon The Laws of Supply and Demand. Viz: If price is low then supply is low and demand high and if price is high then supply is high and demand low. Wherever demand and supply meet is known as “Equilibrium.” Diamonds and water seem to be able to undermine this. But of course they don’t. This is because demand depends on various factors - price of the good in question (a), prices of all other goods completing for one’s income (b-z), one’s income (Y) and one’s Preferences (“tastes”) (t).

Thus, the demand equation in Economics is: d=p(a)+p(b-z)+Y+t

So the diamonds / water paradox relates to tastes, rather than just prices.

In a life boat we couldn’t care less about diamonds (unless we’ve already gone balmy) but water is vital if we’re ever to see a diamond again. So our relative taste for water vis-a-vis  diamonds is very high. This indicates another aspect in Economics: the less one has of something one wants / needs, then the more one wants it - and the higher price one will bid for it (subject to the demand equation); the more one has of something, the less one is willing to pay for more (again, subject to the demand equation). One thing that makes Economics great fun is that everyone is different - so, unlike the Natural Sciences (Biology, Chemistry and Physics are generally taken to be those these days - plus their off-springs) Social Sciences (Economics, Politics, Ethics) have much more variable data with which to come to terms and construct theories.

Oh? Why a paradox? Simply because usually we’ll usually pay far more for diamonds - Why, when they are far less useful than water, which is, of course, essential? To further understand this concept in Economics we need to investigate Utility Theory - more specifically, marginal utility and particularly, diminishing marginal utility - but such is beyond the scope of this brief explanation.

J.



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[Guest_Jox_*]

Hi Nina,

UNFINISHED - will continue ASAP

Thanks for your various visits. I seem to be well out of sequence - here's my reply to your original posting.

>N>Interesting poem comparing the economic value of water and diamonds.  Of course there is a third alternative to your supply and demand Law and that is: if demand is high and supply is low then price will be high and of course the prime example of this is property.

LOL... actually I did mention that (the demand and supply theory, not the specific property example)...

>J>Virtually all of Economics is predicated upon The Laws of Supply and Demand. Viz: If price is low then supply is low and demand high and if price is high then supply is high and demand low. Wherever demand and supply meet is known as “Equilibrium.”

1. D>S 1: House prices are traditionally low. When I was a youngster my parents were still living with my grandmother in rented accommodation because we could not afford to buy our own house (my grandparents had never been able to afford theirs - and my Grandfather was an accountant). It was fourteen years into their marriage before they could afford to take-out a mortgage (1967). Now most youngsters expect to take a mortgage ASAP. In recent years there has been a slight reversal of this whereby house prices vis-à-vis incomes have risen again (especially in SE England). But historically they remain low. Proof of this is in the fact that the UK has one of the highest owner-occupation rates in the World.

2. D>S 2: I only showed the demand equation. There is a corresponding supply equation. In the UK we've run out of land in the SE so supply is limited - which is why house prices are now rising again (as mentioned above). But this also means price is comparatively low - if, say, the minimum house price was £1 million, then demand would be far lower than it is now. So prices will continue to rise until either more supply becomes available or sufficient demand has been removed from the market. This addresses your point, above, I think, but was covered in my original answer, too.

A couple more points about The Laws of Supply & Demand:

1 Demand is the ability and willingness to buy something
2 Supply is the ability and willingness to provide something.

Demand is NOT need. Sure people need accommodation - but unless they have the ability and willingness to pay for it, they are not part of demand. Many people think this is hard-hearted. It isn't. Economics is amoral. We could not calculate anything meaningful if we simply asked "Who would like...?" or "Who needs...?" To be able to assess demand and supply we use "bids" and they are offers of money in exchange for offers of goods or services.

So does Economics ignore those who need accommodation? No, not at all. There are many ways in which Economics examines such problems - two being Welfare Economics ("How to make people better off Economics") and CBA - Cost-Benefit Analysis - usually applied to large public projects - airports, Olympic bids, housing estates etc.

But this poem was firmly about an aspect of demand and supply - so I focussed on that.

>N>Looking at the poem itself: a couple of suggestions [add] {delete} (comments)

Ocean lifeboat -              
fresh water:                      
everything I own
for anything -
in the palms of my hands:
don’t wrap it.

>N>In your third verse you go beyond the simple economic worth

I love that phrase! :)

>N> to something much more profound.  In fact this verse could possibly stand as a complete poem on its own.  It shows how we take water for granted, never thinking too much about its true value, expecting it always to be "on tap".  We place a false value on "diamonds" and other trappings of our comfortable lives - all our gadgets, cars, status symbols, all wrapped in their pretty boxes and packaging.  In reality material wealth is meaningless and we would not hesitate give everything away, if dying of thirst, for a sip of water placed in the palm of our hands.

Thank you very much. I appreciate what you say. In fact all that does come well within the scope of Economics (as I hope the poem illustrates) - but as you indicate also embraces morals, ethics and philosophy. (All in the Social Science area).

>N>The basic needs of life -  food, water, warmth, shelter have a far higher value than all the diamonds in the world.

There is a pyramid of wants which we use in Economics - the things you mention are very near the base - meaning most essential. Diamonds are near the top - aspirational luxuries. Western sociaty is able to address many of the higher points in the pyramis. (The lowest item, by the way - at the very base - is air).

Local food store -
still water:
eighty-seven pence
for five litres -
in a bottle with {a}
carrying handle.

London jeweller -
cut diamond:
thousands of pounds
for a few gems -
in {a} pretty box with
gold{en} flip-top lid.

Thanks for the gold / golden debate. To me golden is flashier - more conspicuous - than Gold itself, which is actually quite a mellow yellow. So I was trying to indicate a tawdry wealth by using "golden" not "gold." Also, "Gold" would, I feel compete with diamonds as the centre of the rich side of this poem.

Thanks for carefully explaining this to me both here and in aPM - much appreciated.

Ocean lifeboat -              
fresh water:                      
everything I own
for anything - ( ? perhaps - for a few drops)

Thanks - will think about that.

in the palms of my hands:
don’t wrap it.  (? perhaps - unwrapped )

I think I’ll retain the original cliche but I forgot to italicise it for satirical impact - will do that. Thanks for the reminder.

Nina, I used syllables as an experiment, as I said - but Alan has shown they didn’t work because he suggests changes. I was trying to see (as I have before -0 with similar results) - if syllables can be a substitute for the seemingly unattainable ba-dums. Alan’s reply shown they cannot. So I may well update this poem next to my usual style and pare. if so, I shall use your suggestions for that - thank you.

Thanks Nina - your comments etc are very much appreciated,

J.