Everything Is Bullshit: The Greatest Scams on Earth Revealed (2 page)

For most of the 20th century, this system controlled 90% of the
diamond trade and was solely responsible for the inflated price of diamonds. As
Oppenheimer took over leadership at De Beers, however, he keenly assessed the
primary operational risk that the company faced:

“Our only risk is the sudden discovery of new mines, which human
nature will work recklessly to the detriment of us all.”

Because diamonds are “valuable”, there will always be the risk
of entrepreneurs finding new sources of diamonds. Exercising control over new
mines also often meant working with communists. In 1957, the Soviet Union
discovered a massive deposit of diamonds in Siberia. Though the diamonds were a
bit on the smallish side, De Beers still had to swoop in and buy all of them
from the Soviets, lest it risk the supply being unleashed on the world market.

Later, in Australia, a large supply of colored diamonds was discovered.
When the mine refused to join the syndicate, De Beers retaliated by unloading
massive amounts of colored diamonds that were similar to the Australian ones to
drive down their price. Similarly, in the 1970s, some Israeli members of the
CSO started stockpiling the diamonds they were allocated rather than reselling
them. This made it difficult for De Beers to control the market price and would
eventually cause a deflation in diamond prices when the hoarders released their
stockpile. Eventually, these offending members were banned from the CSO,
essentially shutting them out from the diamond business.

In 2000, De Beers announced that it was relinquishing its
monopoly on the diamond business. It even settled a U.S. Antitrust lawsuit
related to price fixing industrial diamonds to the tune of $10 million. (How
generous! What is that, the price of one investment banker’s engagement ring?)

Today, De Beers’ hold on the industry supply chain has weakened.
And yet, prices continue to rise as new deposits have not been found recently
and demand for diamonds is increasing in India and China. For now, it’s less
necessary that the company monopolize the supply chain because its lie that a
diamond is a proxy for a man’s worth in life has infected the rest of the world.

A Parting
Thought

“I didn’t
get a bathroom door that looks like a wall by being bad at business.”

(Jack
Donaghy
, 30
Rock
)

We
covet diamonds in America for a simple reason: the company that stands to
profit from diamond sales decided that we should. De Beers’ marketing campaign
single handedly made diamond rings the measure of one’s success in America.
Despite diamonds’ complete lack of inherent value, the company manufactured an
image of diamonds as a status symbol. And to keep the price of diamonds high,
despite the abundance of new diamond finds
,
De Beers
executed the most effective monopoly of the 20th century. Okay, we get it De
Beers,
you guys are really good at business!

The purpose of this chapter is to point out that diamond
engagement rings are a lie — they’re an invention of Madison Avenue and
De Beers. We have completely glossed over the sheer amount of human suffering
that this lie has caused: conflict diamonds that fund wars, money that
supported apartheid for decades, and the pillaging of the earth to find shiny
carbon. And while we’re on the subject, why is it that women need to be asked
and presented with a ring in order to get married? Why can’t they ask and do
the presenting?

Diamonds are not actually scarce, make a terrible investment,
and are purely valuable as a status symbol.

Diamonds, to put it delicately, are bullshit.

2.

THE SEAL CLUBBING BUSINESS

E
very
March, Richard Whelan boards the Shepherd II — one of hundreds of hunting
vessels in Newfoundland, Canada — and drifts into the frigid eastern
waters to hunt for seals. For two months, he lives aboard the battered ship,
subsisting on minimal rations and braving blisteringly cold temperatures.

When Whelan spots a seal scooting across the ice, he takes out
his .22 Magnum, high caliber rifle, zeroes in from a distance, and fires. In
the ensuing moments, he docks the boat, chases the animal down and bashes in
its skull with a
taloned
wooden club — a
practice known as “seal clubbing.” After ensuring the seal is dead, Whelan
swiftly peels off its fur with a 12-inch knife; often, the majority of the
animal’s body is left behind on the
blood-stained
ice.
Though channels exist for seal meat and oil, the animal’s fur, which is
processed, tanned, and fashioned into $4,000 luxury coats, is the sealer’s
crown jewel.

Despite the attention it receives, the seal industry is quite
small today, though this wasn’t always the case. During its golden age, sealing
was the second largest source of revenue in Newfoundland's isolated economy; by
last year, it accounted for less than 1%. Led by animal rights groups and
celebrity supporters,
decades-long
anti-seal clubbing
campaigns have severely crippled the trade. Seal products are now banned in
nearly every market — the U.S., Japan, and the majority of Europe
included — and
strict regulations and quotas have been
instituted by the Canadian government
.

But seals are not one of the world’s 20,000 endangered species,
nor are they scarce in Canada. For most seal hunters, the dying hunting
industry, worth only around $1.5 million in annual sales, is only a part-time
job and provides little financial security.

Why did the world organize itself to effectively end the
practice of seal clubbing — especially when there exists a plethora of
threatened species that are slaughtered on larger scales? And while “clubbing”
a seal with a mallet out in the wild sounds terrible, is that worse than
killing an animal that lives the entirety of its life in a processing plant?

Could it be that we saved seals simply because they’re cute?

The Birth
of the Sealing Trade

Sealing
has a rich, complex history. Though practiced in multiple cultures (Namibia,
Greenland, Norway, Russia, Iceland), over 97% of seal hunting has historically
occurred in Newfoundland and Labrador, on the eastern coast of Canada.

For
Inuits
and native peoples of
Newfoundland, seal hunting dates back more than 4,000 years. In the harsh, icy
territories, these animals provided a means of sustenance: meat — rich in
fat, protein, and vitamins A and C — provided necessary nutrients; fur
pelts were fashioned into coats, boots, and blankets. When a young Inuit boy
killed his first seal, it would be cause for celebration: a huge feast would be
held, and every part of the animal would be utilized.

By the early 16th century, an influx of Portuguese, French,
British, and Basque settlers had established a commercial sealing industry.
These men — most of whom were fishermen — would organize
multi-month expeditions to earn extra income in the cod off-season. A
significant seal market soon emerged in Europe, where the fur was valued for
its warmth and oils were championed as a healing agent; by 1773, 128,000 seals
were being harvested each year.

Sealing continued to grow, and in the 19th century, the trade
saw its Golden Age. Foreign investors stepped in and the hunt greatly expanded,
employing shipbuilders, carpenters, and refiners, who extracted oil from seal
blubber and sold it as a dietary supplement. Between 1800 and 1900, over 33
million seals were harvested. Sealing became inextricably weaved into
Newfoundland’s economy, and trailed only cod fishing as the province’s biggest
revenue stream, pulling in $1.5 million per year ($28 million in 2014 dollars).

Large steam-powered vessels were introduced in the early 20th
century, allowing for bigger hunts over wider territories, but not without
risk: the ships were prone to accident, and in a 50 year span, 400 ships were
lost and nearly 1,000 men perished. In one instance — The Great
Newfoundland Sealing Disaster of 1914 — 78 sealers perished and another
173 were lost at sea, never to be found. Ships were controlled by wealthy
investors, and employment conditions for sealers soon deteriorated: they were
underfed (eating only biscuits and tea for days at a time), given little in the
way of warm clothing and safety gear, and were allocated little time for sleep
or rest.

During World War II, most sealing vessels were enlisted for use
in the service, and the industry came to a
stand-still
;
in the 1960s, it emerged with a vengeance, fueled by an incredible demand for
newly-in-vogue fur. With machinery, increased labor forces, and more scalable
methods of production in place, annual seal kills rocketed to over 300,000 per
year; for the first time in its history, the trade began to attract a pushback.

Years of regulation, lobbying, and anti-sealing campaigning
ensued, and at the heart of the debate were the “seal clubbers” themselves.

The Life
of a Modern-Day Sealer

For
seal hunters registered in Canada, life isn’t grand. The average harvester
earns only 20-35% of his yearly income — a meager $5,000 to 8,000 —
from sealing, and relies on other work to survive. A vast majority of sealers
come from Canada’s poorest, most isolated regions and have few alternatives for
work.

For many years, William Case, a night watchman by trade,
participated in the seal hunt to earn extra income. In an interview with the
Canadian Geographical Society, he elucidates a lifestyle that is both
incredibly difficult and non-lucrative. Docking a schooner in early March, he’d
be at sea for two months with limited supplies, often facing great dangers and
harsh terrain.

One time, sailing out in remote waters, Case’s vessel came
across a small rowboat that had drifted out to sea; inside were two men: one
dead, and the other “with his arms frozen to his oars, and clinging to life.”
The life of a sealer, reminds Case, “
ain't
for the
faint of heart.” Undoubtedly, sealers face some of the harshest weather
conditions in North America, braving the frigid eastern waters of Newfoundland.
Leo Seymour, an ex-sealer, says that on a “rough year” like 2014, ice
conditions can be nightmarish:

“It’s wicked. It’s wicked. Bad days. Blowing gales and then the
fog and everything. And the ice is so heavy. I
s’pose
some fellers takes a chance on it. Some fellers might have 1,500 or a couple of
thousand seals so it’s not so bad. But if you’re only getting a couple of
hundred seals it’s not even worth fueling up your boat for. You can’t even pay
your expense.”

But sealing has harsher realities than the weather: animals must
be clubbed to death. Case, whose ship would haul in “between 300 and 1,500
seals,” recalls the “rather crude” method used to get the job done:

“When we could reach them on the ice cakes, a blow on the snout
with a club would do the trick. We shot them in open water and fished them out
with gaffs. Sometimes, you’d shoot one from a distance and trek about a mile or
two. We went in small boats, two men in each one, the gunner and the other his
mate. We skinned the seals on the ice. A rip with the knife and in a jiffy the
pelt would be taken off and the carcass left for the birds. Sometimes, the old
hoods [seals] would make at us, but we could dodge them, as they always moved
along in a straight line, and then the club or the gun would soon fix them.”

The skins (or pelts) are the means of financial subsistence for
the hunters: while minimal markets exist for oil and meat, seal fur is the
driving force of the industry, constituting about 90% of the market. As such,
sealers take great care to preserve them. Any knife knick or bullet hole in the
pelt can result in price deductions when it comes time to sell them to
processing plants and direct-contact kills are encouraged.

To slaughter a seal, a hunter uses a “
hakapik
,”
a heavy wooden club with a
hammer head
(used to crush
the seal’s skull) and a hook (used to drag away the carcass post-kill).
The tool, a Norwegian innovation, is favored by sealers for its
ability to make a supposedly “humane” kill without damaging the pelt
.

Fergus Foley, who participated in the seal hunt for ten years to
support his fishing income, says it can get a lot worse than clubbing a lone
seal. Sometimes, pups, or baby seals, are lost in the process — something
Foley is now immune to. In an interview with Canada’s Department of Fisheries
and Oceans, he clarifies some of the gruesome realities of his trade:

"The best day we done, we took approximately one hundred
and eighty seals. I seen
a female being pelted and the pup
came out of her when they cut her open
,
the pup was
dead
. Someone passed the comment, 'If Greenpeace were only here to see
this!' There were a few occasions when we took the female Hood seals and left
the pup on the ice. On two occasions, I observed pups falling out of the female
while being pelted on deck. The two pups I observed were alive and were thrown
over the side. I seen these pups crawl up on the ice after we threw them over
aboard."

The Canadian Sealers’ Association (the governing body that
represents all of Canada’s commercial seal hunters) maintains a strict set of
“kill guidelines” that sealers must follow — both to ensure that fishery
regulations are followed and to maximize profits from seal furs. In a “how-to”
video intended for sealers, these methods are demonstrated. “The harvest must
be based on sound science,” the film warns, “humane killing is the key to
success!”

According to the CSA’s President, Frank
Pinhorn
,
the humane way to go about killing a seal is a three-step process: “stun the
seal with a swift knock to the head, check to ensure the skull is crushed, and
cut him open to bleed out.” Quality, reminds
Pinhorn
,
is key here. A sealer must take great care not to “knick organs” during the
skinning process, lest the skin, blubber, and meat be contaminated with
byproducts (“bacteria spread from the gut can cost thousands of dollars”).

The Seal
Market: Making a $4,000 Coat

After
furs are stripped from a seal, hunters return to the port and sell them “in raw
form” to processing plants; blubber is removed and they are appropriately
conditioned for use in clothing. These plants maintain a complex pricing system
which encourages as little tampering with fur as possible and as much as $2 is
deducted from each pelt for “knife
knicks
,” yellowing
(caused by excessive bleeding), and tears. The proper killing of a seal doesn’t
just benefit hunters, says
Pinhorn
— it
“maximizes the financial benefit of all stakeholders involved in the industry.”

But in reality, the payoff for hunters is minimal. Today,
depending on quality, pelts go for $20-35 each; after the ship captain takes
his
cut, that
amounts to a little over $15 for the
hunter that clubbed the animal. Pelts are not particularly lucrative until the
retail stage, and the process to get to that point is painstaking.

When processing plants purchase skins from sealing vessels, they
come in crude form (bloody, and with blubber still attached). At the plant, the
skins are soaked in brine for several weeks,
then
go
through a tanning procedure; if a skin is excessively yellow or sun-spotted, it
is typically dyed a dark color. From the plant, the pelts are sold to brokers,
essentially middlemen with retail connections who sell them at a markup to
clothing and accessory manufacturers. Once the goods are crafted, they are then
disseminated to seal outerwear shops and sold for exorbitant prices.

***

Bernie
Halloran operates Always in Vogue, one of several seal clothing stores in
Newfoundland. After purchasing his skins directly from
Carino
(Canada’s largest sealing plant), he acts as his own manufacturer in addition
to retailing. Since Halloran is a long-time, local trader, he “receives special
deals” on his wholesale fur purchases.

In Canada and other particularly frigid countries, seal fur
doesn’t just provide warmth — it serves as a status symbol. Halloran’s
shop carries an array of items: jackets, hats, bags, boots, and bow ties, and
admits that his items (and seal products in general) are “classified as
luxurious.” A full-length seal coat parka made from “anthracite-colored
top-tier fur” runs about $4,000; on the lower end, spotted seal throw pillows
go for $150 a pop. When he first opened shop 30 years ago, Halloran enjoyed
great business — until product bans and sealing backlash stampeded his
success:

“It
is sad that the world markets have been slowly closing — Europe, USA,
Russia. Seal is a bullied industry. What hypocrites! My thinking is right and I
know it to be right...if killing
seals is
wrong, then
the world is wrong. It’s simple: if people don’t like the product, don’t buy
it. I don’t smoke but I don’t condemn people who do.”