Daniel wants to know why diamonds are so expensive.

The answer has less to do with geology than most people think.

Diamonds are not as rare as their price suggests. Gem-quality diamonds are genuinely uncommon, but the gap between what diamonds cost to mine and what they sell for has long been shaped by something else: controlled supply. A company called De Beers, founded in South Africa in 1888, eventually controlled roughly eighty-five percent of the world's diamond supply. Once you control most of the supply of something, you control the price. De Beers kept supply deliberately low -- not because diamonds were scarce in the ground, but because releasing too many would reveal how many there actually were. The sense of scarcity in the market was carefully managed. Not simply left to nature.

But controlling supply only explains t ...