Rico Gagliano: And now, time for chattering class, when we are schooled by an expert in some party-worthy topic. The topic this week: scams, myths, and misinformation you probably believe are 100% fact, and our teachers are Alex Mayyasi and Zach Crockett, two authors of the new book Everything is BS, except their title doesn’t use the abbreviation. They write for Priceonomics, a San Francisco company that writes about business data. Hello, Alex.
Alex Mayyasi: Hello. Thanks for having me. Rico Gagliano: And hi, Zach.
Zach Crockett: Thanks for having me, man.
Rico Gagliano: No problem. And, if I had to sum it up, I would say that the book is about economic ideas or businesses that we take for granted as legitimate, but, on closer examination, maybe aren’t so much.
Zach Crockett: I think so. The book is based on the premise that we’re surrounded by misinformation everywhere, and our job at Priceonomics is to clarify some of this misinformation, and back it with data and facts.
Rico Gagliano: Data and facts? They take all the magic out of things. The book starts, actually, by saying the diamond business is BS. Why start the whole book with diamonds, why are they kind of the poster child of scams?
Alex Mayyasi: The reason diamonds really starts off the book is to set the tone, because it is such a poster child, as you say. I think most of us assume that diamond engagement rings are this timeless tradition that stretches back for generations when, in fact, diamond engagement rings were a tradition that you could say were dying, weren’t doing that well, except the company with a monopoly over diamonds decided to create this great tradition of giving diamond engagement rings and equating a big diamond engagement ring with, you know, the amount of love you are expressing, and your self-worth as a man.
Rico Gagliano: All right, so, details. First of all, what company was that?
Zach Crockett: We’re talking about DeBeers, which is a massive diamond conglomerate, and really, they were the masterminds behind the whole branding of the diamond, the whole two month salary myth.
Rico Gagliano: Meaning that people should spend two months’ salary to buy a diamond ring for their potential betrothed.
Zach Crockett: Exactly. These recommendations were all set by DeBeers and marketing executives.
Rico Gagliano: And this is what year?
Zach Crockett: It’s about the time of the Great Depression. There were other reasons for the decline of diamonds, and then you add the Great Depression to the mix, and they’re really struggling. How do you figure out people who have less and less money to spend money on something that has very little value?
Rico Gagliano: Yeah, and actually, that was something that surprised me, reading about, is that diamonds really aren’t always as scarce as the diamond industry would maybe have you believe.
Zach Crockett: That’s correct. One example would be in 1902, in South Africa, a deposit of diamonds was discovered, and this deposit was so large, it constituted more than DeBeers’ entire holdings at the time. So, what DeBeers did is try to coax this mine owner into relinquishing his discovery. He initially disagreed, but a few years later, joined the syndicate, and once these diamonds were in the possession of DeBeers, they would release them over a very slow period of time to give off the illusion that they were still scarce.
Alex Mayyasi: Yeah. I would add that the owner of this new mine that was discovered in 1902, who initially resisted joining the DeBeers cartel, one reason he was won over is because, he said in his own words, common sense tells us that the only way to increase the value of diamonds is to make them scarce, that is, to reduce production, so it was very much, they saw the logic of this. We have to make diamonds scarce by, you know, being part of this monopoly.
Rico Gagliano: All right. So, let’s move onto something more apropos for a dinner party-themed show. Chilean sea bass you bring up later in the book. Why is that BS?
Alex Mayyasi: Chilean sea bass is just a great example of how marketing can turn a food that no one would consider appetizing into the absolute toast of the town. The Chilean sea bass is a complete misnomer. It’s not a bass, it’s a type of cod, but the first guy who saw it thought it looked like a bass, and he knew that bass was popular in the United States, so he thought that would help create a market for this fish that no one really recognized.
Zach Crockett: Yeah, and if you actually saw this thing, it’s like one of the ugliest fish known to mankind.
Alex Mayyasi: It’s pretty ugly.
Zach Crockett: It’s called the Arctic toothfish.
Rico Gagliano: Does it actually have, like – I just imagine teeth shooting out from every part of its body. Is that right?
Alex Mayyasi: Well, not exactly, but Zach’s certainly correct that it’s an ugly fish, and if someone served it with the entire fish just staring at you at the dinner table, you might –
Rico Gagliano: Pass.
Alex Mayyasi: – you might not think it should be the Bon Appetit dish of the year.
Rico Gagliano: Which it was. It went from being unknown and used mainly in fish sticks to being this high-end food item in the space of a few years.
Alex Mayyasi: Sure. And then, in terms of where did he get the name Chilean sea bass, you know, he started with something like the South American bass, but he thought, you know, of course, if you want a mouth-watering fish, a luxury product, you want something with some specificity, the same way that you want to know that your shoes were made in a tiny little town, quaint place in Italy. And so, he came up with the Chilean sea bass because that’s the port where he originally found the fish, although that’s not actually where you’re most likely to find the Antarctic toothfish.
Rico Gagliano: Sure. So, I can imagine coming away from this book feeling a little helpless, you know, like, a lot of money is spent on PR campaigns to spread information that might be misinformation. How do we puncture that veil?
Alex Mayyasi: It is tough. You see all the money that’s being spent to manipulate us. I think what can help people get past the BS is to have just a really curious attitude, and be aware that the story they’re being told might not be the right one. I think the reason both Zach and I really enjoy our jobs is that all we do is we think about interesting things that we think would be worth digging into, because there might be something unexpected there. If you go through life with this natural curiosity about what’s at work behind these assumptions you hold, you know, you’ll be much less susceptible to trickery, and I think you’ll be entertained in the process, and maybe even have something to say at a dinner party.