Despite a bipartisan agreement yesterday, I think of the debt ceiling debacle like you are trying to keep your cholesterol normal despite daily consumption of Big Macs, fried chicken and ice cream. So when your blood work reveals a cholesterol of, say, 271mg/dl, you somehow snooker your doctor into agreeing that the upper limit of normal cholesterol is 300mg/dl instead of 200mg/dl. Over the next few years the cycle gets repeated, and each time you are able to negotiate a higher upper limit for "normal" cholesterol.
From an Islamic standpoint, the Big Mac in this case is America's penchant with an interest-based financial system. Neither slashing trillions in spending nor creating a Super Congress would prove beneficial. Unless we address the fundamental issue of interest, raising debt ceilings is just like increasing the upper limit of "normal cholesterol": it doesn't make you healthy.
But the true blue capitalists keep hammering the Keynesian economic concepts, arguing that demand alone is not always enough to stimulate full employment. Thus requiring external forces, such as governments, to create jobs and regulate business cycles, even if it means borrowing more money.
The Keynesian fans never give a straight answer to one simple question though: How would we ever pay off the principal and interest on this $14 trillion plus juggernaut?
That's where I think the Islamic teachings have something to offer.
Islam not only endorses private ownership for both men and women -- "And covet not that whereby Allah has made some of you excel others. Men shall have a share of that which they have earned, and women a share of that which they have earned" (4:133) -- but it also declares their properties as sacred, "O, people! Surely your blood, your property and your honor are sacred and inviolable..." (Last sermon of Prophet Muhammad).
Islam disapproves of wealth accumulation in a few hands though by stating, "...it may not circulate only among those of you who are rich" (59:8).
Remember, as of 2007, the top 20 percent of Americans own 93 percent of America's financial wealth, compelling the bottom 80 percent to survive on a high interest (high cholesterol) diet.
And God warns of war if interest is not abolished,: "O ye who believe! fear Allah and relinquish what remains of interest, if you are believers. But if you do it not, then beware of war from Allah and His Messenger" (2:279-80).
I don't find it funny, therefore, when some joke about starting a global war as one of the ways to reduce our national debt.
Like President Obama, Islam expects the wealthy to pay more. While Obama proposed a tax on wealthy American's income, Islam imposed a 2.5 percent contribution (Zakat) only on savings.
This 2.5 percent contribution is imposed on a Muslim's savings and stock-in-trade, payable to the state annually to fund social programs. Zakat is due on gold and silver too. Zakat on savings is not considered a "tax" by Muslims but a mean of purifying one's wealth.
Imagine if you own a business and pay 2.5 percent on your profits or savings annually. Wouldn't it provide incentive for you to work hard, expands operations and employ more people in order to increase your revenue? It's like being on a treadmill with a 2.5 percent incline -- perpetually. Say goodbye to high cholesterol!
Islam encourages circulation of wealth and is tough on hording. "And those who hoard up gold and silver and spend it not in the way of Allah -- give to them the tidings of a painful punishment" (9:34). So if you save a million dollars a year, you either spend it to run the economic engine or keep paying $25,000 annually.
It also, sort of, gives a money back guarantee if we eliminate interest: "Whatever you pay as interest that it may increase the wealth of the people, it does not increase in the sight of Allah; but whatever you give in Zakat seeking the favor of Allah -- it is these who will increase their wealth manifold (30:40)."
If you are murmuring, "go tell your Muslim governments to take their Islam's advice then instead of begging for financial aid from America", I want you to know that I agree with you 100 percent.
If you feel that I am trying to introduce sharia in the U.S., rest assured, I have no such intentions. I cannot help but think like a doctor who loves his country. I know that simply raising the "normal range" of cholesterol without fundamental lifestyle modifications would not decrease a patient's risk of succumbing to massive stroke or a heart attack.
Islam's solution for our financial problems, I believe, can potentially eliminate the risk of our credit ratings suffering a stroke or our financial health succumbing to a heart attack.
As Islam proposes to eliminate debt, rating agencies like Moodies are proposing that United States should altogether eliminate the debt ceiling.
That's like a patient saying, "Doc, I know the risks. Now could you please let me go so I can have my Big Mac, fried chicken and ice cream..."
Faheem Younus is an adjunct faculty member for religion and history at the Community Colleges of Baltimore County and a clinical associate professor at the University of Maryland School of Medicine. He can be reached at Faheem.Younus@Ahmadiyya.us
Islamic banking - Wikipedia, the free encyclopedia
An Islamic Solution To U.S. Debt Problems - Yahoo! News
Muslim's Guide to Debt and Money Management Part 2 | MuslimMatters.org
You reveal, in your own words, how you simply don't understand the concept of value.
If somebody decides there is a reason urgent enough that they choose to pay (x 100)dollars later for (x)dollars now, then (x)dollars now is literally worth (x 100)dollars later.
Your either don't understand value over time or think it doesn't apply once converted into currency. This is a religious belief rooted in a desire to curb excessive wealth in a time when only wealthy possessed currency. The concept is inapplicable to the current economy in which currency is used by everybody.
Also, your quote seems to directly correlate "rich" with "good" and "poor" with "bad" which is a generally false statement, making your general argument false.
Anybody with currency (which is anybody in industrialized nations and lots of people in developing nations) can loan-at-interest, which is what savings accounts are- loaning the bank your savings at the interest rate they offer you. So that mechanism allows a bank to capitalize and loan that capital out to the community. Small business owners and homeowners pay the local citizens for use of their savings. There isn't neccessarily real wealth transfer from poor to rich inherent in an economic
- in no way am i correlating "rich" with "good" and "poor" with "bad". (Nor am I making the opposite correlation). I'm just defining "rich" as "having surplus money to lend" and "poor" as "needing money so badly you are willing to pay interest on it"
No moral judgement is implied in either condition.
-In some ways this whole discussion is almost moot. At least in some forms of shariah-compliant economics, there are a lot of work-arounds which can incentivize savings and investment without technically being considered "interest". From my perspective, a shariah-compliant financial system would probably look much like a non-shariah compliant system from the perspective of the ordinary working citizens. The real differences come in terms of the house of cards aspects of things like the derivative markets and other similar financial instruments.
The person who's phone will be shut off is irresponsible and is purchasing $100 10 days earlier than he would have access to it for $25. He's literally paying $25 for 10 days advance access to resources HE DID NOT EARN. Why does he deserve a shortcut to unearned resources? Maybe paying a premium will compel him to work harder and not be in that situation again.
Also, the value of currency changes with time. Generally it becomes less valuable due to inflation. Interest is a way to ensure your resource retains it's value over time. A house will depreciate in value as it becomes worn with age. Renting a room and using the money to fix up the house is the same as renting out one's money at interest so it keeps it's value over time against inflation.
A 90% inheritance income tax would mitigate this effect greatly. Outlawing interest would just implode the economy. And a flat tax on savings would disproportionally affect the working poor and middle class far more than wealthy individuals. Regular people generally wouldn't be able to convert their monetary savings into valuable assets to prevent zakat being levied upon them, while the rich could easily purchase valuable assets like homes (and flip them for profit, driving up housing prices... sound familiar?) and avoid paying zakat.
Tax inherited income (aka the dead person's lifetime savings) at 90%, not individual savings at 2.5% annually. Promote financial education instead of outlawing interest.
I'm still honestly stunned that Muslims cannot understand how charging interest is no different than charging rent. It's just renting out money. Money is just a form of energy which tends to be most easily traded. What is so hard to understand?
Interest in terms of Islam is the exchange of the same good for a different price, I give you 4 TVs and you pay me back with 5. Rent is a contract of ownership between two parties which they mutually agree to, it may at times be similar to interest but it isn't interest. Interest keeps people in a perpetual debt. The only case in which the term of almost exactly similar would be fixed rate interest with no hidden charges.
Now I agree with most of what you are saying and interest isn't the reason for our national debt it is overspending and not taxing people for that spending. Eliminating interest would cripple the US economy because the US economy is based on interest. If we wanted to eliminate interest it would be through a multi-year process, starting with excessive rates over 10%. An inheritance income tax wouldn't mitigate much because they would likely try to dump their money to family before death, also it reduces a persons incentive to become rich, part of which is to allow your children and Family to prosper.
The problem with modern economics is relies on a false premise, that Humans are rational creators.
Nobody but the individual traders involved in each individual trade make the determination of value. You don't get to say $100 is always worth $100 because in reality it's not. Only a false understanding of currency and trade would lead one to such a conclusion.
It boils down to the simple fact that just because Prophet Mohammed says so doesn't make it true. If this is about economics and not religion you would already have admitted that it is only one perspective that money has no intrinsic value. It's simply a paradigm which fails to include valuations such as time and access, and is therefore not accurate to reality.
The problem with inherited wealth is that those who inherit do not earn those resources. My children to not deserve any of my excess resources beyond that which I need to raise them competently to an age in which they are capable competent individuals. Interest on earned resources is not bad. Interest on inherited resources is false.
Handing your kids money will do nothing but neuter their ability to function in reality. Passing on intangible assets such as emotional fortitude, critical thought, and showing them how to navigate a life of joy and peace for themselves and all others will ensure the success of one's genetic line moreso than accumulating a bunch of physical resources and passing them along generationally.
I find it odd you are supposed to be the religious one while I am advocating for you to see beyond the material to what truly matters.
Import tariffs
Simplified tax code without deductions
Increased employment
Wage growth
Higher taxes for incomes >$200,000
90% inheritance income tax
Reduced military footprint
Price negotiation of prescription drugs
How does outlawing interest and taxing savings promote those things? More to the point, sovereign debt is often owed to other sovereign nations. Are entire nations supposed to loan to each other at no interest? Or will some "profit-sharing" model be employed between nations (ha ha)? So this would have to become a global system and really has nothing to do with just the US. It's about promoting an archaic form of finance and taxation to instill an Islamic perspective on the nature of money and the role of individuals in society.
In a world with no interest on loans, our national debt would still be huge because the principal is the majority of the bill and only the interest would not exist.
What prevents the rich from moving their money to a country which does not employ zakat? So, like the current problems in the US tax code, the rich would end up NOT paying zakat while the poor would still be subject to it.
A 90% inheritence income tax would be far more effective at mitigating actual excessive wealth accumulation while capturing a larger portion of an individual's lifetime income than the punitive annual 2.5% on savings (which the rich could easily avoid).
In the 7th century, money was far more rare than it is today. Most trade was conducted through barter, and actual money was mainly used either in cities or by the wealthy. In essence, only wealthy individuals possessed large enough sums of physical money to store (bank).
It made sense back then to tax savings because only rich people had savings to tax. The very fact that one had excess resources which could be stored as money in savings made them wealthy.
That is not the case today. Most average people actually NEED to save money in banks in order to comfortably survive to old age. The use of money has become far more prevalent and is no longer the provenance of the rich.
Taxing something that generally only the rich possessed as a way to prevent wealth accumulation made sense... in the 7th century. Here in the 21st century, everybody uses money for everything and most people who have money in savings are not wealthy. So the model of taxing monetary savings as a method of preventing excessive wealth accumulation becomes a way to prevent ANYBODY from accumulating wealth, especially the poor, in the real economy of today.
That's why you people pushing this concept are idiots. Stop reading text written in the context of a society from over 1000 years ago and start
You bring up some very good points and I am happy to continue this discourse. But you may have to be a bit more civil. The last two sentences of your post did not add any substance to your argument.
In the meantime what are your thoughts on: "How would we ever pay off the principal and interest on this $14 trillion plus juggernaut?"
Thanks,
FY
Thanks to all who enriched the conversation with thoughtful comments. Let me respond briefly:
1) As expected, some folks still argue that we have a better system in the US than many so-called Muslim countries. I WHOLEHEARTEDLY agree with that (as mentioned in the article itself). Please take a look at one of my previous post about my views on corruption in the Muslim countries. I suggested that they should learn from the so-called "Infidels": http://www.huffingtonpost.com/faheem-younus/enforce-shariah-law-or-le_b_877211.html
2) This was not an attempt to blend church and state or infuse religion into a secular problem. The article simply points to a system that millions of people over centuries have used. Other faith communities routinely provide their input as well. Try this:
https://secure3.convio.net/sojo/site/Advocacy?cmd=display&page=UserAction&id=419
This is what this Christian group claim: “As Christians, we believe the moral measure of the debate is how the most poor and vulnerable people fare. We look at every budget proposal from the bottom up—how it treats those Jesus called “the least of these” (Matthew 25:45).”
I see nothing wrong with that.
4) Some asked me to go away. I considered that. But thousands of my patients (more than 99.9% of them are NOT Muslims) with life threatening infections would want me to stay and take care of their families. Their love and trust is far too strong of a magnet for me to ignore. This country is my home and I am committed to its prosperity.
5) No one attempted to answer a simple question in the article. Let me pose it to you again: "How would we ever pay off the principal and interest on this $14 trillion plus juggernaut?"
Concious individuals seek to increase their influence over energy. It doesn't matter what form the energy one has traded their labor for is in. It's irrelevant whether I have a big house with an extra room or dollars in a savings account of which I have extra dollars- it's all energy which I traded for my labor. The particular form is irrelevant.
So If I purchased a big home with the excess capital, could I profit on rooms I rent (read: loan to others)? Or is that "wrong" because I should be renting the rooms out at cost to people with insufficient housing because I have a big house (which I earned by trading my labor for resources) and they do not?
You're intentionally ignoring (or simply don't understand) the actual causes of wealth disparity. Money and loans-at-interest are nothing more than tools designed to facilitate trade. Excessive wealth is accumulated via inheritence, not interest on loans. A 90% tax on inherited income would capture most of the wealth an individual accumulates during their lifetime to mitigate generational wealth.
Instead of taxing savings 2.5% annually for social services and preventing loans-at-interest being issued in order to mitigate excessive wealth accumulation, allow individuals to accumulate as much wealth as they desire during life and tax their lifetime's worth of income when they die for social services. This 90% inheritance income tax would mitigate excessive generational wealth, while not inhibiting trade or a person's ability to save for their family's needs and retirement, and still providing a large tax-base from which to fund social services.
Taxing savings reduces a worker's ability to save for a child's education or their own retirement. There is not an overabundance
Loans are a more efficient application of resources in an economy- that's why profit-sharing models were ultimately displaced by them.
Money is a medium of exchange, but that doesn't mean it has no intrinsic value. Actually just the opposite. You have a problem with particulars- you think the inherent value of earned labor changes depending on the particular form it is converted to. It does not. All things are energy, and energy is represented by a medium. Money is one medium. If I perform labor and earn resources, whether I am paid in food and housing or cash, the total value of the energy I exchanged in the act of labor for resources, no matter what form those resources are traded to me in, is the same.
Reality is composed of concious energy. All concious individuals function the same as atoms in terms of the manner in which they self-organize. Less energetic atoms move around little and form solids. Apply more energy, and the atoms gain some mobility and become liquid. Apply enough energy and the atoms break free of gravity's hold and move about with great energy and freedom in gas form.
Capitalism is a system which reflects the true nature of reality. Concious individuals are energy-gathering entities, seeking to increase their concious influence over energy. Everything in reality is composed of energy. Individuals perform labor to gain resources. These resources, no matter the form, represent the accumulated energy traded for labor. Money is just a tool
You work for a day, you get a day's wage. You spend $100 at the supermarket, you get $100 worth of groceries. Great.
But then the question is, what's the fair price for cash? So if you lend someone $100, how much should you charge them? And all Muslims are saying is that the fair price of $100 is $100.
That seems to me to be an obvious and fatal flaw in the Islamic system.
But how much is $100 worth of groceries? There would be a different amount of groceries depending on which store was gone to, what commodities are trading for in the large markets, and the individual's own determination whether the trade of (x)food is worth (y)dollars.
The value of anything is not set by an external entity, but only by the entities engaged in the trade. If there were fresh blueberries for sale @$4/pint and somebody wanted 1 pint for $3.50, the individual and the entity selling blueberries can either negotiate or decide not to trade. If that person negotiates a price of $3.75/1 pint but the next customer simply purchases 1 pint @ $4, what is the actual value of a pint of blueberries? The actual value of a trade is determined by the individual traders in the act of the trade.
"But then the question is, what's the fair price for cash? So if you lend someone $100, how much should you charge them? And all Muslims are saying is that the fair price of $100 is $100"
And here is where the philosophy behind the concept is revealed to be false. Sometimes receiving $100 today is worth trading back $125 two weeks from today. Say you get paid bi-weekly and your check is 10 days away, but your cellphone bill is overdue and getting shut off today. It would be worth paying $125 in 2 weeks
I would have described this differently from the article. Zakat is a religious obligation. Even in a Muslim society, only Muslims would pay it. It's a poor "tax" that primarily goes to people in need.
What was said consisted primarily of religion, not logic and verifiable evidence.
The use of religion as a justification in a secular debate disqualifies the speaker.
" …Democracy demands that the religiously motivated translate their concerns into universal, rather than religion-specific, values.
It requires that their proposals be subject to argument, and amenable to reason. I may be opposed to abortion for religious reasons, but if I seek to pass a law banning the practice, I cannot simply point to the teachings of my church or evoke God’s will. I have to explain why abortion violates some principle that is accessible to people of all faiths, including those with no faith at all."
http://www.youtube.com/watch?v=3tdoQr3BQ1g