Friday, October 06, 2006

Why I Support Church/State Separation

Those of us who have any dealings with banks know how the system works – you purchase a home or car, you have credit cards, and the bank charges you interest. Granted, some banks steal from you – 27% interest on a credit card is theft! But that’s how the system works. If you play smart, you can benefit. If you have no large debts, but you invest money, then you receive interest. I know, banking 101. However, Muslims cannot pay or receive interest. This is a big problem. So today I read that several banks in South Africa will be offering Shariah-compliant services. Under Shariah law, wealth must be generated through trade and investment in assets. The Shariah financial model works on the basis of risk sharing - the customer and the bank share the risk of any investment on agreed terms and divide any profit between them. A Shariah-compliant savings account will earn the person an agreed upon “dividend” based on their annual deposits. When it comes to loans on cars, a figure that includes the profit to be made by the bank is worked out upfront. That profit plus the capital amount is then divided by the number of months it will take to repay. In this way the borrower knows exactly what amount they will be paying. Interest on deposits is similarly replaced by a dividend from the bank. When purchasing a home the bank buys the property in partnership with the client. The bank annually sells portions of its share of equity to the client at an agreed price, so that over the period of financing the client purchases the entire share held by the bank.

Confused? Will there be separate “queues” for Muslims? Will there be Muslim-only ATM’s? I know this is how the free market works – business creates ways to meet the needs of it’s customers, but this doesn’t feel right, sound right, or smell right. Will this ever happen in the US? Probably not anytime soon. However, in a couple of months everyone at the mall will greet you with the really asinine “Happy Holidays” greeting rather than “Merry Christmas.” This is why I thank God every day that we have a wall of separation between the church and the state, and our government is bound to be religiously neutral.

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