I discussed the theory of Islamic finance in the last post on this subject. Here is a nice summary of the difference between Islamic and conventional banks’ approaches to risk.
The above is from work done by Maher Hasan and Jemma Dridi, two IMF economists, on how Islamic banks performed during the global financial crisis (and the period leading up to it). In a 2010 working paper, they use bank level data from 120 Islamic and conventional banks from eight countries* over the period 2007-10 to explore why Islamic banks might have performed differently during the crisis.
In the last half decade of Hosni Mubarak’s rule, the Egyptian economy grew by healthy 5-7% a year. Economic growth dipped to less than 2% a year after the revolution. Currently, Egypt is on the brink of economic meltdown, and is negotiating an IMF rescue package. The IMF package will probably involve tax reforms, privatisation, trade liberalisation, removal of subsidies, you know, the standard Washington Consensus neoliberalism. The Muslim Brotherhood run government of Egypt does not particularly want to do any of these things. As I speculated over a year ago, economic problems are giving anti-Brotherhood factions a political opening.
But this post is not about Egypt.
Islam is the solution — the Muslim Brotherhood used to say. It will be interesting to see whether someone issues a fatwa declaring the IMF package as ‘Islamic’ or Shariah-consistent. But as far as I can tell, the two things most commonly associated with Islamic economics — zakat and Islamic finance — have very little to say about Egypt’s current problems.
I’ll do a separate post or two about the origin of Islamic economics. And there will be a post on zakat. Over the fold, some thoughts on Islamic finance from the perspective of a mainstream economist (who may or may not be a believer).
All About Eve, the Oscar-winner in 1950, is a drama set in the black-and-white era Broadway. It shows how the seemingly innocent Eve Harrington (Anne Baxter) connives, deceives and manipulates people and event to eclipse the ageing star Margo Channing (Bette Davis). In her quest, Eve is initially assisted by the theatre critic Addison DeWitt (George Sanders). But before long, DeWitt makes it clear who calls the shot. Let me outsource to wiki to describe how the movie ends:
After the awards ceremony, Eve hands her award to Addison, skips a party in her honor, and returns home alone, where she encounters a young fan—a high-school girl—who has slipped into her apartment and fallen asleep. The young girl professes her adoration and begins at once to insinuate herself into Eve’s life, offering to pack Eve’s trunk for Hollywood and being accepted. “Phoebe” (Barbara Bates), as she calls herself, answers the door to find Addison returning with Eve’s award. In a revealing moment, the young girl flirts daringly with the older man. Addison hands over the award to Phoebe and leaves without entering. Phoebe then lies to Eve, telling her it was only a cab driver who dropped off the award. While Eve rests in the other room, Phoebe dons Eve’s elegant costume robe and poses in front of a multi-paned mirror, holding the award as if it were a crown. The mirrors transform Phoebe into multiple images of herself, and she bows regally, as if accepting the award to thunderous applause, while triumphant music plays.
You see, whether it is Margo or Eve or Phoebe — it’s Addison who makes or breaks the star. The question is, what makes Addison tick?
And more generally, what motivates the media?
A significant part of my grad school days was spent in bookshops — both second hand and new. A typical Sunday afternoon might have involved walking aimlessly into a second hand bookshop and finding something like this. Then there was the major independent bookshop, reputed to be one of the best in the Southern hemisphere. Ten minutes walk from a left-leaning university, surrounded by cafes and vegetarian restaurants, that was the place where many of us debated the empire and hegemony (and girls, of course).
For someone like me who grew up in a third world
superslum mega city or the small town west, the large independent bookshop or scores of small second hand ones were a major part of the big city attraction. Even after I had left school and started working, for years I’d visit that bookshop district next to the university everytime I’d be in the city — you see, I work in a small town, and for years we had (almost) nothing comparable.