Author: tompepinsky

So lately at work, I’ve (jm) been seeing lots and lots of kids.  Every single day there is at least one person who comes in and tells me they want to go to Harvard.  Sometimes it’s more like two or three a day.  Seeing as this was the first year that more than one Malaysian student was accepted to Harvard (they took 3- 2 Malaysian kids and an American expat living here), I have to politely inform them that their chances are not good.  I don’t get it.  How on earth did Harvard become such a brand name?  They don’t even usually mention the other Ivies, much less all the other fantastic schools out there, just Harvard.  It’s actually quite funny, they all ask for brochures and we don’t have any.  We get tons of materials from all over the states (I spent about an hour just opening mail the other day), but none from the top schools.  They all have huge endowments, but I guess they save it for things other than glossy brochures.  They don’t have to advertise because everyone knows who they are already.

Last night I went to a career fair with my boss at a British secondary school outside of KL.  It’s a school basically full of expat kids with a few other random people tossed in.  It was a neat event, the guidance counselor arranged to have reps there from all sorts of places so that the kids and their parents could see what some options were for further education.  We expected to be bored all night, figuring nobody would be interested in going to the US, but we were the busiest table there.  It was kind of interesting meeting these kids. Of the ten we met, at least three are going off to programs at Yale and Columbia this summer for some kind of thing where they take a class or two and get to network with guidance and admissions staff at the schools.  I guess they figure this will increase their shot at getting in.  I do hope that if they end up applying to these schools that they don’t apply for financial aid.  You know that at the first blank spot they find on that application, they will write about how they  attended a summer course on campus, and the college will immediately know that they spent $8000 for summer school.  So why not $42,000? (times four, of course)

The earlier post on Islamic banking has led me (TP) to think some more about the whole system.  In my readings, I have come across some more interesting stuff.  In addition to the principles of "guaranteed custody" and "deferred-payment sale," there also also schemes for business financing through profit and loss-sharing (al-Musyarakah), capital financing (al-Murabahah) and leasing (al-Ijarah) that function under Islamic principles.

What I started thinking about, though, was whether or not the Malaysian government has set up any sort of Islamic money markets to prevent funds from Islamic banks being commingled with funds from non-Islamic banks.  Turns out, such a system does exist.  In Malaysia you can buy an Islamic-based Malaysian Savings Bond in addition to a regular savings bond. In doing so, you are conferring a benevolent loan (al-Qardhul Hasan) to the government for development expenditure.  Not sure how you make money on it, though.  There is also a separate interbank market based on a principle called al-Murdharabah, which is close to the capital financing principle above based on reciprocal investor-entrepreneur relationships.  Islamic bank checks go through an Islamic clearing system.  There are Islamic stock indices and Islamic unit trusts.  In all, the government has recreated almost the entire financial system in parallel, based on Islamic principles.

Something else that had confused me dealt with the concept of insurance.   I had heard that the concept of insurance was counter to Syariah because it involved a form of gambling, which is haram as well.  Turns out, insurance itself as a method for groups planning ahead for misfortune is OK, just not the way that it is normally done in insurance companies.  The way it works is through the concept of al-Takaful, where a group of people reciprocally agree that the collective will pay for a misfortune that may befall any one of them.  Using the al-Murdharabah concept above, they can appoint an entrepreneur to invest their money that they jointly contribute, and they voluntarily agree (Tabarru’) to forgo some portion of the profits from the investment in order to pay for the aforementioned misfortunes.  Very interesting.