For many years, my case for life insurance on children was half-hearted at best. To interested people, I would talk about the virtues of preserving their childrens' insurability while putting away systematic savings for them, a rare foresight they would appreciate decades later. A few people would take me up on my lukewarm offer.
But the fact is, my case was weak; moreover, in my heart, I really believed that parents had a variety of better things they ought to be doing with their money, most notably (of course) saving for college; and life insurance is simply not a good vehicle for this. Compounding my belief was the fact that I had read several of those "know it all" financial columnists who would talk about life insurance on children being nothing but a scam to sell insurance policies.
My opinion on this matter changed 2 years ago, when my wife and I lost our firstborn son, Aren. He passed away on the day he was born; at 23 weeks, we had no hope short of miracles that anything positive could come of these circumstances. To say we were devastated is, as anyone who has been in remotely similar circumstances knows, a woeful understatement.
Looking back almost 2 years later, aided by the birth of our second son, I can honestly say that my wife and I were disabled for about 18 months following Aren's death. It took me months to muster enthusiasm for my work again- my paid for premium that year was $40,000. My wife was even more affected; it took a lot of togetherness for my wife and I to begin to cope with this.
Wednesday, May 23, 2007
Monday, May 21, 2007
Interest vs. Riba, Part 2
Throughout human history, we have devised several economic systems. If the debate can be boiled down to its essence, it has revolved around two main ideologies: "hands on" or "planned" economies (communism; socialism) and "hands off" economies (capitalism).
In our world today (and throughout human history), both have been tried to certain extents, but neither one in their "purest" form. The criticisms of planned economies include: 1) that human planning cannot possibly equal the market as a fair and effective arbiter of resources, (as it never has in actual practice); 2) that planning tampers with naturally competitive markets, which results in inferior products and services and thus lower quality of life; 3) that centralizing planning opens opportunities for corruption by those in control, which, coupled with lack of fair competition, quells ambition for innovation
Completing the circle, criticisms of hands-off economies mirror those above: 1) that the market cannot (and has not) been a fair and effective arbiter of resources, and some planning is necessary; 2) that competition without limits reduces quality of life by creating a culture of consumerism and a society-wide overemphasis on production; 3) that capitalism's focus on "the bottom line" while not scrutinizing the means allows greed to seep into the system, resulting in dishonesty and other unscrupulous business practices
Though both ideologies have their unabashed and uncompromising proponents, I believe the mainstream position is that ALL of these criticisms are correct to some degree, and that it is simply a question of choosing between the lesser of two evils. No system is the "ideal" system, but perhaps it is the ideal system available, despite its faults. Furthermore, no economy in the world today is purely one or the other. If I could sum up my observation of the trend in the world today, I would say that the most "successful" societies in the world are leaning towards capitalism, but recognize that certain institutions must be kept in the hands of the state for society to remain cohesive and functional. Across the spectrum, from the US, through Europe, India, and China (to name a few), this is true in varying degrees (i.e. the US is a country that is capitalist in philosophy, but feels it must retain some government intervention; China is communist in philosophy, but has benefited greatly by strategically opening up its markets to a degree).
It is hard to dispute the success of capitalism in fostering a free society that encourages innovation and equal opportunity (to a reasonable degree). But no mixed economy that has ever seen its capitalist elements produce these economic benefits has ever felt comfortable simply shedding all its "socialist" leanings in favor of unbridled capitalism. They know that the free market must be checked and balanced to be good for society, or the "side effects" of capitalism will overrun its benefits. Can you imagine the United States, the symbol of free market success, without a minimum wage law? Without an Food and Drug Administration to regulate products? Without its governmental monopoly on law enforcement? Without some social welfare for its poorest citizens (though the debate over whether we provide too much or too little rages on)? Even the United States recognizes that we must be "hands on" with our "hands off" economy. If there is one thing nearly ALL economies have in common, it is that we hold onto at least some checks and balances that mitigate the potential pitfalls of an unbridled free market system. The fact that some countries (like Cuba) restrict the market altogether, while others (like the US) embrace it with a few "safety" clauses is, in a way, only a matter of degree!
Which brings us to Riba. None of the checks and balances that man has put on the market system has produced ideal results- as listed earlier, lean too far left to warrant one set of criticisms; lean too far right and earn the other. There is room for improvement on how we order our economic activity. Could banning interest- while it seems oppressive to those who say it is our capitalist right to deal in it as we see fit- help us curb capitalism's excesses without the typical drawbacks that come with planned economies? This is the question the rest of this paper explores.
In our world today (and throughout human history), both have been tried to certain extents, but neither one in their "purest" form. The criticisms of planned economies include: 1) that human planning cannot possibly equal the market as a fair and effective arbiter of resources, (as it never has in actual practice); 2) that planning tampers with naturally competitive markets, which results in inferior products and services and thus lower quality of life; 3) that centralizing planning opens opportunities for corruption by those in control, which, coupled with lack of fair competition, quells ambition for innovation
Completing the circle, criticisms of hands-off economies mirror those above: 1) that the market cannot (and has not) been a fair and effective arbiter of resources, and some planning is necessary; 2) that competition without limits reduces quality of life by creating a culture of consumerism and a society-wide overemphasis on production; 3) that capitalism's focus on "the bottom line" while not scrutinizing the means allows greed to seep into the system, resulting in dishonesty and other unscrupulous business practices
Though both ideologies have their unabashed and uncompromising proponents, I believe the mainstream position is that ALL of these criticisms are correct to some degree, and that it is simply a question of choosing between the lesser of two evils. No system is the "ideal" system, but perhaps it is the ideal system available, despite its faults. Furthermore, no economy in the world today is purely one or the other. If I could sum up my observation of the trend in the world today, I would say that the most "successful" societies in the world are leaning towards capitalism, but recognize that certain institutions must be kept in the hands of the state for society to remain cohesive and functional. Across the spectrum, from the US, through Europe, India, and China (to name a few), this is true in varying degrees (i.e. the US is a country that is capitalist in philosophy, but feels it must retain some government intervention; China is communist in philosophy, but has benefited greatly by strategically opening up its markets to a degree).
It is hard to dispute the success of capitalism in fostering a free society that encourages innovation and equal opportunity (to a reasonable degree). But no mixed economy that has ever seen its capitalist elements produce these economic benefits has ever felt comfortable simply shedding all its "socialist" leanings in favor of unbridled capitalism. They know that the free market must be checked and balanced to be good for society, or the "side effects" of capitalism will overrun its benefits. Can you imagine the United States, the symbol of free market success, without a minimum wage law? Without an Food and Drug Administration to regulate products? Without its governmental monopoly on law enforcement? Without some social welfare for its poorest citizens (though the debate over whether we provide too much or too little rages on)? Even the United States recognizes that we must be "hands on" with our "hands off" economy. If there is one thing nearly ALL economies have in common, it is that we hold onto at least some checks and balances that mitigate the potential pitfalls of an unbridled free market system. The fact that some countries (like Cuba) restrict the market altogether, while others (like the US) embrace it with a few "safety" clauses is, in a way, only a matter of degree!
Which brings us to Riba. None of the checks and balances that man has put on the market system has produced ideal results- as listed earlier, lean too far left to warrant one set of criticisms; lean too far right and earn the other. There is room for improvement on how we order our economic activity. Could banning interest- while it seems oppressive to those who say it is our capitalist right to deal in it as we see fit- help us curb capitalism's excesses without the typical drawbacks that come with planned economies? This is the question the rest of this paper explores.
Subscribe to:
Posts (Atom)