It is universally accepted that the young people are idealistic.
They care about other people, they care about not only their own future but the future of their society as well.
You can look at this everywhere in every country, including Malaysia.
Young people are basically looking for things that actually make them emotionally and psychologically and mentally prepared to enter into fields that are helpful to the society as a whole.
What’s the difference between me as an old man and some young person?
A young person has a life in front of them and they want to see that the rest of the society they live in prosper and grow.
You see most of the people now are in movement against inequality, against poverty, against huge mass fortunes of very few people in the society and enormous poverty… They all are concerned about these things.
So the way to recruit young people into Islamic finance isn’t to say you come here and I’ll give you a good salary, you’ll end up with a job that pays you $10,000 to $20,000 more.
But say, if you really care for the society, for the future of humanity. If you care about poverty. About deterioration of environment. And about the way people are now, basically old people, are being forced to live on meager income because they’re not getting any returns on their pensions…
If you care about these things, then you need to go in a field that says the society’s risks have to be shared. They cannot just simply be passed on by a few people to a whole large number of the population. So we end up with a whole bunch of people who are populace.
And then you have a number of few people who are very rich.
And the present conventional finance doesn’t have an answer.
Look what’s happening now. You have in the world, for instance the central bank in Japan, for example has a negative interest of 1.4%.
So basically, this interest rate, which is usually a major cost of production for firms is now not only part of not positive, it’s negative.
In other words if the banks will borrow money from the centralized $100 now, at the end of the year, they have to pay $98.6 back.
Central bank pays them to come and borrow money from them. This is a situation where the cost of production would go down.
On the other hand, oil prices which are also a part of the huge energy cost of firms, that is also going down to thirty dollars or twenty-seven dollars, which is equivalent to the price of 1950s.
So the price has dropped from $140 down to $27. But yet unemployment is growing, firms are going out of business, they’re going bankrupt.
The only reason that anomaly is happening is because the system is now piled up a huge amount of debt everywhere.
The global debt is now 60 trillion dollars more than it was at the time of 2007-2008 crisis.
And all the crisis that we have known whether it’s for example the 1997-1998 crisis in this area over the crisis of 2007-2008, whether you call it banking crisis or exchange rate crisis or capital account crisis… All of them have now been found to have been debt crisis at the bottom.
So interest-rate debt is a plague on the financial system. And having a negative interest rate is not going to help.
Because what’s happening is that central banks are offering the banks to come and borrow money from it at a negative rate. (For instance in Japan or in the US, it is very close to zero).
But then again they want them to take this money and loan it out to consumers so they can buy more. For investors so that they can invest.
But the banking system isn’t doing that, because their objective is the bottom line.
The objective of the central bank is to help the employment to grow and incomes to grow, poverty to decline. But the banking system looks around and says:
“Well, the government that’s borrowing at let’s say 3 to 4 per cent, so you go and buy bonds rather than loaning the money government bonds. So you borrow from central bank and loan it to the government.
So this is becoming a very absurd system. And there is a huge amount of uncertainty about this regime of financing.
So sooner or later, it has to come to that creation of debt comes from this transfer of risk mechanism. So it has to come down to risk sharing.
So if you tell a person all of these problems that you see at the bottom is the question of creation of debt and passing risk from one rich individual to a poor individual or the tax payers.
The best thing to do is to share the risk. Have everybody have ‘skin in the game’. Therefore they would be reluctant to engage in processes, engage into businesses, to things that actually make them lose money rather than earn money.
When you don’t have to worry about who’s bearing the risk when you can pass on the risk of your own operation to somebody else, you don’t care, you don’t have ‘skin in the game’.
You end up actually, as the very famous statement in the US that:
‘If you steal a loaf of bread, you end up in jail for a number of years, but you can steal billions of dollars in the financial system and you don’t see one day of jail’ basically because you are rich enough to pass on the risk of your operations to the taxpayer.
This video is used with the speaker’s kind permission. It is transcribed by Reading Islam team.