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Old 09-12-2017, 06:03 PM   #41
Anthony
 
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Originally Posted by sir_pudding View Post
I suspect it has more to do with applying a scheme for economic fairness concocted by a 7th century illiterate (or revealed to him by an Angel, which as we know are all incredibly wealthy but always are trying to borrow ten bucks; so they don't really understand money either) to modern financial systems.
Anti-Usury laws have been invented by a lot of cultures; the main distinction of Islamic banking is that it's written down in a holy book that's difficult to amend (this is a problem for a lot of Islamic law). Medieval Catholic doctrine on usury is somewhat interesting; Cardinal Hostiensis's doctrine of lucrum cessans looks like a very early understanding of opportunity cost.
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Old 09-12-2017, 08:03 PM   #42
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Originally Posted by sir_pudding View Post
Yes, that was the example upthread. Negotiating a price based on ROI isn't interest. So if your car (or spaceship) happens to cost 110% more if you pay it off over 36 months, then that isn't haram, because you aren't explicitly borrowing money at interest in that case. The only real distinction is whether the bank or the borrower owns the vehicle or not.

It won't have much effect on the game mechanics in Spaceships, as abstracted as they are already.
And this is using a technicality to skirt the word of law without adhering to the intent in any way. So like I said, this is very realistic: use any legal loophole to get away with breaking the intent of the law. Depending on how realistic Vicky wants his banking, this isn't a bad thing to include.
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Old 09-12-2017, 08:49 PM   #43
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Originally Posted by NineDaysDead View Post
Here's an example of Islamic "mortgages" in the UK:

https://www.alrayanbank.co.uk/home-f...purchase-plan/
I'm by no means an expert or even particularly comfortable with Sharia banking, but it may be helpful to break out what Al Rayan Bank says is happening with its home financing.

First, there are three separate but interdependent contracts involved. Sharia says it's permissible to have interdependent contracts as long as they don't interact in complex ways to obscure the results.

The first contract is a contract of Diminishing Partnership. In this instance, the Bank puts up somewhere between 60% and 80% of the total property value and the home owner as the other partner buys the bank's share of the partnership down to 0% over a period of time. Interest is not charged, instead, the home owner agrees to value the bank's share as the amount the bank put up plus some additional lump sum. In general, the home owner makes equal payments over the life of the contract (in this instance four years) but he is allowed to buy out the Bank's share earlier if he so desires. If the bank has not had its share fully acquired at the end of the four years, the contract of Diminishing Partnership continues in force but another lump sum is assessed against the remaining value of the bank's share of the partnership. The contract of Diminishing Partnership will also cover which partner is responsible for paying administrative fees and stamp duty.

Under Sharia law making a profit is assumed to be the reason for going into partnership. If either party finds the partnership is operating at a loss for them, the contract is discharged. Exactly who needs to return money depends on the source of the loss. For example, if the home owner loses his job, the bank will return the full value of his share in the property. If, on the other hand, the home owner sells the property at a loss, since the loss comes from his sale, he has to make good on the full value of the Bank's share in the property. As for any increase in the value of the property between the time the Bank puts up its share and the home owner acquiring that share: the Bank says that any excess value beyond the lump sum added to the purchase price belongs solely to the home owner and is his profit in the partnership.

The second contract is a contract of Lease. The Bank owns its share of the property and the home owner leases the use of the Bank's share until the Bank's share diminishes to 0%. In general, the lease would provide for a regular payment of rent and the rent would diminish proportionately with the size of the Bank's share in the property.

Thirdly, there is a Contract of Service Agency. This is optional, in the sense that the Bank rather than the home owner could be the Service Agent. The home owner is usually the Service Agent as he has a greater long term interest in the property and it allows the Bank to offer a lower price if it doesn't have that financial responsibility. The Service Agent is responsible for maintenance of the property, paying utilities and property taxes and paying for insurance(s) deemed adequate by the partnership.

Something that might be a possible complication for the OP would be the existence of additional laws regarding debt. Judaic law as well as Sharia law forbids usury (in the sense of any interest, rather than exorbitant interest), but also requires the discharge of all debts by the jubilee year (seventh year) and, IIRC, the forgiving of any outstanding debt. So, you might have the complication of being taken to court to discharge a debt (or as much of it as you can) and (if you can't pay much of what is owed) the creditor taking a bath on it.
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Old 09-12-2017, 09:24 PM   #44
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Originally Posted by Curmudgeon View Post
I'm by no means an expert or even particularly comfortable with Sharia banking, but it may be helpful to break out what Al Rayan Bank says is happening with its home financing.
While this is technically, in terms of the rules of this interpretation of sharia, a set of contracts that does not involve interest, it seems in actual fact to be an interest-bearing loan, in which the amount that is paid back exceeds the amount that is borrowed. And so it enables the normal sort of financial arrangements that a Finance roll might allow, but with an extra roll, perhaps, to address the legal technicalities.

The actual situation of "no interest can be charged" would be one where you went to a bank to borrow money, and they could not have you pay back more than the amount you borrowed. And then no bank would lend you money in the first place. You could borrow from a relative, perhaps, but there wouldn't be a commercial loan market.

And if that were truly the case, there would be other effects. For example, if you had gold, or federal reserve notes, you would have no reason to lend them. You could bury them in the back yard, like the servant in the parable of the talents, or stuff your mattress with them, or put them in a secure warehouse and pay a regular fee for storage. Or you could buy durable goods like works of art. But there wouldn't be what we call "capitalism."

(The late nineteenth century individualist anarchist Benjamin Tucker envisioned something like this. Among other things, he wanted to do away with rent, by having no protection for ownership of land that a person was not actually occupying and using.)
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Old 09-12-2017, 09:39 PM   #45
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Originally Posted by whswhs View Post
The actual situation of "no interest can be charged" would be one where you went to a bank to borrow money, and they could not have you pay back more than the amount you borrowed. And then no bank would lend you money in the first place. You could borrow from a relative, perhaps, but there wouldn't be a commercial loan market.

And if that were truly the case, there would be other effects. For example, if you had gold, or federal reserve notes, you would have no reason to lend them. You could bury them in the back yard, like the servant in the parable of the talents, or stuff your mattress with them, or put them in a secure warehouse and pay a regular fee for storage. Or you could buy durable goods like works of art. But there wouldn't be what we call "capitalism."

(The late nineteenth century individualist anarchist Benjamin Tucker envisioned something like this. Among other things, he wanted to do away with rent, by having no protection for ownership of land that a person was not actually occupying and using.)
This is tangential, but wrong. While moneylending is important to capitalist economies, it's very distinct from ownership of business firms or capital, which you conflate it with throughout the last two paragraphs. Capitalism without the latter is nonsensical, but capitalism without the former is conceptually fine.
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Old 09-12-2017, 10:41 PM   #46
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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This is tangential, but wrong. While moneylending is important to capitalist economies, it's very distinct from ownership of business firms or capital, which you conflate it with throughout the last two paragraphs. Capitalism without the latter is nonsensical, but capitalism without the former is conceptually fine.
Large parts of the funding of businesses comes through bonds (a formalized way of paying interest on loans) or bank loans. Do away with those options, and the funding options for businesses, especially startups, would be significantly narrower.
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Old 09-12-2017, 10:52 PM   #47
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Originally Posted by whswhs View Post
While this is technically, in terms of the rules of this interpretation of sharia, a set of contracts that does not involve interest, it seems in actual fact to be an interest-bearing loan, in which the amount that is paid back exceeds the amount that is borrowed. And so it enables the normal sort of financial arrangements that a Finance roll might allow, but with an extra roll, perhaps, to address the legal technicalities.

The actual situation of "no interest can be charged" would be one where you went to a bank to borrow money, and they could not have you pay back more than the amount you borrowed. And then no bank would lend you money in the first place. You could borrow from a relative, perhaps, but there wouldn't be a commercial loan market.

<snip>
I think you're over-rating what interest is. It doesn't "seem in actual fact to be an interest-bearing loan" to me. It's much closer to a loan which involves the payment of a fee. You might not become wealthy under such a scheme but I suspect you could make a living.

While there were banks of a sort before modern banking began in 14th-century Italy, it would appear that non-usurious loans were made by moneylenders (who amounted to the commercial loan market) so I don't think it's a deal-breaker, though the banking industry may have been smaller.
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Old 09-13-2017, 12:00 AM   #48
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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Large parts of the funding of businesses comes through bonds (a formalized way of paying interest on loans) or bank loans. Do away with those options, and the funding options for businesses, especially startups, would be significantly narrower.
Can startups usually borrow much money when they've typically got no revenue and next to no assets? That quibble aside, yes, borrowing (and hence lending) is important to typical business operation in modern economies.
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Old 09-13-2017, 12:44 AM   #49
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

At its heart, interest is a fee. It is the fee charged for use of money. It happens to be paid over time, and the lender isn't garaunteed full payment of the fee. But it remains a fee for the use of money.
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Old 09-13-2017, 02:41 AM   #50
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Default Re: [Spaceships] Islamic Banking and Financing Spaceships Purchases

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I guess the question I'd have is what definition of Usury you're using. Since the only one I am really aware of is lending at an "unreasonably high" rate of interest, I'm not sure how that would be an issue.
(Also @Humabout and others who asked for definitions and some other specifics.)

You're aware of the revised definition. But since I'm looking at something that developed in parallel for multiple TLs, essentially a divergent techpath in economics of the setting which happened at TL2-TL4 (unlike ours, where the divergence happened at TL7-TL8!), I'm looking at a definition closer to the original one. That is:

Charging interest on money over time in a way that it compounds over and over and over again the longer it is not paid off. The cultural reasoning is the population's wariness of 'dept pits' (i.e. situations where one becomes indebted, then loses the source of income that was meant to pay off the dept, resulting in the dept growing and growing, eventually bankrupting the indebted person). Other concerns for wariness include fear of inflation for the indebted people (will be commented on below), and the fact that in our techpath, banks can basically wash their hands off in case something goes wrong, and thus are incentivized to give credits even to people who aren't all that likely to be able to handle them which in turn leads to bad stuff.

As discussed by others, when there's reduced demand for alternative ways of financing, of which two seem more easy to handle while avoiding use of interest:
  1. Co-ownership of a ship as an enterprise (e.g. 20%:80%), with the bank receiving a portion of the earnings pro rata, with the captain having and retaining the right to buy the shares from the bank, with some pre-agreements about what the price is and how it may or may not be adjusted. This seems to be the silent partner path, with some adjustments.
  2. Co-ownership of a ship, with the right to buy it out piece by piece, again with some pre-agreements, plus rental of the bank-owned fraction to the captain. This seems to be more appropriate for ships used for non-earnings-generating ships, such as a yacht that the captain uses purely for recreation.
Both seem more suited to letting partners decide to go their separate ways (at least judging by some arguments of economists), and avoids debt, interest and the possibility of 'interest pits'. Also, in both of these cases, nothing prevents the bank from pre-agreeing that the ship's cost-to-be-sold-to-the-captain is higher than the cost-of-the-ship-as-bought-by-the-bank-from-shipyard.

What I'm interested the most are:
  • How each of those schemes will change the calculation of costs/payments / what the reasonable playable approximation of payment calculations should be for them.
  • What changes to the legal status of ownership and insurance should I keep in mind when dealing with each of these schemes, especially during adventures.

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Originally Posted by Humabout View Post
How does a usury-no system account for and offset inflation? If you loan me $1,000 today and there is 3% inflation between now and when I pay back the loan, the bank is recieving only $970 in purchasing price parity on the original principle of $1,000. That's a loss.

Can a person charge interest to offset projected inflation or simply adjust the princle for inflation as it occurs? Or is that then considered usury?
Actually, inflation is a totally separate concern. Consider how in our 'mainstream' economic systems, the risks of inflation aren't protected against naturally, but instead require implementing tricky workarounds. In fact, borrowing money measured in a hard currency is a terrible, terrible decision as far as risk management goes:
Let's say a person (a wealthy businessman) earns enough to have 8,000 spare dinars a year. Said person takes a loan in jade talents (a hard currency), in such a way as to pay half a talent a year (about 4,000 dinars) until the debt is paid off in 10 years. Hard currency loans tend to have lower interest rates, after all, so it's very tempting! Over the course of the fifth and sixth year, the situation on the international market changes, and now 1 jade talent costs 24,000 dinars, so the wealthy merchant now has to pay 12,000 dinars a year, which bankrupts him by the end of the 10-year period. It's even worse if it's not a business that can be abandoned, but rather a person's only dwelling.

While the specific example is fictional, the overall pattern isn't, and it keeps reoccurring even in modernity. Had the merchant took a loan in an inflating currency, things would probably have been softer, especially with a capped/fixed/etc. interest rate.

What I'm saying is: inflation is a complicated matter; it's not easily avoided as a factor to be considered with 'mainstream' methods but requires active counters; it's also not usually handled in GURPS, as the GURP$ is considered static.
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