Humans As Rational Beings

Neoclassical economics is built on very strong assumptions that, over time, have become “established facts.” Most famous among these are that all economic agents (consumers, companies, etc., are fully rational, and that the so-called in- visible hand works to create market efficiency). To rational economists, these assumptions seem so basic, logical, and self-evident that they do not need any empirical scrutiny.

But how rational is human? Only one entity in this entire universe can answer this question with certainty – the One who created all things in this universe.

To Him is due the primal origin of the heavens and the earth; when He decreeth a matter He saith to it: "Be"; and it is. (Aya 117 of Sura Al-Baqara)

Allah (SWT) says in Ayat 19 –21 of Sura Al-Ma’arij

Truly man was created very impatient,

Fretful when evil touches him;

And niggardly when good reaches him

So there are bounds to rationality of human beings. The demands of classically defined rationality, according to Albin, simply go far beyond the capabilities of human actors to deal with the world’s complexities. These are the ‘barriers and bounds to rationality.’

Adam Smith first coined the term “The Invisible Hand” in his important book “The Wealth of Nations.” With this term he was trying to capture the idea that the marketplace would be self-regulating.  The basic principle of the invisible hand is that though we may be unaware of it, an unseen hand is constantly prodding us along to act in line with what’s best for the whole economy. This means that when this invisible hand exists, when we all pursue our own interest, we end up promoting the public good, and often more effectively than if we had actually and directly intended to do so.  This is a beautiful idea, but the question of course is how closely it represents reality.

That’s Harvard economist Greg Mankiw’s advice to students of all ages:

Economists like me often pretend that people are rational. That is, with mathematical precision, people are assumed to do the best they can to achieve their goals.

For many purposes, this approach is useful. But it is only one way to view human behavior. A bit of psychology is a useful antidote to an excess of classical economics. It reveals flaws in human rationality, including your own.

The main stumbling-block with traditional approaches to development, Sendhil Mullainathan said in a talk this year, is “this little three-pound machine that’s behind your eyes and between your ears” — the human brain. “This machine is really strange, and one of the consequences is that people are weird. They do lots of inconsistent things.

In 2008, a massive earthquake reduced the financial world to rubble. Standing in the smoke and ash, Alan Greenspan, the former chairman of the Federal Reserve Bank once hailed as “the greatest banker who ever lived,” confessed to Congress that he was “shocked” that the markets did not operate according to his lifelong expectations. He had “made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders.”

Why did Mr. Greenspan, along with the rest of the world’s regulators, fail to foresee that this could happen? We think their mistake was to neglect the role of human nature. To prevent future catastrophes, regulators should focus explicitly on how to provide safeguards against two all-too-human frailties explored by decades of work in behavioral economics: bounded rationality and limited self-control.The standard (non-behavioral) econ­omic model has greatly influenced regulators. In that model, economic agents (econs for short) choose optimally, no matter how hard a problem they face. They play chess as well as they play tic-tac-toe. The problem with this approach is that the world is populated by humans, not econs. Humans are not stupid, but when things get complicated they flounder: they suffer from bounded rationality.

Salman Taseer, Malik Mumtaz Hussain Qadri, Aasia Bibi Vs. State

The objective analysis of all events that culminated in murder is the need of the hour but unfortunately, the analysis so far is a lopsided one either to the one end of the scale or the other end, hence both are extreme views and nothing but is an effort to join the either of the bandwagon.

First, what is the matter of one Aasia Bibi? Asia Bibi, 45, was handed down the death sentence by a court in Nankana district in central Punjab on Monday. Ms Asia’s case dates back to June 2009 when she was asked to fetch water while out working in the fields. But a group of Muslim women labourers objected, saying that as a non-Muslim she should not touch the water bowl. A few days later the women went to a local cleric and alleged that Ms Asia made derogatory remarks about the Prophet (peace be upon him). The cleric went to police, who opened an investigation.

Second, What should be the response of the state as an Islamic Republic?  The response of the Govt. should be probe the allegations in a transparent manner and make public all its inquiries in this matter. Federal Minister for Minorities Affairs Shahbaz Bhatti has also urged the provincial government to provide all possible chances to Aasia Bibi to plea her case on merit. Talking to reporters outside parliament house after attending a meeting of National Assembly standing committee on Monday, Mr Bhatti said the government would not allow anyone to misuse the blasphemy law. President Zardari has also sought a report from the minorities` affairs ministry on the sentencing to death on blasphemy charges of a Christian woman of Nankana Sahib. Aasia Bibi was sentenced to death under Sections 295 B and C of the Pakistan Penal Code after an altercation between her and her co-workers over fetching water from fields. According to media reports, police took her into protective custody to shield her from a mob and later registered a case against her. The spokesman said the president had asked Minorities Affairs Minister Shahbaz Bhatti to submit a report on the issue within three days.

The response of the Govt. should be in line with the recommendations of the Standing Committee on Law and Justice, which is being reproduced below.

The Standing Committee on Law and Justice after detailed deliberations decided to recommend the proposed deletion of ‘or imprisonment of life’ from Section 295-C of the Pakistan Penal Code. The members, however, observed that there was a need for a more specific definition of the offence under Section 295 PPC which the members were of the considered opinion was in the present form very generalised. The committee suggests that the matter may be referred to the Council of Islamic Ideology for suggesting a more specific definition of the offence falling under Section 295 PPC As well as for its opinion as to whether during the lifetime of the Holy Prophet (PBUH) or during the period of Khulafa-i-Rashideen or afterwards in any of the Muslim countries, what was the punishment awarded to the offenders for committing offence falling under Section 295 PPC” (Gazette Extraordinary, Feb 22, 1992).

Third, What Salman Taseer did as a representative of the state? After Bibi’s conviction last November, the case seized the attention of Taseer, the outspoken governor of Punjab. Outraging conservatives, he visited Bibi in jail along with his wife, Aamna, and his daughter. He posed for photos, offered warm support, and promised a presidential pardon. He spoke on high authority – President Asif Ali Zardari told Taseer he was “completely behind him”, a reliable source said. He was playing with fire. Religious leaders were outraged at Taseer’s description of the blasphemy statute as a “black law”. Protesters torched the governor’s effigy outside his sweeping residence in central Lahore.

Fourth, What was the aspiration of the public at large? The public reaction to this case has been divided. Protestors in Lahore rallied on 21 November demanding Aasia’s release. Yet only a few days later during another protest in the same city, an Aalmi Tanzim Ahle Sunnat (ATAS) leader Pir Muhammad Afzal Qadri requested Pakistan’s Chief Justice Iftikhar Chaudhry to take suo moto action against Governor Salmaan Taseer for supporting Aasia Bibi.

Fifth, What was the role of our so called learned and moderate civil society in all this incident? Recently a Christian woman, Aasia Bibi, was sentenced to death for allegedly committing blasphemy. Mr Taseer emerged as one of her most high-profile supporters. He not only visited her in jail and held a press conference with her, but also promised to get a presidential pardon for her. Although the pardon was prevented by a court order and the PPP distanced itself from any attempt to amend the blasphemy law, Mr Taseer kept criticising it publicly. Human rights groups say the law is often exploited by religious conservatives as well as ordinary people to settle personal scores. But the law has widespread support in a country that is more than 95 per cent Muslim, and most politicians are loath to be seen as soft on the defence of Islam. Taseer, however, was an outspoken critic. Ms Jahangir criticised the blasphemy law in its present form and observed that laws should be made to protect religious minorities and not to provide a tool to some people to exploit it in the name of religion. Sherry Rehman, Tahira Abdullah and Ali Hassan, rejected the blasphemy law as discriminatory and called for either repealing or suitably amending it.

The big question is what other laws or powers by state in this country are not misused. Here are few examples, where laws are flouted and yet all so called moderates, human rights activists have not uttered any voice but only Blasphemy case.

Pursuant to Art. 265 the Constitution came into force on August 14, 1973, referred to in the said Article as the ‘Commencing day’. The Constitution was held in abeyance by the Proclamation of Martial Law issued by General M. Zia-ul-Haq on July 5, 1977 and published in the Gazette of Pakistan, Extraordinary Part I, at page 411, on the said date. The whole of Pakistan once again came under the control of the Armed Forces of Pakistan on October 12, 1999, by virtue of the Proclamation of Emergency issued by General Pervez Musharraf, Chairman Joint Chiefs of Staff Committee and Chief of Army Staff, on October 14, 1999 and published in the Gazette of Pakistan, Extraordinary Part I, at page 1265, on the said date. The Pakistani daily Dawn — a pro-US paper not known for its anti-war stance — reports that US drones killed over 700 civilians in 44 bombings since Obama took office in January 2009. Of the 44 attacks, only five succeeded in hitting their target. In other words, Obama has surpassed his predecessor’s murderous record in Pakistan. (Of course these attacks are carried out with the complicity of Pakistan’s ruling elites — as Jane Mayer reported, and as Pervez Musharraf confessed — and are cheered on by native informers such as Ahmed Rashid). For more than half a century Kashmir, or Paradise on Earth as it is called, has suffered due to the extremely brutal Indian occupation. Since 1988 over 80 000 civilians including women and children have died at the hands of the Indian army and paramilitary forces. Their crime? They want India to end the brutal occupation of Kashmir, their homeland. The saga of missing persons seems to be getting more and more complicated with every passing day as the governments, whether federal or provincial, political parties and parliament are simply incapable or indifferent to providing the needed support to the Supreme Court to keep intelligence agencies under check and to make them behave as per the law of the land. The latest report from a Sindh village near Moro in which two couples were shot dead, and a woman was allegedly abducted, reinforces the need for taking practical measures that go beyond expressing outrage. Part of the reason why violence against women continues, and is tolerated as a fact of life, is that many sitting in our legislatures espouse the same tribal values that prescribe the death penalty, particularly for women who dare to make a decision to marry out of their own free will. According to the report, a total of 1,981 people — 1,726 men, 177 women and 78 children — were killed last year. The data does not include those killed in road accidents. Of the 447 victims of targeted killings, 215 were killed apparently for their association with major political, religious and nationalist parties, 187 for their ethnic background and 23 on sectarian grounds. In the recent past, a number of sitting and former representatives of the government has been accused of serious corruption. It is general perception that the corruption culture more flourish in PPP regimes. The glaring proof of absence of the rule of law in this regime is clear from the last-one year mega corruption cases of National Insurance Corporation, Pakistan Steel Mills and Rental Power Plants which have been taken up by the Supreme court. The fake degrees issue has most politicians and their party bigwigs scampering around to avoid potential political fallout. But Nawab Muhammad Aslam Raisani is not one of them. “A degree is a degree, whether fake or genuine,” said the swashbuckling chief minister of Balochistan. Siddiqui's supporters, including international human rights organizations, have claimed that Siddiqui was not an extremist and that she and her young children were illegally detained, interrogated and tortured by Pakistani intelligence or U.S. authorities or both during her five-year disappearance. The U.S. and Pakistan governments have denied all such claims. The CCP’s investigation proves the presence of a strong sugar mafia in the country. Despite ample availability of sugar, it is being sold at Rs125 to 135 per kilogramme against a production cost of less than Rs55 per kg.

Sixth, Why Salman Taseer was so outraged and Why Malik Mumtaz Hussain Qadri was compelled to do what he did? Why both took the matter of Aaasia Bibi in their own hands when the matter was being probed into and was in the court to decide?

We claim to be Muslims and that means we have accepted the authority of Allah (SWT) and we have submitted all our wishes to the wish of Allah (SWT) so it is pertinent to know What Allah (SWT) says about Islam, Love of Prophet (PBUH) and our behavior towards that.

O ye who believe! enter into Islam whole-heartedly; and follow not the footsteps of the Evil One; for he is to you an avowed enemy. (Aya 208 of Sura Al-Baqara)

Those to whom We have given the Book rejoice at what hath been revealed unto thee: but there are among the clans those who reject a part thereof. Say: "I am commanded to worship Allah and not to join partners with Him. Unto Him do I call and unto Him is my return." (Aya 36 of Sura Ar-Ra’d)

Once you are in Islam then accept all opf it rather than the part you like and reject the part you dislike.

Allah and His angels send blessings on the Prophet: O ye that believe! send ye blessings on him and salute him with all respect. Those who annoy Allah and his Apostle Allah has cursed them in this world and in the Hereafter and has prepared for them a humiliating Punishment. (Ayat 56-57 of Sura Al-Ahzab)

Love for the Prophet Muhammad (PBUH) is a measure of one's iman (faith and inner conviction) and our iman is completed and perfected only when our love for the Prophet exceeds our love for everything else in this world, including our own lives. The Holy Qur'an says: "The Prophet is preferable for the believers even to their own selves..." (Aya 6 of Sura Al-Ahzab)

Narrated 'Abd Allah bin Hisham: 'We were with the Prophet (SAAW) and he was holding the hand of 'Umar ibnu Al-Khattab (RAA). 'Umar said to him, "O Allah's Messenger (SAAW)! You are dearer to me than everything except my ownself." Allah's Messenger (SAAW) said: "No, by Him in Whose Hand my soul is, (you will not have complete Faith) untill I am dearer to you than your ownself." Then 'Umar (RAA) said: "However, now, by Allah, you are dearer to me than my ownself." He (SAAW) then said: "Now, O 'Umar, (now you are a believer)."

The (Prophet) frowned and turned away. Because there came to him the blind man (interrupting). (Ayat 1-2 of Sura Abasa)

There is no anger against beloved Prophet. Those who take these verses as a disgrace to the Prophet and desires to lower his prestige are on wrong thinking and misguided. Farooque-Azam Hazrat Umar (RAA) came to know that an Imam (Person leading in prayer) recites always this chapter, he sent a man to behead such person as he used to recite the chapter for defaming the prophet. Such a man goes out of Islam and becomes apostate.

The matter of Aasia Bibi was then sub-judice and as a representative of the Islamic Republic of Pakistan, as the official name of the country is, then Salman Taseer was not supposed to comment on it let alone going to the extent of calling the law as “Black Law”. He was not functioning as he should be as head of a province in whose territory such incident happened. He should have referred the matter for suitable amendment in the law to competent authority rather than calling names and showing his anger. He took the matter in his own hands because he thought he is correct and all others are wrong or he had no confidence in the legal course of action.

Malik Mumtaz Hussain Qadri also took the matter in his own hand because he thought that Govt. is not up to the mark and Salman Taseer, the Governor, has no respect for the prophet because he was only vocal on this issue at the expense of many other pressing issues. He also had no confidence in the legal course of action. Because Govt. was fully tilted towards one end.

So why people took matters in their own hands than seeking legal remedy?

There is a sense in which conduct regarded as criminal is often quite the opposite. Far from being an intentional violation of a prohibition, much crime is moralistic and involves the pursuit of justice. It is a mode of conflict management, possibly a form of punishment, even capital punishment. Viewed in relation to law, it is self-help. To the degree that it defines or responds to the conduct of some one else-the victim-as deviant, crime is social control. It should be clear, however, that the victims of moralistic crime may be entirely unaware of why they have been selected, especially when the offender is unknown. Such crimes may therefore be understood as secret social control . In modern society the state has only theoretically achieved a monopoly over the legitimate use of violence. In reality, violence flourishes (particularly in modern America), and most of it involves ordinary citizens who seemingly view their conduct as a perfectly legitimate exercise of social control. It might therefore be observed that the struggle between law and self-help in the West did not end in the Middle Ages, as legal historians claim.It continues. Many people still "take the law into their own hands."

The idea that violence is associated with statelessness still enjoys considerable support. With various refinements and qualifications, an absence of state authority has been used to explain high levels of violence in settings as diverse as the highlands of New Guinea, Lake Titicaca in the Andes, and western Sicily. It has also been used to explain war and, other violent self-help in international relations. A version of the same approach may be relevant to an understanding of self-help in modern society.

In the end, the conclusion that emerges from above discussion is that state failed to perform its functions. Had the state taken serious notice of the case, conduct of Salman Taseer the following events would not have happened.

میں باغی ھوں

اس دور کے رسم رواجوں سے
ان تختوں سے ان تاجوں سے
جو ظلم کی کوکھ سے جنتے ہیں
انسانی خون سے پلتے ہیں
جو نفرت کی بنیادیں ہیں
اور خونی کھیت کی کھادیں ہیں

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو
وہ جن کے ہونٹ کی جنبش سے
وہ جن کی آنکھ کی لرزش سے
قانون بدلتے رہتے ہیں
اور مجرم پلتے رہتے ہیں
ان چوروں کے سرداروں سے
انصاف کے پہرے داروں سے

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو
جو عورت کو نچواتے ہیں
بازار کی جنس بناتے ہیں
پھر اس کی عصمت کے غم میں
تحریکیں بھی چلواتے ہیں
ان ظالم اور بدکاروں سے
بازار کے ان معماروں سے

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو
جو قوم کے غم میں روتے ہیں
اور قوم کی دولت ڈھوتے ہیں
وہ محلوں میں جو رہتے ہیں
اور بات غریب کی کہتے ہیں
ان دھوکے باز لٹیروں سے
سرداروں سے وڈیروں سے

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو

مذہب کے جو بیوپاری ہیں
وہ سب سے بڑی بیماری ہیں
وہ جن کے سوا سب کافر ہیں

جو دین کا حرفِ آخر ہیں
ان جھوٹے اور مکاروں سے

مذہب کے ٹھیکیداروں سے

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو
جہاں سانسوں پر تعزیریں ہیں
جہاں بگڑی ہوئی تقدیریں ہیں
ذاتوں کے گورکھ دھندے ہیں
جہاں نفرت کے یہ پھندے ہیں
سوچوں کی ایسی پستی سے
اس ظلم کی گندی بستی سے

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو
میرے ہاتھ میں حق کا جھنڈا ہے
میرے سر پر ظلم کا پھندا ہے
میں مرنے سے کب ڈرتا ہوں
میں موت کی خاطر زندہ ہوں
میرے خون کا سورج چمکے گا
تو بچہ بچہ بولے گا

میں باغی ہوں ، میں باغی ہوں

جو چاہے مجھ پر ظلم کرو

ڈاکٹر خالد جاوید جان

EMH and Financial Bubbles

From the starting point of rational investors came the idea of the efficient market hypothesis, a theory first elucidated by my colleague and golfing buddy Gene Fama. The EMH has two components that I call “The Price is Right” and “No Free Lunch”. The price is right principle says asset prices will, to use Mr Fama’s words “fully reflect” available information, and thus “provide accurate signals for resource allocation”. The no free lunch principle is that market prices are impossible to predict and so it is hard for any investor to beat the market after taking risk into account.

In the world of the EMH, as it is known, bubbles are nothing to seriously worry about because prices cannot deviate from proper valuations for too long.

In economics, the invisible hand, also known as the invisible hand of the market, is the term economists use to describe the self-regulating nature of the marketplace. This is a metaphor first coined by the economist Adam Smith in The Theory of Moral Sentiments, and used a total of three times in his writings. For Smith, the invisible hand was created by the conjunction of the forces of self-interest, competition, and supply and demand, which he noted as being capable of allocating resources in society. This is the founding justification for the laissez-faire economic philosophy.

But what if that invisible hand is working in its own interest rather than for the interest of all the participants in the market.

Can Goldman Sachs, the profit-seeking missile of high finance, really make money by investing $450 million in Facebook, at a vertigo-inducing price that values the social-networking company at $50 billion? Facebook’s shares were said to be trading on a private-market exchange at a valuation of $42.4 billion. Thanks to Goldman’s imprimatur, Facebook’s value increased 20 percent virtually overnight. Can Goldman really expect to squeeze more water from this stone? Sadly, yes. To understand why, we have to go to the heart of the many problems in the way the Wall Street cartel does business, despite the promised reforms of the Dodd-Frank law. With Goldman’s investment in Facebook, we have a front-row seat to the process by which Wall Street creates and inflates financial bubbles. Goldman has almost certainly locked up the role of lead manager of the inevitable Facebook initial public offering. Fees for underwriting public offerings are generally about 7 percent of the value of the stock sold. Facebook could easily sell $2 billion of stock or more, generating fees to Goldman and the other underwriters of at least $140 million. The other benefit for Goldman in leading the public offering — aside from major bragging rights — is that it can use its marketing, sales and distribution muscle to make sure the value of Facebook at the time of the offering exceeds the $50 billion valuation at which Goldman invested.

It seems that Goldman has set up a "special purpose vehicle" and alerted top clients that through this SPV they will have the opportunity to invest in an as-yet-unnamed company, which reportedly is Facebook. The way this looks to Felix Salmon over at Reuters, and his explanation makes a lot of sense to me, is that this SPV is potentially a way around SEC reporting requirements for publicly-traded companies. But to me this just looks like a funky retro take on many of the IPO scams of the late nineties and early 2000s, where the investment bank sucks in herds of overstimulated investors, hides the true value of the firm in question from everyone, and then roasts the whole cattle-crowd of wealth-seekers to a crisp through fees and commissions and hidden markups. Back then the carrot was a wave of excited news-media coverage about the "new paradigm" that was going to make financial behemoths out of every online university for dogs or web-based dental floss warehouse that came up the IPO pipeline. This time around it's fantasies like the notion that Facebook is somehow worth fifty billion dollars (it's been interesting to watch which news outlets credulously report that figure).

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates. The bank's unprecedented reach and power have enabled it to turn all of America into a giant pump-and-dump scam, manipulating whole economic sectors for years at a time, moving the dice game as this or that market collapses, and all the time gorging itself on the unseen costs that are breaking families everywhere — high gas prices, rising consumer credit rates, half-eaten pension funds, mass layoffs, future taxes to pay off bailouts. All that money that you're losing, it's going somewhere, and in both a literal and a figurative sense, Goldman Sachs is where it's going: The bank is a huge, highly sophisticated engine for converting the useful, deployed wealth of society into the least useful, most wasteful and insoluble substance on Earth — pure profit for rich individuals. They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.If you want to understand how we got into this financial crisis, you have to first understand where all the money went — and in order to understand that, you need to understand what Goldman has already gotten away with. It is a history exactly five bubbles long — including last year's strange and seemingly inexplicable spike in the price of oil. There were a lot of losers in each of those bubbles, and in the bailout that followed. But Goldman wasn't one of them.

Financial institutions that are large in absolute size may have deep and well-filled with which they can among other things hire lobbyists, support individual political parties and election candidates, and, under the recent Supreme Court reinterpretation of the U.S. Constitution's first amendment, mount advertising campaigns in direct support of or opposition to election candidates.  In Federalist Paper No. 10, James Medison warned against the political power of factions resulting from "the verious and unequal distribution of property" ... " who are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community."

Here I offer only one additional strand of historical evidence ‐‐ Figure 1, drawn by artist Joseph Keppler for Puck magazine, January 23, 1889 ‐ a year before the Sherman Act was passed. 

One cannot view it without recognizing that the U.S. public was alarmed at the time about the political power of the great trusts, for which we might now substitute bloated figures for JP Morgan Chase, Bank of America, and Goldman Sachs.  It would be hard to deny that public concerns over the trusts' power in federal and state legislatures were an important stimulus to the Sherman Act's passage.   And now, 120 years later, there is abundant reason to fear the enormous political power of the financial institutions, said by one writer to own Washington "lock, stock, and barrel."   In 2008, for example, the finance lobby is said to have contributed $475 million to political candidates and their supporting party organizations ‐ more than twice the level of contributions from the second largest lobby, the health care industry.

Fundamentalism Vs. Moderation

Fundamentalism is strict adherence to specific set of theological doctrines typically in reaction against the theology of Modernism. The term fundamentalism was originally coined by its supporters to describe a specific package of theological beliefs that developed into a movement within the Protestant community of the United States in the early part of the 20th century, and that had its roots in the Fundamentalist-Modernist Controversy of that time. The term has since been generalized to mean strong adherence to any set of beliefs in the face of criticism or unpopularity, but has by and large retained religious connotations.
The term "fundamentalism" has its roots in the Niagara Bible Conference (1878–1897) which defined those things that were fundamental to Christian belief. The term was also used to describe "The Fundamentals", a collection of twelve books on five subjects published in 1910 and funded by Milton and Lyman Stewart. This series of essays came to be representative of the "Fundamentalist-Modernist Controversy" which appeared late in the 19th century within the Protestant churches of the United States, and continued in earnest through the 1920s. The first formulation of American fundamentalist beliefs can be traced to the Niagara Bible Conference and, in 1910, to the General Assembly of the Presbyterian Church which distilled these into what became known as the "five fundamentals":

• The inspiration of the Bible by the Holy Spirit and the inerrancy of Scripture as a result of this.
  
• The virgin birth of Christ.
  
• The belief that Christ's death was the atonement for sin.
  
• The bodily resurrection of Christ.
  
• The historical reality of Christ's miracles.

By the late 1910s, theological conservatives rallying around the Five Fundamentals came to be known as "fundamentalists." In practice, the first point was the focus of most of the controversy.
A closely related term that is often used interchangeably to describe the behavior “strong adherence to any set of beliefs” is extremism.
Extremism is any ideology or political act far outside the perceived political center of a society; or otherwise claimed to violate common moral standards. In different countries at different times were many different definitions of "extremism". Dr. Peter T. Coleman and Dr. Andrea Bartoli give short observation of definitions:
Extremism is a complex phenomenon, although its complexity is often hard to see. Most simply, it can be defined as activities (beliefs, attitudes, feelings, actions, strategies) of a character far removed from the ordinary. In conflict settings it manifests as a severe form of conflict engagement. However, the labeling of activities, people, and groups as “extremist”, and the defining of what is “ordinary” in any setting is always a subjective and political matter. Thus, we suggest that any discussion of extremism be mindful of the following:

• Typically, the same extremist act will be viewed by some as just and moral (such as pro-social “freedom fighting”), and by others as unjust and immoral (antisocial “terrorism”) depending on the observer’s values, politics, moral scope, and the nature of their relationship with the actor.

• In addition, one’s sense of the moral or immoral nature of a given act of extremism (such as Nelson Mandela’s use of guerilla war tactics against the South African Government) may change as conditions (leadership, world opinion, crises, historical accounts, etc.) change. Thus, the current and historical context of extremist acts shapes our view of them.

• Power differences also matter when defining extremism. When in conflict, the activities of members of low power groups tend to be viewed as more extreme than similar activities committed by members of groups advocating the status quo. In addition, extreme acts are more likely to be employed by marginalized people and groups who view more normative forms of conflict engagement as blocked for them or biased. However, dominant groups also commonly employ extreme activities (such as governmental sanctioning of violent paramilitary groups or the attack in Waco by the FBI in the U.S.).

• Extremist acts often employ violent means, although extremist groups will differ in their preference for violent vs. non-violent tactics, in the level of violence they employ, and in the preferred targets of their violence (from infrastructure to military personnel to civilians to children). Again, low power groups are more likely to employ direct, episodic forms of violence (such as suicide bombings), whereas dominant groups tend to be associated with more structural or institutionalized forms (like the covert use of torture or the informal sanctioning of police brutality).

• Although extremist individuals and groups (such as Hamas and Islamic Jihad) are often viewed as cohesive and consistently evil, it is important to recognize that they may be conflicted or ambivalent psychologically as individuals, and/or contain a great deal of difference and conflict within their groups. For instance, individual members of Hamas may differ considerably in their willingness to negotiate their differences with the Palestinian Authority and, ultimately, with certain factions in Israel.

• Ultimately, the core problem that extremism presents in situations of protracted conflict is less the severity of the activities (although violence, trauma, and escalation are obvious concerns) but more so the closed, fixed, and intolerant nature of extremist attitudes, and their subsequent imperviousness to change.

The terms extremism or extremist are almost always exonymic — i.e. applied by others to a group rather than by a group labeling itself. Rather than labeling themselves extremist, those labeled as such might describe themselves as, for example, political radicals. There is no political party that calls itself "right-wing extremist" or "left-wing extremist", and there is no sect of any religion that calls itself "extremist" or which calls its doctrine "extremism". The notion that there is a philosophy which can be described as extremism is considered by some to be suspect. Within sociology, several academics who track (and are critical of) extreme right-wing groups have objected to the term extremist, which was popularized by centrist sociologists in the 1960s and 1970s. As Jerome Himmelstein states the case: "At best this characterization tells us nothing substantive about the people it labels; at worst it paints a false picture." (Himmelstein, p. 7). The act of labeling a person, group or action as extremist is sometimes claimed to be a technique to further a political goal — especially by governments seeking to defend the status quo, or political centrists. In any event, the term extremist — like the word violence— cannot be regarded as value-neutral.
On the other hand, Moderation is the process of eliminating or lessening extremes. It is used to ensure normality throughout the medium on which it is being conducted. Moderation is also a principle of life. In ancient Greece, the temple of Apollo at Delphi bore the inscription Meden Agan - 'Nothing in excess'. Doing something "in moderation" means not doing it excessively. For instance, someone who moderates their food consumption tries to eat all food groups, but limits their intake of those that may cause deleterious effects to harmless levels. Similarly in Christianity, moderationism is the position that drinking alcoholic beverages temperately is permissible, though drunkenness is forbidden (see Christianity and alcohol). Moderation is a characteristic of the Swedish national psyche, more specifically described by the Swedish synonym Lagom. Islam also consider moderation as a preferred way of life, even when applying religious norms. Moderate Muslims adhere to the concept of contextual relativism as a way to grasp meaning from the Quran. They also understand the Quran as a whole opposed to a discrete understanding. Furthermore, Moderate Muslims also follow various types of Hadith (prophet Mohammed's sayings) that favor moderation and view Muhammad (PBUH) as an ideal example of a moderate Muslim and Human.
Another term that is interchangeably used to describe moderation is liberalism.
Liberalism (from the Latin liberalis, "of freedom") is the belief in the importance of individual liberty and equal rights. Liberals espouse a wide array of views depending on their understanding of these principles, but most liberals support such fundamental ideas as constitutions, liberal democracy, free and fair elections, human rights, capitalism, free trade, and the separation of church and state.
All these terms are subjective that is why Associated Press' AP Stylebook recommends that the term fundamentalist not be used for any group that does not apply the term to itself. A great many scholars have adopted a similar position. A good many scholars, however, use the term in the broader descriptive sense to refer to various groups in various religious traditions including those groups that would object to being classified as fundamentalists.
As Jerome Himmelstein states the case: "At best this characterization tells us nothing substantive about the people it labels; at worst it paints a false picture." (Himmelstein, p. 7). The act of labeling a person, group or action as extremist is sometimes claimed to be a technique to further a political goal — especially by governments seeking to defend the status quo, or political centrists. In any event, the term extremist — like the word violence— cannot be regarded as value-neutral.

Blasphemy and Islam

Blasphemy is irreverence toward holy personages, religious artifacts, customs, and beliefs.

In the third book of the Torah, Leviticus 24:16 states that those who speak blasphemy "shall surely be put to death". See also List of capital crimes in the Torah. The Seven laws of Noah,which Judaism sees as applicable to all of humankind prohibits blasphemy. Christian theology condemns blasphemy. It is spoken of in the Mark 3:29, where blaspheming the Holy Spirit is spoken of as unforgivable - the eternal sin. Blasphemy has been condemned as a serious, or even the most serious, sin by the major creeds and Church theologians.

The punishment for blasphemy in most of the major religions is death. It is stated in the Old Testament of the Bible, which is the authority for both the Jews and the Christians:

And he that blasphemeth the name of the LORD, he shall surely be put to death, and all the congregation shall certainly stone him: [Book of Leviticus 24:16]

Moreover, if we read Manusmriti, the Law book of the Hindus, it says:

“If a man born of a lower class intentionally bothers a priest, the king should punish him physically with various forms of corporal and capital punishment that make men shudder.” [Manusmriti 9:248]

Blasphemy in Islam is any irreverent behavior toward holy personages, religious artifacts, customs, and beliefs that Muslims revere. Where Sharia pertains, the penalties for blasphemy can include fines, imprisonment, flogging, amputation, crucifixion, hanging, or beheading. Muslim clerics may call for the killing of an alleged blasphemer by issuing a fatwa.

Blasphemy in Islam, as in other faiths, is speech that is insulting to God. In Muslim history, blasphemy came to be associated mainly with perceived insults to the prophet of Islam.The material on blasphemy in the Qur’ān includes the concepts of denying the truth, inventing falsehoods, and insulting the divine. The most common Arabic verbsfor blasphemy are sabba (to abuse, insult) and shatama (to abuse, vilify). Shatama does not occur in the Qur’ān, and sabba appears only as part of a commandment to Muslims not to insult the idols of polytheists (Q6.108): “Do not abuse those to whom they pray, apart from God, or they will abuse God in revenge without knowledge.” Further material relates to the terms takdhīb (giving the lie, denial), and iftirā’ (invention). In these verses blasphemy means denying the truth about God and spreading falsehood in its place. The greatest offence of invention is shirk—to associate with God what is merely human, as in the warning of Luqmān to his son: “Do not associate others with God: to associate is a mighty wrong” (Q31.13). This, of course, was the accusation which Muslims made against the Christian confession of the divinity of Jesus.

Regarding the punishment for blasphemy in Islam, it is mentioned in the Glorious Qur’an:

“The punishment of those who wage war against Allah and His Messenger, and strive with might for mischief through the land is: execution, or crucifixion, or the cutting off of hands and feet from opposite sides, or exile from the land: that is their disgrace in this world, and a heavy punishment is theirs in the Hereafter;” [Surah Al-Maidah 5:33].

In Islam, a person who has committed blasphemy can either be killed or crucified, or his opposite hands and feet can be cut off, or he can be exiled from that land. On the other hand, in other religions there is no other option except capital punishment. Islam at least has four options of punishment for an act of blasphemy.

Islamic Law takes a more severe view toward reviling Muḥammad (PBUH) than it does toward reviling God. By the beginning of the fourth Islamic century, a consensus had developed among the scholars that the one who insults the prophet of Islam must be put to death.

In 1982, Pakistani President Zia ul-Haqq introduced Section 295B into the Pakistan Penal Code, punishing “defiling the Holy Qur’an” with life imprisonment. In 1986, Section 295C was introduced, mandating the death penalty for “use of derogatory remarks in respect of the Holy Prophet.”

The concept of ‘freedom of speech’ is derived from the Capitalist ideology that is based on the belief that God and religion should be separated from life’s affairs (secularism). Human beings define how to live their lives free of the constraints of religion which is why freedom of individual, ownership, religion and speech are essential cornerstones of Capitalism. The right to speak and what are the limits of speech are therefore all defined by human beings.

This view completely contradicts Islam. In Islam it is the Creator of human beings Allah سبحانه وتعالى who gave the right of speech to people and defined the limits on what is acceptable and unacceptable speech.

The Messenger of Allah صلى الله عليه وسلم said: “Whosoever believes in Allah and the Last Day, then let him speak good (khair) or remain silent.”[Agreed upon. Narrated by Abu Hurayra.]

Khair in this hadith means Islam or what Islam approves of.[Hizb ut-Tahrir, ‘American Campaign to Suppress Islam,’ p. 23]

Quran

The Qur'an does not specify a specific punishment for blasphemy, however it does specify a punishment for "spreading mischief": (Sura Al-Maidah 5:33)

Hadith and Other Islamic Writings

Muhammad (PBUH) had said to his followers “Whoever curses a prophet kill him,” (Tabarani, Daraqutni)^[3] and there are many examples of people during his time who were guilty of blaspheming Islam and its Prophet. Most of these people were assassinated with Muhammad's blessing, and no punishment or compensation was imposed on the murderer.

• 'Abdullah bin Ubai (bin Salul) – Muhammad (PBUH) asked his followers to kill this man for making "evil" statements about Muhammad's family.

• Abu `Afak – Muhammad (PBUH) asked his followers to kill this man for making negative remarks about Muhammad and Islam.

• Ka’b bin Ashraf – Muhammad (PBUH) asked his followers to kill this man for writing inflammatory poetry about Muhammad and Muslim women.

• Asma Bint Marwan – Muhammad (PBUH) asked his followers to kill this woman for composing inflammatory poetry about Islam and Muslims.

• Blind Man's Slave-Mother - When Muhammad (PBUH) learned that one of his followers had stabbed and killed his slave (other sources refer to her as a freed concubine: Umm walad) for making derogatory remarks about Muhammad, he declared that "no retaliation is payable for her blood."

• Al-Nadr Bin Al-Harith - Al Nadir, a storyteller and poet who had mocked him. He was a prisoner of war who was not allowed to be ransomed by their clans and was executed on Muhammad's (PBUH) orders.

Scholars

[In Islamic Fiqh] there are absolutely no opinions, no variants, no exceptions...Muhammad ibn Sahnun said that even if a man claims that it is part of his religion to insult the Messenger, and so in his religion it is lawful, that makes no difference to us. If he openly insults our Messenger, may Allah bless him and grant him peace, then our religion makes it lawful to kill him. This surely is the inescapable centre of the current affair. The arrogant kuffar have to learn that the world contains a two-billion community who have a different set of Laws from theirs, and who can never be detached from that Law (The Fiqh Concerning Those Who Insult The Messenger of Allah Shaykh Dr. Abdalqadir as-Sufi, February 6, 2006)

“Know that all who curse Muhammad (PBUH), may Allah bless him and grant him peace, or blame him or attribute imperfection to him in his person, his lineage, his deen or any of his qualities, or alludes to that or its like by any means whatsoever, whether in the form of a curse or contempt or belittling him or detracting from him or finding fault with him or maligning him, the judgement regarding such a person is the same as the judgement against anyone who curses him. He is killed as we shall make clear. This judgement extends to anything which amounts to a curse or disparagement. We have no hesitation concerning this matter, be it a clear statement or allusion.

The same applies to anyone who curses him, invokes against him, desires to harm him, ascribes to him what does not befit his position or jokes about his mighty affair with foolish talk, satire, disliked words or lies, or reviles him because of any affliction or trial which happened to him or disparages him, because of any of the permissible and well-known human events which happened to him. All of this is the consensus of the ‘ulama' and the imams of fatwa from the time of the Companions until today.^{[4] (}Qadi 'Iyad ibn Musa al-Yahsubi)

According to Ayatullah al-Khu'i, it is incumbent (wajib) to kill one who insults or calumniates the Prophet when one hears the insults provided there is no danger to his self, reputation or wealth. Agha also extends this ruling to cover insults against the Imams and Bibi Fatima (A.S.). It is not essential to get the permission of a Hakim al-Shar' to carry out the act. (Islamic law on Blasphemy Dr. Takim, 'Aalim Network QR, December 8, 1995)

In Islam, a person who has committed blasphemy can either be killed or crucified, or his opposite hands and feet can be cut off, or he can be exiled from that land. On the other hand, in other religions there is no other option except capital punishment. Islam at least has four options of punishment for an act of blasphemy.  (Question Hour: Ruling for Blasphemy in Islam Dr. Zakir Naik, Islamic Voice, April, 2006)

Whoever Curses the Prophet Peace and Blessings be Upon him, Muslim or Kafir, Must be Killed. (The Drawn Sword Against the One Who Curses the Messenger - Pages 31-33 Ibn Taymiyyah)

"The general scholars agreed that whoever curses him, Peace and Blessings be upon him, must be killed. This was stated by Malik, Al-Layth, Ahmad, Ishaaq, and Ash-Shafi'ee, and Nu'man (Abu Hanifa) said that the Dhimmi (Jizya-paying non-Muslim) is not to be killed." (The Drawn Sword Against the One Who Curses the Messenger -  Pages 31-33 Ibn Al-Munthir)

The Prophet (peace and blessings of Allaah be upon him) sometimes chose to forgive those who had insulted him, and sometimes he ordered that they should be executed, if that served a greater purpose. But now his forgiveness is impossible because he is dead, so the execution of the one who insults him remains the right of Allaah, His Messenger and the believers, and the one who deserves to be executed cannot be let off, so the punishment must be carried out. (Al-Saarim al-Maslool, 2/438)

Insulting the Prophet (peace and blessings of Allaah be upon him) is one of the worst of forbidden actions, and it constitutes kufr and apostasy from Islam, according to scholarly consensus, whether done seriously or in jest. The one who does that is to be executed even if he repents and whether he is a Muslim or a kaafir. (Ruling on one who insults the Prophet (peace and blessings of Allaah be upon him) Shaykh al Munajid, Islam Q&A, Fatwa No. 22809)

Financial Crisis and Academic Conflict of Interest

Islam prohibits a behavior that is in conflict of one’s responsibilities. Here is an Aya from Quran and commentary. The Aya and commentary is very relevant to the subject under discussion.

And do not eat up your property among yourselves for vanities nor use it as bait for the judges with intent that ye may eat up wrongfully and knowingly a little of (other) people's property. Aya 188 of Sura Al-Baqara

Besides the three primal physical needs of man, which are apt to make him greedy, there is a fourth greed in society, the greed of wealth and property. The purpose of fasts is not completed until this fourth greed is also restrained.
Ordinarily honest men are content if they refrain from robbery, theft, or embezzlement. Two more subtle forms of the greed are mentioned here. One is where one uses one's own property for corrupting others - judges or those in authority - so as to obtain some material gain even under the cover and protection of the law.
The words translated "other people's property may also mean "public property". A still more subtle form is where we use our own property or property under our own control - "among yourselves" in the Text - for vain or frivolous uses. Under the Islamic standard this is also greed. Property carries with it its own responsibilities. If we fail to understand or fulfil them, we have not learnt the full lesson of self-denial by fasts. Commentary By Abdullah Yusuf Ali

Academicians are the forerunners of practitioners. They observe a certain phenomena and try their best to explain it so that behaviors of practitioners can be moulded accordingly for the benefit of public at large. Rules and regulations are the outcome of such observations, empirical analyses, academic debate etc.

In the wake of current financial crisis, there is a need for an unbiased analyses by the academia so that causes for such crises in the future can be controlled. But unfortunately there are some grey areas that need to be addressed like biasness for example. There are growing reports that academia was involved in the financial meltdown.

Here is an excerpt from an article

Over the last thirty years, academic economics has been penetrated by special interests, particularly financial services, in the same way that America’s political and regulatory systems have been compromised by campaign contributions and the revolving door.  In fact, the “revolving door” is now a triangular trip between industry, government, and academia.

Prominent economists are now routinely paid to testify in antitrust cases, criminal trials, and regulatory proceedings; to testify in Congress; to give speeches to the industries and firms they study; to serve on boards of directors and as advisors; and to write supposedly objective analyses of industries, companies and policies. These payments and the conflicts of interest they generate are rarely disclosed, except when required by Federal law.

These activities are not marginal; they are now, literally, a billion dollar industry, managed by firms such as the Law and Economics Consulting Group (LECG), The Analysis Group, Compass Lexecon, Charles River Associates, and others.  Professors’ income from such groups often dwarfs their academic salaries.  That neither universities nor most publications require such disclosure was one of the most shocking facts I learned while making Inside Job, my documentary on the financial crisis.

More recently, American Economic Association has recognized this moral hazard and has announced to adopt a code of ethical standards for its members. Following is an excerpt from The New York Times article on the subject.

Academic economists, particularly those active in policy debates in Washington and Wall Street, are facing greater scrutiny of their outside activities these days. Faced with a run of criticism, including a popular movie, leaders of the American Economic Association, the world’s largest professional society for economists, founded in 1885, are considering a step that most other professions took a long time ago — adopting a code of ethical standards.

The proposal, which has not been announced to the public or to the association’s 17,000 members, is partly a response to “Inside Job,” a documentary film released in October that excoriates leading academic economists for their ties to Wall Street as consultants, advisers or corporate directors.

Here is another excerpt from an article

In October, Gerald Epstein and Jessica Carrick-Hagenbarth released a paper documenting potential conflicts of interests among academic economists writing about the financial crisis and financial reform. Focusing on the Squam Lake Working Group on Financial Regulation and the Pew Economic Policy Group Financial Reform Project, they found that a majority of the economists involved had affiliations with private financial institutions, yet few of them disclosed those affiliations even in academic publications (where they do not face the word constraints imposed by print newspaper editors), preferring to identify themselves by their universities and as members of prestigious institutions such as NBER. To be fair, they did not find a strong relationship between economists’ affiliations and their positions on financial reform, perhaps because of the small sample and the limited amount of variation in the positions of members of these groups.

Following is an excerpt from a letter written by Epstein and Carrick-Hagenbarth to the president of the AEA asking for the adoption of a code that requires economists to avoid conflicts of interest and to disclose ties that could create the appearance of a conflict of interest.

More specifically we propose that the AEA adopt a code modeled on that of the American Sociological Association. This code could state that: “Economists should maintain the highest degree of integrity in their professional work and avoid conflicts of interest and the appearance of conflict. Moreover, economists should disclose relevant sources of financial support and relevant personal or professional relationships that may have the appearance or potential for a conflict of interest in public speeches and writing, as well as in academic publications.”

This issue has taken on greater salience as the recent financial crisis has highlighted economists’ potentially conflicting roles that may have affected their real or perceived impartiality as analysts and experts. For example, in an assessment of 19 economists who have played prominent and influential roles in recent public policy debates, Gerald Epstein and Jessica Carrick-Hagenbarth found that 13 out of 19 economists had private financial affiliations indicative of some possible conflicts of interest, but only 5 had clearly and publicly revealed their affiliations. A Reuters study of Congressional testimony by academics (many but not all of whom are economists) analyzed “… 96 testimonies given by 82 academics to the Senate Banking Committee and the House Financial Services Committee between late 2008 and early 2010 — as lawmakers debated the biggest overhaul of financial regulation since the 1930s.”  They found that “…roughly a third (of the academics) did not reveal their financial affiliations in their testimonies, based on a comparison of the text of their testimonies available on the Congressional committees’ websites with their resumes available online.”

From reading all the above reports, one can easily get that there is something wrong and under the existing arrangement of academia and financial industry, it is hard to accept that they will come up with some un biased analyses and reforms that are in the interest of the public at large. Unless and until the profession does not enforce transparency and code of ethical standards, ill advised policy is a real danger.