Bryan Caplan  

The Relevance of the Religious Hypothetical

Religion and Consumer Protecti... Bike Rental vs. Car Rental...
Consider two contrasting arguments against a policy rationale:

1. Your rationale could conceivably be abused for bad ends.

2. Your rationale supports many policies you yourself oppose.

Arnold seems to think that my religious objection to his consumer protection views (here, here, and here) falls under heading #1:
It is as if I were to praise the Internet and someone were to ask me about Josef Mengele and say: See what happens if you support government-sponsored research?


I never said that I like the CFPB. I think they did something right in a particular instance. If you think that any support for any government action, however beneficial, has to be judged in light of other potential government actions, that is fine. But just say that.
My point, however, was never that Arnold's policy rationale would be abused.  My point falls under heading #2.  Arnold didn't just praise one particular CFPB decision.  He offered three general rationales for consumer protection.  These rationales seem to imply policies that Arnold would reject.  So he should probably abandon these rationales.

To be fair, Arnold also tries to distinguish religious protection from regular consumer protection:
People can benefit from religious beliefs that are false. That makes it more difficult to regulate religious fraud than other types of fraud. (Do we also benefit from holding beliefs about government that are false? In any case, public sector fraud is even harder to regulate.)
I'd like to see this argument more fleshed out.  Couldn't you just as easily say that consumers benefit from the peace of mind of Capitol One's payment protection products, even though the products make little financial sense? 

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COMMENTS (6 to date)
Luther writes:

Rabbit's foot?

Ken B writes:

[Past experience suggests I should label this comment with a warning. Warning: offensive to religious believers.]

Religious freedom is in important ways different from other freedoms. We have learned through experience that religious belief is extremely resistant to reason and argument, and religious motivation often an unconquerable spur to action. This action is often destructive and disruptive. The only effective way to mitigate these unruly aspects of religion, and to be able to constrain them when need be, is to offer -- and demand reciprocally -- a tolerance of religious behaviour that we would not tolerate in other circumstances. The need for religious freedom (which I consider vital) is squarely based on the shortcomings, irrationality, intransigence, and intemperance of believers.

I have no idea if Arnold would endorse this caveat.

Lord writes:

If you want to get into slippery slopes, couldn't you say Madoff's investors benefited from their sense of security while ongoing? It probably lasted long enough that it outlived some of them. Your rationale is just rationalization that no line can be drawn, but if no line can be drawn, no line can be drawn.

Silas Barta writes:
Couldn't you just as easily say that consumers benefit from the peace of mind of Capitol One's payment protection products, even though the products make little financial sense?

And indeed, during the times when they have to actually hard-sell you on it, that is exactly the justification they use. I remember having to go through one of these pitches just to activate a card (not this bank, and it doesn't happen anymore).

Hugh writes:

In an ideal world we would have well qualified private firms that would review consumer products (financial and otherwise) and warn consumers subscribed to their services of the dangers of poor products.

In our world this may happen for washing machines, but not so much for financial products.

Hence the field is open for a government agency to hit the occasional home run.

valter writes:

I'm with Ken B. here, but the argument needs fleshing out to answer Bryan reference to astrology (which is also prosecuted only in very extreme circumstances).

Our societal norms exclude certain activities from state intervention for different reasons.

Religion because, as Ken says, it is too hot to handle.

Various forms of quackery (except for any invasions into medicine) because ... I don't know, maybe because those who are not foolish enough to believe in them enjoy the occasional laugh at those who are.

And they are also not foolish enough to believe themselves immune to fraudsters' tricks in other areas where ignorance and exploitable cognitive biases (e.g., evaluation of financial products).

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