Would Arnold Support an RFPB?
The world’s competing faiths subscribe to mutually incompatible doctrines – including doctrines about how to avoid eternal suffering in the afterlife. One of these faiths could conceivably be true. But no more than one. If there are X incompatible views, at least (X-1) are false.
All of these incompatible faiths solicit money to stay in business. So given Arnold’s recent posts (here, here, and here) on consumer protection, I have to wonder: Would he support a Religious Financial Protection Bureau (RFPB) to protect the world’s religious consumers from being ripped off?
Consider the three standards of consumer protection that Arnold has proposed.
1. Sophisticated firms shouldn’t be allowed to take advantage of unsophisticated consumers:
This is a case of a sophisticated financial institution taking advantage
of unsophisticated consumers, and I applaud the Consumer Financial
Protection Board for doing something about it.
If you think of the major religions as “sophisticated,” and individuals in search of salvation as “unsophisticated,” it seems like Arnold should favor shutting down all or almost all major religions. At least until they can prove their product works.
2. Firms shouldn’t be allowed to sell a product unless we “can imagine a set of preferences that would make you want to buy this product”:
I think I have a test that would allow for some consumer protection
without heading down a slippery slope toward paternalistic regulation.
That test is, “Can you imagine a set of preferences that would make you
want to buy this product?” If the answer is “no,” then regulation is
justified. However, if you can imagine a set of consumer preferences
that would make you want the product, then regulation embodies
paternalism and should be subject to libertarian opposition.
A key part of Arnold’s argument seems to be that firms should only be allowed to sell a product if more than zero fully informed consumers would prefer to support it. This suggests that we should shut down all false religions, leaving either one or none free to operate. After all, who prefers to support a religion he knows to be false? Even if regulators can’t identify the one true religion, they would still be authorized to ban all the ones that clearly aren’t true, like Pastafarianism.
Alternately, maybe Arnold means that firms should only be allowed to sell a product if any consumer with the best available information would buy it. This might allow various competing plausible religions to remain in business. But you could argue that the “best available information” includes two facts: (a) there are tons of mutually incompatible religions, and (b) people generally accept whatever religion they’re raised in. These two facts in turn suggest that the “best available information” is so inadequate that everyone ought to just keep their money – depriving the world’s religions of virtually all financial support.
3. Firms should be allowed to sell any product as long as firms use a soft sell approach:
I would be ok with saying that people chose to spend their own money on
these products if they picked them out of a catalog or brochure, or if
they inquired about these products.
This does save the world’s religions from outlawry. But it effectively bans active proseletyzing. No knocking on doors. No preaching on the street corner. No offers to mail viewers a free copy of the Book of Mormon.
I suspect that most people will reject my analogy between financial products and religion: “Unlike financial products, no one knows what the true religion really is.” But this walks right into my trap. Would the CFPB let consumers buy a product that no one knew to be beneficial? I doubt it. So if no one knows what the true religion is, why shouldn’t a RFPB prevent consumers from frittering their money away on products without demonstrable merit?
Am I saying that Arnold wants to abolish the First Amendment and start a massive government crusade against religion? Of course not. I’m confident that Arnold is a staunch friend of religious freedom. But his principles of consumer protection – all three versions – are inconsistent with religious freedom. Anyone who believes in religious freedom has to defend people’s right to spend their money foolishly – and the right of firms to cater to such people.
I understand why Arnold is offended when firms part fools and their money. But I don’t understand why he strays from his usual policy of tolerating what offends him. If you correctly perceive a product to be junk, don’t buy it. Tell your friends not to buy it. Tell the world not to buy it. But don’t ask the government to ban it.