Wednesday, July 18, 2012

CFPB: Cheers (?)

Don B raises the key point. And I don't know the answer. Don makes some good arguments. But it's not a slam dunk case.

  Here is the example. Worth reading.

 Now, the question: Suppose it is true that C is naive. One of the problems of being naive is not knowing the full extent and impact of one's naivete.

 Now, suppose that we know that there are people like D, people who take advantage of naivete. D is capable of making bright shiny things, or complicated things, that will induce C to pay more than that thing is "worth."

 Then, along comes B. B is a hand-wringer, the sort who really REALLY cares about other people. But B thinks B should get paid for caring about people, because he doesn't really care about other people THAT much, to work for free. So, B proposes we create a government agency whose job it is to protect C from being taken advantage of by D.

 Except that, to make this work, we will also have to tax A. A thinks C is an idiot, and that D is morally defective. But A would never buy D's product, and wonders why C would do it. After all, C should be able to figure it out, if he tried.

 But, there it goes: We tax A to pay B to prevent C from being exploited by D. Don asks, "Is this justified?" I think the right question is "When MIGHT it be justified." Still, Don asks a good question.

1 comment:

Tom said...

It should be noted that there are some who will substitute for B without charging A. These substitute Bs are supported by donations and fees (as Consumer Reports) or by ads (as Clark Howard). They lack the power (and the arrogance) to FORCE D to leave C alone, but that also means that some of the Cs, who may be in unique circumstances, to use their own judgement. Of course, the naive Cs must develop some degree of skepticism for the alternatives to work. Also, the Bs of the world must learn that their do-gooding ways also have costs.