Yesterday Professor Charles Fried, the elegant, eridite former Solicitor General of the US and former Supreme Court Massachusetts Supreme Court Justice, sparred with eminent philosopher and law professor Cass Sunstein and Harvard economist Ed Glasser in a faculty forum over “the Nanny State.”
The discussion was lively and engaging, but Fried’s remark on credit cards stopped me in my tracks. Fried was aggressive in his defense of unregulated consumer choice. He poo-poo’d the idea of regulating much of anything in order to protect people from themselves, following the classical conservative position that people should be free to make as many choices as possible. But Fried made a point of mentioning why current credit card practices are morally reprehensible. I’m not a perfect reporter, but I tried to scribble down what he said:
“Credit card issuers make a profit from trying to get people to hurt themselves. That isn’t about consumer choice. That’s just reprehensible.”
With this remark, Fried takes the discussion over credit cards in a different direction. Sunstein defends libertarian paternalism–a light touch regulatory approach designed to help overcome the cognitive biases, self-control problems, and lack of stable preferences that prevent people from meeting the necessary prerequisites for libertarianism to function. To reframe Sunstein as I think he would deal with credit card issuers: regulate no tricks, no traps, and no taking advantage of customers’ cognitive biases to diminish their welfare. Even an anti-regulator like Fried might agree to the no tricks and traps rules as diminishing consumer choice, but he goes a step further with the credit card example. He points out the immorality of businesses that profit by encouraging people to slit their own throats. Even if the decision is a well-informed one, free of cognitive biases, Fried says he does not support the businesses that “make a living helping people hurt themselves.” Fried is a rock-ribbed conservative, but the consumer choice argument over credit cards cuts no ice with him. The word of the day: reprehensible.
Probably should make sure to set the date on these Warren articles, because as I write this it says it was published today.
Though, it could be…this is Warren’s position now, and it was a big reason why she pushed the CFBP into existence and fought for regulations that forced the banking industry to write their documentation clearly and limit their ability to take advantage of consumers. Warren isn’t getting enough credit for changing the conversation that way, for really taking the screws to the banking industry and all its cheating ways…if she can get out from under the Medicare-for-all weight being thrust on her then she really should pivot to how she has fought for Americans and how CFPB shows what she intends to do as president.
Originally “posted by Elizabeth Warren” April 20, 2007 at 6:19 PM at https://www.creditslips.org/creditslips/2007/04/a_conservative_.html#more.
The original post differs from this one at its conclusion, after she quotes Fried deprecating “mak[ing] a living helping people hurt themselves.” Instead of “Fried is a rock-ribbed conservative ,” the original post concludes with these words: " I’ve taught Fried’s Contract as Promise for years in my own contract law class, in part to inject a moral dimension into our discussions of breach and remedies. Now Fried–and Sunstein–on credit cards will be part of my class as well."
There are also two thoughtful comments at her original post at creditslips.com