Religious pluralism and state-sponsored religions both harm society. Many competing religions contribute to social fragmentation and create useless discord (as opposed to the useful discord of, say, a free market). A single state-sponsored religion inevitably intrudes into citizens' privacy and the political process.

Competing religions may not be good for society, but they do seem to be good for religion. I read a fascinating article once (which I unfortunately cannot locate) which argued that the U.S.'s policy of free religion led to a competitive marketplace of different churches, which functioned as markets do to keep religion responsive to what people want, which kept religiosity strong down to the present day. Whereas in Europe, state religions were stagnant and stultified, and so the people gradually drifted away from them.