I’m not aware of any general standards for distinguishing between abusive contracts and beneficial ones and I’m not sure there could be any. But the question “would anyone who really understood what was going on ever want this contract?” must be a relevant one. You could argue about how much humility should be applied: after all, just because I can’t see any reason why a rational person would sign this contract doesn’t mean there isn’t one. So as is often the case, the optimal policy is not obvious. But make no mistake. The libertarian policy will result on a whole bunch of vulnerable people (almost none of whom will be libertarians by the way) getting screwed over and over and over again. You could (barely) argue that the libertarian policy has benefits that overbalances these costs, but there is no denying that the costs are real and big.
But the question “would anyone who really understood what was going on ever want this contract?” must be a relevant one.
Indeed, and this only seems like the “first-order” version of the question. For example, a credit card with extreme late payment penalties might be of reasonable appeal to someone sufficiently confident in their ability to pay on time. But it would need to derive its appeal from some other benefit, which presumably exists only because enough people fall into the late payment trap. In this way the credit card company becomes more like a “trickery broker”, passing along the spoils to some rational subset of customers while taking a cut.
So a variant of your question might be, “if this contract were only entered into by people who really understood the terms, would it still exist?”
How many of these people have you met? Not just screwed over and over again, but over and over and over again!? What are the chances that you’re thinking of a fairly small number of real people who are stupid enough to need institutionalization (from where they don’t need these regs) and very few other real people?
You could (barely) argue that the libertarian policy has benefits that overbalances these costs, but there is no denying that the costs are real and big.
Accepting for the sake of argument that the costs are ‘real and big’ you seem to be leaping to the conclusion that therefore something must be done. The costs are not generally imposed on me though and not everyone is a utilitarian. I don’t see any reason why I should be concerned about costs that others impose on themselves through their own bad decisions.
I don’t think this particular example is a very cost effective way to raise my own status. This kind of thing is obviously a cost effective way for politicians to raise their status since they generally receive a disproportionate share of the credit and the costs are shared widely so they pay a relatively small proportion of the cost. That is why we see so much of this kind of proposed regulation (of course proposing it and then not following through is arguably even more cost effective than actually passing legislation on the issue).
I can think of much more cost effective (and more fun) ways to raise my own status in those contexts where I care about it.
I’m not aware of any general standards for distinguishing between abusive contracts and beneficial ones and I’m not sure there could be any. But the question “would anyone who really understood what was going on ever want this contract?” must be a relevant one. You could argue about how much humility should be applied: after all, just because I can’t see any reason why a rational person would sign this contract doesn’t mean there isn’t one. So as is often the case, the optimal policy is not obvious. But make no mistake. The libertarian policy will result on a whole bunch of vulnerable people (almost none of whom will be libertarians by the way) getting screwed over and over and over again. You could (barely) argue that the libertarian policy has benefits that overbalances these costs, but there is no denying that the costs are real and big.
Indeed, and this only seems like the “first-order” version of the question. For example, a credit card with extreme late payment penalties might be of reasonable appeal to someone sufficiently confident in their ability to pay on time. But it would need to derive its appeal from some other benefit, which presumably exists only because enough people fall into the late payment trap. In this way the credit card company becomes more like a “trickery broker”, passing along the spoils to some rational subset of customers while taking a cut.
So a variant of your question might be, “if this contract were only entered into by people who really understood the terms, would it still exist?”
How many of these people have you met? Not just screwed over and over again, but over and over and over again!? What are the chances that you’re thinking of a fairly small number of real people who are stupid enough to need institutionalization (from where they don’t need these regs) and very few other real people?
Accepting for the sake of argument that the costs are ‘real and big’ you seem to be leaping to the conclusion that therefore something must be done. The costs are not generally imposed on me though and not everyone is a utilitarian. I don’t see any reason why I should be concerned about costs that others impose on themselves through their own bad decisions.
Because helping other people with their problems will help you gain status?
I don’t think this particular example is a very cost effective way to raise my own status. This kind of thing is obviously a cost effective way for politicians to raise their status since they generally receive a disproportionate share of the credit and the costs are shared widely so they pay a relatively small proportion of the cost. That is why we see so much of this kind of proposed regulation (of course proposing it and then not following through is arguably even more cost effective than actually passing legislation on the issue).
I can think of much more cost effective (and more fun) ways to raise my own status in those contexts where I care about it.