[Tilmbeinymn]

I would, however, make an exception for the predatory lenders you mention as an example here. If interest rates offered are 40, 60, 80%, and in fact interest rates are far lower, and there is no reason to offer the rates other than to cheat the ignorant, those loans ought to be invalidated.

That is exactly what they did.

A gray area is where moneylenders offer money to those whose credit rating does not enable them to raise capital anywhere else, but at a higher rate than normal. If, for example, a slum-dweller cannot find any market mechanism to finance his daughter's wedding - no bank will loan him the money. The moneylender comes in, and offers a rate not too much higher than market. For instance, if the market rate is 18%, he will offer 23%. This is, by the way, permissible.

This rate is, however, still too high for the man to ever be able to pay it off. He essentially becomes a debt slave to the moneylender and his collectors.

In this case, what do you suggest? Restricting either man's freedom is not an option - they are both engaging in an activity with mutual consent, with no coercion on either side. But the outcome still sits uneasy on our conscience.

What do you suggest we do?

[Thomas12400]

Do people need laws protecting them from their own stupidity?

No, they don't need such laws. The better question is whether society benefits from such laws. The answer to that is yes.

Given that people live in groups, one's actions almost always have some effect on others. One person's stupid action could lead to some amount to harm to come to several other people. Some of the people harmed could react negatively or harmfuly to the event, creating a chain of negative consequences that in the end has no positive upside, and does nothing but increase the cost to everyone. To use that example you gave, the farmer taken loans with usurious rates not only threatens his own personal finances, but those of his family members, and if he were to renage on his obligations, that would start a possible chain of conflict between borrower and creditor, their families and friends, and so forth.

Another example are laws mandating that car owners have insurance. A true free marketer should be oposed to such a law, as it might very well inflate the price of car insurance for all, since car insurance companies know that as long as people buy cars, they will be mandated by law to buy this service. But by creating such a law you help mitigate the general harm caused by the rather common event of car accidents. Same with laws that penalize people for not wearing seatbelts.

At the end of the day, what any law does is create an incentive for individuals toward some action. It does so by threatening some negative consequence for the action, but as we all know, for some people, the threatened negative consequence is secondary to the possible gain from an action, and hence crime. But I think society as a whole benefits if it creates situations that steer people towards less risky or possibly harmful interactions, or sets up methods to mitigate possible harm, as to limit the effect.

[DuePew]

Another way to express the concept in the OP might be "Shall we abolish freedom for the lower orders since they clearly are not capable of using it wisely?".

My view is that such opposition to democratic freedoms is not the answer.

[gunhijala]

"To finance his daughter's wedding"... and free market look do not fit well.

Best regards,