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MatthewB comments on Disclosure vs. Bans: Reply to Robin Hanson - Less Wrong
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I think the standard economists' reply is off-base in this case, because the problem is not a lack of information, but too much information. A typical credit card agreement fills up several 8.5 x 11 sheets of paper in very small print. The credit card company has many lawyers who collectively know every word in that document. Most people are incapable of understanding an entire credit-card agreement. People don't read them any more than they read the 10-page terms of agreement you have to click on to "agree to" with almost every piece of commercial (and even free) software you install nowadays. Did you know you are not allowed to use Cygwin at work? Did you know you cannot use Java to develop software for use in nuclear power applications? Did you even read to the end of this paragraph?
Would it be more acceptable to a libertarian to see the government legislate a limit on the length of different types of contracts that can be offered to consumers, than to legislate their content?
(While they're at it, I'd like to see a legal limit to the length of legislation, too. Like a law saying that Congress, in a given term, cannot pass more than 30 pages of legislation for every day they've been in session.)
Limiting length might have the result that contracts would get even harder to read, as lawyers used terser language to say things more succinctly. Wait - no, I'm not afraid of that happening.
I think you have hit a nail on the head there with the suggestion that people do not read their terms/contracts.
Back in the 80s/early 90s, I had a lot of credit (and money), and I would read every word of the contract with my credit instruments (Am Ex card, Visa, Lines of Cash Credit, etc.) as I would then know where they could get me, and where I could get them. For instance, I discovered that many Am Ex accounts, at that time, came with credit insurance as a standard item. And, all it would take was a call to a Dr. to have a late payment deferred so that no increase in credit charges would occur (this would be for their Optima Card and the Lines of Credit).
I believe that it is a case of inadequate information that causes many of the problems with the credit industry and the fact that no one really knew what to do about it when confronted with their own dilemmas. I also favor Gov't intervention in this case, as most people are not capable of handling their own affairs (who have been taken in by credit card companies offering them lines of credit that the people really shouldn't have taken). This is true especially for people who come from social classes where handling money was not something they had much of a choice about. People whose only choices are to pay their bills when they are able, and hope that they have enough to cover them. It is only when people have a disposable income that they tend to pay attention to such things, as they do not want to be just throwing their money out of the door.
When one has no disposable income, it is doubtful that a person will ever learn how to manage money beyond immediate payment of bills, or running away from debt.
It is this group of people who have mostly contributed to the debt crisis (and housing problem), when they were offered terms that looked fair, but in reality were too complex for these people to understand.
As for the OP... I am really not sure what the issue is. It seems to be a complaint about the Gov't having to step in to legislate against companies doing unfair things (exploiting the ignorance of the masses).