Except clearly that doesn’t work, and clearly some people who take out loans like this aren’t doing it in bad faith. The idea that the threat of punishment is e

Except clearly that doesn’t work, and clearly some people who take out loans like this aren’t doing it in bad faith. The idea that the threat of punishment is effective at stopping “bad” behavior has, I believe, been thoroughly debunked by psychology. It’s not as simple as “someone borrowed $10 and didn’t pay you back”, typically. Even personal bankruptcy is available to people who borrowed in good faith and couldn’t make the ends meet. But when there is an entire system that is designed and exploited to make it hard or impossible to pay people back (e.g. payday loans or usurious rental contracts), no amount of punishment will get the desired behavior you want because the system itself is broken.