Risk is Unavoidable
Every choice we make has a risk associated with it. Much of the dangers from improper risk assessment can be mitigated early within our formative years. Learning how to trust only trustworthy people can be tricky, and anyone can be conned, but understanding how to assess a risk to you & yours is critical to any individual's survival.
Assessing Risks
Can I abide by these terms? Can I pay this back? What if my company goes under, can I afford to go without insurance? Do I really need this, or can I go without and save up for that other thing I really want & need? These are all things we will probably need to assess if we take a loan or other form of external funding, or make a purchase we might regret due to the cost. Success will reward people greatly for high risks, while failure will ruin credibility, careers, or lives.
Lending & Risk
For me, the only reason predatory lending sucessfully occurs is the individual's inability / failure to properly assess risks in the transaction. This inability for regulated transactions can be tied to the state, as we are taught to trust both their advice, and that rules will protect us from predators. Let me explain why.
For many of us, a loan shark's money carries too much risk of actual physical harm, but to some the reward appears to be higher than the risks. The same is true with banks and their debt finance system, except here the risks are to property & not the body. You can lose your house if you cannot meet the payments on a bank loan, and walking on a mortgage can ruin your credit ratings for life. Some people may find the risks too high given their current income, while others will find it less risky due to their circumstances. This is a natural process that is dependent on an individual and their situation (both socially and economically).
States & Mitigated Risks
There is one other major difference between the unregulated loan shark and the state regulated banks. The state, in part, determines what is and is not risky activity for a business. Their regulations (or lack thereof) allowed predatory lending practices to occur, even though their regulations are supposed to be in place to prevent it.
The reason why government causes natural risk mechanisms to fail is the government's ability to quantify & qualify the value of those risks. By assigning a set punishment for damages done to individuals and the environment, governments allow companies to make a clear judgement call on the expected costs to behaving in an unethical manner.
Types of Risk
Quantified, or known risks, are inherently less dangerous than unknown ones. Unknown risks have variable costs, which can depend on geographic locations, society, or an individual. Because they have unknown implications, such risks are often avoided on purpose to prevent any unaffordable costs. If, however, a risk with an unknown cost is quantified by the state, a new dynamic emerges.
The Dangers of Government Based Risk Mitigation
When the state quantifies an unknown cost associated to a risky action, it converts an unknown risk to a known risk. Known risks are assessed based on the profit gained vs any potential costs incurred If the costs are outweighed by the gains, the risk will be taken. By setting fines for pollution, unethical behaviour, or any other unknown risks, people can decide to behave in an evil manner because they suddenly can afford to do so.
Government Generated Risks
Not only can the state arbitrarily decide how dangerous something unethical is, it can also declare that possession of certain objects is too risky to be allowed. Both the era of prohibition & our modern drug war are excellent examples of how the state can make a relatively low risk activities (like drinking and smoking) into a high risk scenarios. By doing this, the state creates dangerous black market situations, ones which historically led to the rise of people like Capone and groups like the Zeta Cartel.
Conclusion
No one should consider any arbitrary declarations on what is or is not risky as positive for society. In fact, only the individual should be allowed to decide what is or is not risky behaviour. Each person has different objectives and circumstances, and only they can determine with any accuracy what actions are too dangerous to take. Letting the state determine this for us is a risk we can no longer afford.