Instapundit, Bankruptcy, and Freedom

Glenn Reynolds hates the bankruptcy bill since, as far as I can tell, he believes it helps credit card companies commit fraud and exploit poor people.

Now fraud is fraud. If the credit card companies are misrepresenting whatever deals they are making with people, this can and should be taken care of with existing anti-fraud laws.

But as for exploitation, Reynolds writes,

… if people are supposed to live with the consequences of their actions, then why shouldn't credit-card companies live with the consequences of extending credit to poor risks?

At any rate, if [current, easy to get out of debts] bankruptcy law is "anti-freedom." then what's pro-freedom? Debtor's prison?

By definition, a slave is less free than a free man. But now who is more free: someone who has the option of selling himself into slavery one years hence (in return for a lot of money to spend in the next year) or someone who has this option precluded from him? Here, the one with more options is more free.

Of course, we have purposely limited our freedoms by outlawing selling ourselves into slavery, and I agree with this. We have also outlawed loans which send the borrower to debtor's prison if he doesn't pay. But there are other less extreme examples. I am more free if I get to keep my house whether or not I pay my mortgage than I am if only get to keep it if I pay my mortgage. (The former simply has more options than the latter.) But, stepping back in time as in the slavery example, I am less free if I am precluded from contracting that the mortgage company can take my house if I don’t pay up.

Adults are usually given great latitude in their freedom to write binding contracts. Everyone believes there should be some restrictions on the contracts we will enforce, but these are basically for paternalistic reasons: people will foolishly sign contracts they shouldn't and we wish to protect them from that. But this is anything but a libertarian impluse. It's modern liberals who want to protect everyone from their stupid selves. Like his critics, I thought a libertarian like Reynolds would be more on the freedom side.