You can't "punish people by letting them hang their own rope" when they don't actually get hung, because they're still around afterwards but now a burden. They now have to rely (more) on the social safety net, or turn to crime, or just sit around all poor and broken being unpleasant to look at.

A society that has decided to take on, at least partially, the burden of individual failure is incentivised to try to prevent it.

If you were to propose some sort of "unaccredited investors get to invest in risky markets if they agree to be put on a boat and cast out to sea if they fail" then I could see myself accepting that.