law should protect privacy

Privacy is just something you DO as an individual. Law has nothing to do with it as long as it doesn't get in the way (which it shouldnt even be able to do if "laws" are the voluntary contracts they should be.)

In the absence of law, why would exchanges do KYC? Is your grandmother staring at the ledger all day? Obviously a public ledger is very different from a glass house. And why wouldn’t you want your grandmother to know you bought drugs? Because it is shameful. This is exactly my point. A public ledger could discourage shameful activity. Even if you don’t want someone to know something, if they are doing chain analysis and stalking your transactions, you could use LN and basically completely prevent them from know what you bought. The major benefit of a public ledger is that it can be audited. A public ledger would prevent shady deals between business and government. Monero would only make those deals easier. Privacy has a place but so does transparency.

I don't want some system preventing me from doing shameful things if I want to do them and keep them private. That sounds like a nanny structure that I would absolutely opt out of for certain activities.