I'm assuming in this scenario that they would be keeping passwords in a plaintext file. If they kept passwords in an encrypted file, wouldn't they need to decrypt it? Wouldn't you presumably have a strong password to decrypt it? Where is that kept? How strong must one's password be when that password is keeping other passwords secure? If they can remember that password, why can they not remember others?

Remembering 1 password is easier than remembering dozens of them. Reusing passwords is not a great idea, so dozens of passwords is a real concern.

It's also the case that disabling paste doesn't do anything to stop a user from storing their passwords in an unencrypted file.

Because remembering one strong password is way easier than remembering 50 strong passwords.