Untrue.
I like racks because I have researched them. The animals in the rack do not spend their time up at the front, gazing out at the world. They spend it in the back, in their hide box, happily feeling secure.
Do not anthropomorphize!!! Yes, reptiles have feelings, but they aren't the same as ours, because their NEEDS aren't the same as ours. If you understand their instincts and their behavior, then you can understand their feelings. Because YOU would feel claustrophobic in a rack, does not mean that THEY do. I considered whether racks were ethical, just as you have....the difference is, I looked into it in depth.
People use racks for reasons OTHER than convenience. They use them because the animals kept in them are healthier--they eat better, they grow better, they experience fewer illnesses, and they breed better.
Why? Because they are less stressed--they are "happier".
Reptiles are not warm-blooded creatures. Their bodies are designed to maximize efficiency. They conserve energy. If they have food, water, secure shelter, and proper heat, they are ecstatic. The last thing they want to see is your ugly mug in front of them (imagine how horrible we must look to a reptile, lol...). They don't want to see the birds, they don't want to look at the squirrels, and they're not interested in watching what's going on. Those things are scary, stressful, and unpleasant. They would rather be alone, with plenty of bugs to eat, in a nice quiet, secure place.
They DO need a certain amount of room to roam, or they'll be stressed by that, as well. A sweater box gives as much floor space as a 20 gallon tank, and it doesn't have that unpleasant view of the big scary creatures called humans going about their business on all sides of it.
Like a burrow or a rock overhang, it provides shelter from predators such as raptorial birds and foxes. It's a wonderful place, for a nocturnal lizard. You may not like it, but THEY love it. If they could find a place that mimicked it in the wild, that is where they would live.
A reptile wants security, food and room to hunt it, water, warmth, and a mate.
It most decidedly does NOT want you. It does not want to see you, or anyone else. It doesn't want to watch the birds through the window. It doesn't think they're pretty or cute. It thinks they are scary, potential predators, or competitors, something it could live without. It may get used to you, but it doesn't LIKE you. It's not a dog or a cat. It's not a mammal, prone to running off energy out of an instinct to keep in shape...its metabolism wants to conserve, not expend in a fit of exuberance.
If you are going to keep these creatures happy, you have to understand THEM--understand them for what they ARE, not for what you WANT them to be.