Dave, you missed the third flaw. Some people are sociopathic cheaters, and many of them never get caught or punished. Also, the personalities that cheat gravitate towards positions of power and, over time, the levers of power become concentrated in the hands of sociopathic cheaters. This is the big failing of communism, too. The fact that Bernie Madoff and Ken Lay bilked people out of billions isn’t a fault of capitalism, it’s a fault of certain sociopathic humans. Laws and enforcement are unfortunate necessities to ensure that as many of the cheaters as possible get caught. Laissez-Faire systems could only work if people were angels, but then of course communism would work great if everyone were angels too.
Why does anyone think that *any* system thought up by flawed human beings could ever be perfect? Didn’t they pay attention in Sunday school?