EDIT for EDIT:
Well I actually do know how MMOs work, all the things I have ragged on, such as player housing, have failed in very obvious ways.
Did it fail? Ultima Online is still around. Star Wars Galaxies
would be still around if their licence didn't run out. Minecraft (which is almost
all about making your own constructions in a shared world, as far as the multiplayer goes) does great.
Where are those "failures" you're talking about?
Which could be simulated without having the ability to ban people. Any game designer who thinks such an abuse of power is warranted has a screw loose.
Of course it
could be implemented differently. But just because there's more than one way to do something doesn't make one of the ways to be "bad gameplay", so that's not an argument in favour of your original statement.

As for the "screw lose" comment: Are you seriously resorting to
ad hominem attacks on someone who can't even defend themselves, not participating in this discussion?