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Closing loopholes affects everyone, not just bad actors. You degrade the whole system in order to harm a subset. Every rule and regulation does, at least when these rules and regulations only place new restrictions. I'm not sure about the effect of restrictions which limit other peoples ability to place restrictions, it's harder to solve the general case of that question.
Rules tend to limit things to the lowest common denominator, this doesn't just protect those below, it also harms those above. We're also part of a dynamic system, and these tend to balance themselves. If you find a way to make X half as dangerous, then people tend to be half as careful when they do X, and then you're back where you started. This "you're back where you started" seems to explain why introducing new rules for centuries haven't gotten us anywhere. We made laws in the 1500s to combat theft, and even today we're making new laws to combat theft. I think it's safe to conclude that laws do not work, and that further laws also won't work.
I recommend an entire new way of looking at these issues. Some rules are better than others, but I think we should look at these issues in a different perspective, one which is so different that our current perspective doesn't make any sense. I like this quote by Taleb:
"I am, at the Fed level, libertarian;
at the state level, Republican;
at the local level, Democrat;
and at the family and friends level, a socialist"
If the optimal level of trust in other people is inversely proportional to the size of the system, then the optimal system is different at every scale. And one way in which you can lessen restrictions is through decentralization (running many small systems in parallel). This is merely my own answer to the question, but it seems correct. After all, the amount of rules a system has (and perhaps needs) seems to depend on its size. Family members don't usually make rules for one another. This also explains why Reddit got worse as it grew larger, until themotte had to move to its own website. And this website is largely independent from larger systems (decentralized). If this website grew in size and popularity by a factor of 10 or 100, it would either need more rules and regulations, or be shut down.
Of course, this mathematical property is not set in stone - 4chan had few rules for its size at every scale. This is either because 4chan users are more tolerant of the tradeoffs of freedom, or because the social power of moral arguments was smaller on 4chan (less moralizers = less people suggesting that you ruin everything for everyone to prevent some kind of abuse going on).
These websites are merely examples, I'm trying to solve (or model, since no solution seems to exist) the most general case of imposing restrictions on behaviour order to prevent exploitation of a system. My conclusions so far are "there are only trade-offs" and "what systems are possible depends just as much on the people inside said systems as it does on the design of said systems"
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