Comment by thayne

I think the point is that in a theoretical society in whcih there are no bad actors, and there is no cost to prevent fraud, the optimal amount of fraud is zero. That is, there isn't a reason you would want to encourage fraud, because a little bit of fraud is good. But when you also consider the cost of reducing fraud the optimal state for the system as a whole will have a non-zero amount of fraud. And of course, bad actors do exist, so in a real system you want to accept some amount of fraud.

The difference is significant, because if you discover a way to significantly reduce fraud for a low cost (including cost of freedoms and similar), it will be worth implementating. And there isn't some point where you say "we are already down to x% fraud, we don't want to go any lower than that, even if it doesn't cost us anything".