The question I like to turn to is: who should bear the costs of law enforcement and prosecution.
Good question. Off the top of my head: I feel some form of insurance would be in order.
If I am victimized by a scammer, are my neighbors obligated to pay the costs of investigating the crime, locating and apprehending the culprit, prosecuting, and then incarcerating him?
Legally obligated? In almost all jurisdictions: yes, where "neighbour" is suitably broad.
Morally obligated? Not in my opinion although I suspect I'm in the minority.
If so, does this mean that I have less incentive to protect my Bitcoin and to investigate those I have financial dealings with? What if all the costs involved add up to more than the value involved - who should decide whether we call it quits on the investigation or not?
Ah! That's a rather ugly nest of moral hazards.
Is socialism really a fair way to handle this?
Highly subjective. A yes (resp. no) answer almost defines one as being a collectivist (resp. individualist).
Is there a magic lamp we can rub that will bring forth a genie that will right all wrongs and triumph over evil?
Does wiping out all sentient life on Earth count? If not then probably "no".
