The “nirvana fallacy”: comparing an imperfect entity or outcome to the idealized alternative. In economics it is frequently used to compare institutions. For example, “markets fail, therefore we should have government intervene”. While this may be a valid policy strategy, generally the suggestion is made based on an idealized vision of how someone thinks government ought to work, rather than how it actually will.
http://en.wikipedia.org/wiki/Nirvana_fallacy
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=918106