Google is not dumb by any means, but they really can't complain about the SEO industry because they single handedly have shaped the entire search industry. Unethical practices are going to spring up anywhere there is a chance to make some money and you have to take the good with the bad. Google has made lots of money for themselves but in the process they have spawned and industry with no regulation and no benchmarks leaving things wide open for you know'the bad people.