We don't need everyone to be fully rational. Especially not when short selling is safe and easy to do.

With proper shortselling, a single entity can benefit from muckracking.

Of course, short selling is the first thing that gets banned at the drop of a hat. To give a timeless example: https://www.google.com/search?q=france+bans+short+selling

You are right that it can take a while in practice. We should make it easier for the reckoning to come.