I think you're right but people need to learn before they do stuff....you can't walk around life being dependent on regulations protecting you. I can't even remember the last time I placed a market order.
Sure, it would be best if every retail investor learnt the market before participating - but that doesn't make it bad to take steps to protect those who don't (assuming those steps aren't particularly costly). If you can't remember the last time you placed a market order, surely it would be no big loss to you if they were banned entirely?
The best protection is to be well-informed of what is going on. Certainly, we can't know everything (such as how our food was prepared, quality of it, etc) but every investor putting money into stocks should know something as basic as a market order vs a limit order....that is NOT too much to ask.
Why would this be the case?
A regulation prohibiting market orders doesn't even in theory serve to protect against poor-quality securities that will decline in value, it protects against poor quality market price information and/or order execution that results in an order being executed at a substantially different price than expected.
It might reduce the degree to which retail investors research information on order execution between different entities through which they might trade securities, but the jump from there to it reducing the degree to which they research the underlying securities seems unwarranted (if anything, it would seem more likely to focus their research more on the securities themselves.)
But, the thing is, its not like retail investors are bothering to research and understand the issues it would address now much at all, so its not like it would actually change anything except the degree to which they get bitten by them. (And, conversely, the degree to which counterparties benefit from them getting bitten by them.)
I think you're greatly overestimating this effect. The government already regulates the stock market a lot. One more regulation isn't going to make retail investors suddenly start taking much bigger risks.