RMT is bad because it is a form of cheating in a video game. You acquire something in the game the easy way, without having to overcome whatever hurdle or challenge the game put up between you and your goal. This devalues the achievements of others, who got to the same point the legit way. I'm calling this the primary evil of RMT. Primary because there is no way you could think of RMT that doesn't involve this cheating. (How opposed or in favor you are of video game cheating is another question).
RMT is bad because of regular players getting bombarded with spam, and because they are prevented from gathering certain goods in game due to lots of gold farmers camping the spot. RMT is bad because of gold sellers scamming their customers, and because they try to install trojans on your computer to steal your WoW password and sell your gold. And the list goes on and on. All these I call secondary evils of RMT. Secondary because they are clearly a result of RMT, but RMT could exist without them. Take in-game gold spam, that is a relatively new phenomenon. RMT existed for many years before the first guy started spamming gold sales in WoW.
Why would I want to make a distinction between primary and secondary evils of RMT? Because it gives us new ways to solve the problem. If some secondary evil is worse than the primary one of cheating, then legalizing RMT might solve some of the problems. How long would gold spam survive if gold sellers could get a license to sell gold on an official legit market, with a threat of spam revoking their license? Or you can attack the secondary bad effect directly, which is what some games do now with spam filters.
Look at the Ni Hao video I posted on Saturday, which besides the catchy tunes shows you that apparently people are more concerned with the secondary evils than the primary ones. The video complains about not being able to gather primals in Shadowmoon Valley due to the gold farmers. But it is easy to see how you could have exactly the same problem even if there was no RMT and there were just lots of other regular players farming the primals. The Burning Crusade already introduced some areas with dynamic spawns, where the more mobs get killed, the faster they respawn. If primals get farmed 24/7 and prices for them are still high on the AH, there are obviously not enough sources for them. If Blizzard put in dynamic spawns on the mobs that drop them, there would be enough supply for everyone who really needs the primals. And the gold farmers would just ruin themselves if they overfarmed them and crashed their value on the AH. A dynamic economy is less easily abused than a static one.
It is even possible to design games with a high inherent resistance to gold farming. Gold farmers exist because of their comparative advantage of living in a low-income country. The video says "10 cents an hour is good money if you are Chinese", which goes to the heart of the matter, even if it is probably a bit more than 10 cents per hour. By playing the same account 24/7 in shifts or by using bots, the gold farmers make use of the fact that money earning is linear with time spent in game. What if it wasn't? I'm thinking again of the harvesters in SWG, which produce resources in real time. For all we know Pirates of the Burning Sea has similar harvesters and production sites working in real time as the source of their player-based economy. But if you don't need to be online all day to make them run, then a gold farmer isn't producing any more wealth with a harvester than a casual player. If a gold farmer can't make more gold than a casual player, he can't sell that gold very cheap, and the RMT market in such a game never gets going. A game design in which wealth doesn't depend on you playing all the time is not only more fun for casual players, it also solves lots of the secondary evils of RMT.
Unless you remove the ability of players to transfer wealth between them, RMT is never going to go away completely. But if we focus on what is really bothering us about RMT instead of trying to solve a huge and abstract problem, there are solutions available to diminish many of the bad secondary evils of RMT.