The case for Google
Before I split my personality here, I'd like to state my opinion for the record. I don't see this as a pure black or white issue. Link buying is neither entirely good nor evil. Like all things in life, it's about moderation. If you've tried SEO but hit some internal road blocks, buying credible links may work. As long as it's relevant and not excessive, you probably aren't dabbling too deeply in the dark side. If you just go out buying tons of links all willy-nilly across off-topic sites, then you probably do deserve to get a little less Google love.
Google vs. the people
Country clubs, fraternities and condo boards all have requirements that allows them to decide who is in and who is out. Think of Google as Bushwood Country Club. It's Google's index and isn't it Google's right to determine who gets in based on its criteria? It's not like there aren't other indexes out there. Google is simply saying I may not let you in or may limit your access if you don't comply.
Additionally, Google has gone out of its way to explain bad practices -- probably more than necessary. The company could have kept its positioning even more enigmatic than it currently is, leaving webmasters to fend for themselves. Instead, it put up a big neon sign stating "Link Buying is Bad" and warned us to prepare.
But did we listen? Nope. Just like some of us overused email, pop-ups and targeting software, some did the same with link buying. Sure, we did it in the spirit of delivering the internet that users want: personalized and targeted. But in the end, I got spammed with ads for a lot of diseases I don't have, and my AllAdvantage checks never cleared.
I recently met with an established company whose principals told me they can get people to write about how great my client's products were, which would help establish quality links. At one point they said that while a blogger may not completely believe in the product, they would likely post something like, "The guys from COMPANY asked me to blog about this product using this KEYWORD." Seriously, does this seem right to you?
David Ogilvy has a great quote that we should keep in mind when we think of link buying: "You wouldn't tell lies to your own wife. Don't tell them to mine." If people buy a product based on a top listing in Google, but we achieved that listing through a bunch of fake paid endorsement links, aren't we lying?
There are loads of SEOs that use link buying properly. The problem is that for every good one there are 100 offshore bad guys. Similar to cloaking, why should Google have to decipher who is buying links properly and who isn't?
That's why Google should be allowed to kick out link buyers. Now let's shift gears and hear the people's side.