We have a few options for why Leaf is not a post-scarcity society. The easiest would be 'magic cannot do that' but we'd prefer not to go that route. A better reason is 'politics' -- people won't let you do that. It's a good reason because it's plausible (people do stupid things all the time, even when those things are against their interests) and because it's something that the players can grapple with. If we were to say "well, jutsu don't work when used outside of combat because the gods don't like that" then there would be nothing you could do. If the reason is 'politics' then you can work to change people's minds or find ways around the obstacle.
Moloch.
Ninja need to eat, ninja magic can't make crops grow, so civilians aren't immediately irrelevant. At the same time, every bit of surplus goes to the military because the first nation that doesn't do that gets invaded, its villages burned, its men killed, its women raped, its children enslaved. Throwing all your surplus at the military happens IRL (North Korea) and doesn't require everyone to hate money.
Notice that this explains why nobody has thought of Hazou's ascent to godhood before: they have, but Moloch ate it. People
have noticed it's trivial to build building with earth jutsu, and do, but this hasn't lead to post-scarcity because Moloch ate all the surplus it generated. Hazou doesn't immediately turn into Bill Gates because (1) price must equal marginal cost, so if magic is trivially easy, it doesn't pay that much and (2) Moloch eats it.
This also gives the players a way around the obstacle (coordination).
You're probably right that everyone would be better off in the long run if the Merchant Council would get out of the way. It's even likely that (at least some) people in-universe recognize this. The key phrase there is in the long run. In the short term, letting ninja loose on the economy would cause a lot of disruption.
Real income increases in the short term. The instant someone pays a ninja less than they would have paid a civilian, their real income increases.
IRL, every time you restrict trade (except for maybe fissile material?), a black market springs up approximately immediately, because trade necessarily makes both sides better off. Every civilian who has a comparative advantage (which includes every farmer and every civilian with a trade) benefits (immediately) from participating in such trade, as does every ninja. In fact, the only civilians who wouldn't want trade along the lines of comparative advantage are precisely the ones who no one (ninja or civilian) would trade with if they were allowed to trade with ninja, making their threat to not trade with ninja somewhat empty.
(And now I kind of want a Firefly/MfD crossover where a crew of 5 missing-nin who take on four civilians, three of them highly skilled in different areas and the fourth the sage but also insane, who travel about the EN, smuggling goods and clandestinely using ninja bullshit to provide civilians goods and services at a fraction of the going price.)
Note that this doesn't require a knowledge of comparative advantage, just the ability to notice that black market granite (or whatever) costs less than civilian granite (or whatever). Individuals act against their self interest all the time, but I am unaware of tens of thousands of people standing up and saying, loudly and firmly, "we would like to pay drastically higher prices." The US has quotas on tobacco that increases the price of all crops, but there's at least a causal chain a few links long. Banning ninja from trading with civilians is like Jimmy McMillan demanding a
minimum rent that's 10 (or 100 or 1000) times higher than normal rents currently are.
They have enough sway that they have convinced people that this is a good idea.
Given how stubbornly black markets crop up IRL, I don't find it very plausible that
they have managed to convince everyone that pay 10 (or 100 or 1000) times as much for goods and services is a good idea, but let's say it happened in Leaf. Even if other nations are copying Leaf's setup, as they were setting up, they were going to have every civilian with a trade and every farmer clamoring, hard, to be able to trade with ninja simply because it costs dramatically less and however irrationally you can sometimes get people to act, you don't see widespread money bonfires. And the second a nation doesn't bend over backwards to prevent people from doing what they desperately want to do, its economy grows an order of magnitude or two overnight. (If North Korea is our reference class for a highly militaristic economic shithole that doesn't allow its citizens to act in their own self interest, then the nation that does sensible things for economic growth is South Korea, which has a GDP roughly 50x North Korea's).
- The members of the Merchant Council (upper-middle and upper class) are happy and rich. Change is more likely to harm than help.
- The First-, Second-, and Third Hokages had a stable village that was relatively wealthy and improving over time. Could they have gotten it to improve faster by going to the mattresses with the MC? Maybe, but it would cause a lot of havoc and would undoubtedly hurt a lot of people. Why take the risk when you're on a generally positive path?
- Jiraiya has less than zero desire to start a big brouhaha at home while focused on the Naruto / Akatsuki issue.
- The ninja clans are happy and rich. Change is more likely to harm than help.
- The average ninja is comfortable. Change is more likely to harm than help.
- The working people have various reasons for not throwing the MC out:
- For most of them, getting rid of the MC and letting ninja do all the commerce is outside their Overton Window.
- Some of them lack the education to understand what's happening.
- Others have been convinced by propaganda that this is the best and safest way to run things.
Taking (some of) these one at a time
- The merchant council has members who are merchants. Merchants have to buy inputs. Many (most?), if they could buy from ninja, could plausibly reduce spending on materials by a factor of 10 (or 100 or 1000). Being happy and rich is not enough to to ignore this.
- Ninja clans could plausible increase their revenue by a factor of 10 (or 100 or 1000) by being allowed to do ninja stuff for profit. Shikaku thought that an 8% revenue bump would be enticing to the Hyuuga. Being rich and happy is not enough to ignore a 1000% (or 10000% or 100000%) revenue increase.
- Ditto on ninja in general.
- Working people... the idea was never for the ninja to do all the commerce (just precisely the commerce they have the comparative advantage for), and... actually I'm not a political scientist, so sure, maybe "ninja use their wizardry for economic gain" doesn't occur to them. But as long as they understand that it takes a trivial effort for the wizards to wizard meaning they don't pay as much, they have enough education to make the equilibrium incredibly unstable.
A few points for anchoring:
- "What it takes an entire crew of masons weeks to build, you can create in seconds with one jutsu." If we round "seconds" up to "1 hour", put a crew of masons equal to 5 and assume 40 hour weeks, and call "weeks" "2 weeks", then 1 Hazou is worth 400 masons: a thousandfold increase in production is plausible in at least some areas.
- Singapore has the death penalty for drug possession, resulting in the execution of a few hundred. Threat of assassination may hinder black markets, but won't stop them.
- Apparently you can buy fissile material on the black market. And now I'm probably on an FBI watchlist or something for googling "can you buy fissile material on the black market"