Full BS. If I create some content, it belongs me and not you, plain and simple. Just as if you buy a car, it belongs to you, not someone else. The only role government plays is ensuring, the content owner retains ownership. It's not legal fiction.
You clearly have no idea what copyright is. You would have a stronger claim if you suggested some sort of inherent right to attribution, but in the words of Jefferson:
Stable ownership is the gift of social law, and is given late in the progress of society. It would be curious then, if an idea, the fugitive fermentation of an individual brain, could, of natural right, be claimed in exclusive and stable property. If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it.
If you create a physical work, you are more than welcome to sell or trade that specific book or image. You cannot physically control the idea itself, even with the aid of the government. The term "legal fiction" is therefore justly warranted. What copyright actually does is provide an exclusive right to monetize a particular idea. It could be argued that this is not necessary, since humanity in general and the arts specifically carried on very well without any such invention for many centuries. However, I feel that some form of copyright is probably a better idea than e.g. patronage for allocating resources to content creators.
Running a quick check using humans and software is not impossible. YouTube generates billions in revenue. I can't believe they can't hire people to police content, at least random checks, if 100% checking of all videos is too expensive.
You have yet to establish any sort of argument for why they should do any such thing, even assuming it were possible, which I do not grant -- the issue of whether a work is infringing is a legal problem, not a technical one. Not only does Google not have the obligation to determine the legal status of a work, they also do not have the right to do so, absent a specific agreement from the content owner. It is not to say that no part of the legal system may be automated away, but this particular problem is not remotely tractable.
Again, legally this is all very clear-cut, and no one is considering changing any of the laws here, or even pursuing any other service providers. Not only would there be wild outrage about introducing liability for infringement for service providers, but actually jeopardizing YouTube's existence would eliminate a billion dollar revenue stream that the content creators don't have to pay overhead costs for. We are not hearing cries for new laws, we are not hearing cries for the Department of Justice to investigate, we are not hearing cries for YouTube to be shut down. We are hearing cries about Google's profits. You yourself are only complaining about the monetary issues. This is a shakedown.