1) 409A (option pricing) valuation problems
2) Increase in # of shareholder problems
3) Legal issues (for both the company and employee) if buyers of shares later felt deceived by sellers
4) Team cohesion issues if different employees were getting radically different prices for there sales
You might disagree with the solution, but these are definitely real problems worthy of consideration.
as an employee, if you are lucky/skilled enough to end up at a successful startup, and you aren't very careful with tax issues, you can find yourself stuck: if you leave, you have to exercise, and immediately owe hundreds of thousands of dollars (or more!) on a completely illiquid asset that you can't sell. Which doesn't even take into account the potential for that asset to become less valuable.
That's not a decent way to treat people. Startups don't write the tax code, but many are willing to take advantage of it to control people this way.
After you put your 4 years in, you should be free to re-up or leave. Not free to leave if you are willing to risk all your liquid assets and/or borrow heavily.
And if one person leaves it's not likely to materially affect the business as everyone else keeps it going.
Another point of view is that if all the early employees disappear at the 4 year mark (or whenever they feel they've vested "enough") that could cause very serious problems for the business. There is an element of a prisoner's dilemma here and it's not unreasonable to think about ways to keep people from defecting.
As I said, it's complicated.
No. That's not the way it works.