I submit that you have rather egregiously misread TFA. The antecedent of "They" in this case is the judge and other law enforcement fans. Felten's point is not to stipulate to their mistaken assumption, but to contradict it. That is, he shows how the threat represented by the court system is indistinguishable from that of various other bad actors. He doesn't spare Lavabit from critique either, by pointing out how better systems design would have better resisted the "insider" attack carried out using the courts.
A man with a crowbar will beat you for your password even if you assure him you can't divulge it. The problem is with the man with the crowbar, not whether or not you use a secure system.
A man with a crowbar won't continue to beat you for your password if you can prove that you can't divulge it, unless he is beyond the reach of logic. At that point he might as well be beating you because he doesn't like the color of the moon, and you would best get together with some of your friends and divest the lunatic of his crowbar.
But there is a logical reason to beat you for the password you can't divulge, namely to serve as an example and deterrent to any future persons who might attempt to restrict access via the same mechanism.
It won't convince the crowbar enthusiasts (who support every abuse of citizens by state agents), but the existence of more secure email providers will eventually lead reasonable people to question why the regulation of email provision requires so many crowbars.
What about deniable encryption, where you can give them a key that decrypts the ciphertext to innocuous stuff while concealing the real key that decrypts to the real plaintext? What does the crowbar do for the attacker then?
"Perpetrators often attempt to justify their acts of torture and ill-treatment by the need to gather information. Such conceptualisations obscure the purpose of torture... The aim of torture is to dehumanise the victim, break his/her will, and at the same time set horrific examples for those who come in contact with the victim. In this way, torture can break or damage the will and coherence of entire communities." -- Physicians for Human Rights
