Rufusing to acnowledge real human behaviour.

You write: "I argue that if you set them incorrectly it does very little to reduce speed, it does however massively increase non-compliance."

That is as an argument you are putting forward to strengthen your point, but where is the data? How do you know that speed limits do very little to reduce speed? As for myself, I reduce or increase my speed based on the limit posted, and I observe that most people do likewise. 

[To Shawn]

It's probably that where you drive they have set most speed limits to match the road they're on?
It's the standard of the road and the conditions at the time that overwhelmingly dictate traffic speeds.
I'm not saying speed limits make no difference to speed, for what difference they do make they seem to be most effective when they match the road they're on, especially when limits change inline with a change to the road's character, rather than in some arbitrary location several hundred yards before the start of a built up area.

It would be a strange statement to make if it wasn't true, I recommend the study Effects of Raising and Lowering Speed Limits, Which states the following "lowering posted speed limits by as much as 20mph, or raising speed limits by as much as 15mph had little effect on motorists' speed. The majority of motorists did not drive 5mph above the posted speed limits when speed limits were raised, nor did they reduce their speed by 5 or 10mph when speed limits are lowered."

I've also seen data from roads near me from hidden radar detection measuring (free flow) traffic speeds, that seem to back up this study's claims.
Quite a few roads with 40mph speed limits had lower average speeds than other roads near to them that had 30mph speed limits, even one road with a 50mph speed limit had an average speed lower than one with a 30mph speed limit. That 30 limit road was just a higher standard than the 50 limit road.
One quite generous 40 limit that has survived had 97% compliance with the speed limit, which is the opposite of the 20 limit road with 97% non-compliance. That's the level your dealing with.

Some roads have even been know to have speeds increase after the limit has been lowered. It surprised me as well.

The way I read this, it appears "R(e)fusing to ac(k)nowledge real human behavio(u)r"  is being put forward as a possible fallacy.   The speed limit and communism examples may be presented as supportive.   

I suggest re-writing the question/observation/proposal, as it is not entirely clear, and potentially very broad.  

To further muddy the water, and potentially go off point, the relatively recent field of behavioral economics may be what you are hinting at here.    I am not prepared to argue this point, but I will postulate that many human behaviors are not understood to the level necessary to apply the tools of rhetorical fallacy.  In other words, we are beginning to 'know ourselves' to an extent that we might recognize the 'rational consumer' models are largely a relic. 

[To John Best]

Like I said, I wasn't sure if it counted as a fallacy, maybe it could be called a mindset a form of phycological denialism, but is there a name for it?

Maybe I've asked on the wrong website, I'm thinking it could more be described as a mindset rather than fallacy.
I thought of another example today, that being vegans who for some reason have a problem with people who rescue battery chickens and keep them almost like pets because they eat the hens' eggs.
Vegans think they should be feeding their eggs back to the hens.
Of course if you point out to them that imposed that rule only a fraction of the number of hens would be recued and get to live out their life as pets in someone's back yard, their answer to this seems to be "I don't care it's cruel to take their eggs".

Same idea... vegans tend to lean more towards virtue ethics, where killing/relocating some animals to build a children's hospital where woodlands was is not acceptable. It is not a fallacy, just a different ethical worldview.