Flat Feet --
It's slightly more complicated than that, I think. Ask: why is it bad to pronate? I maintain that you are supposed to pronate a certain amount, and doing so is part of an efficient stride. Again, try running barefoot (on grass) as an exercise. You will land more on your lateral midfoot with the heel touching the ground simultaneously or shortly after landing, then roll (pronate) inward as your arch flexes down (then springs back up) and you push off with your toes.
If you put yourself into a firm, well-shaped, tight-fitting orthotic and a solid motion control shoe (or, to take it to a logical extreme, just glue your orthotic to a block of wood and strap your foot in), you will, in fact pronate less with each stride. But does this feel good or help you run fast? No, of course not.
I believe the issue is that if people pronate a lot, the put a rotation on the tibia-fibula an invert the knee, which then can lead to pain at the knee. My point with cushioned shoes and elevated heels is that this will happen more than it would in bare feet or minimal shoes -- and for most of us, the amount of pronation in bare feet won't hurt the rest of our leg, but the excess pronation allowed from the heel lift and cushion will hurt more of our knees. In these cases, the orthotic is there mainly to counterbalance the excess pronation allowed by the shoe. So I threw away both the shoe and the orthotic.
At the other extreme, the fellow with an orthotic and a block of wood will also have problems. He will pronate not a bit, and a fair amount of the kinetic energy from stride motion and torque that was supposed to be absorbed and dissipated by his foot-arch-ankle motion (which includes pronation) will simply be transmitted north to his knee, causing knee problems in this case too. He will also run slower. In other words, locking your foot motionless with each foot-plant isn't that helpful, from my point of view.
Okay, I'll stop ranting.