See when I watch anime the part of my brain that tells me this is fiction kicks in. So when things happen that are odd or could never happen in real life, I get it. Also they explained why they didn't want him to kill all the pirates and why they were mad at him for it. But I guess you missed that part cus you were to busy thinking this was reality.
Episode 3 about 02:54

I already addressed that in the opening paragraph of my initial rant. But hey, I suppose your much-prized reading comprehension skills just failed a bit there.
Also if you watch Episode 3 you get the feeling that there isn't much bloodshed between the pirates and the others.
Episode 3 about 05:53

It's even further explained not directly that they only use weapons as a way to threaten one another. Not actual bloodshed.
*Sigh* Again, this was addressed by me in my opening paragraph of the original rant, not to mention by other people.
Let me recap, since you seem to be horribly at odds with your brain and eyes: what I'm pointing out is that I don't see how the captain could have even maintained that kind of status quo. He obviously is not able to rationalize on the level of a common high school student in some of the more intelligent anime. How do you maintain a status quo based on a show of force when your show of force is obviously inferior? The answer is that you have to fill it in with some kind of show of force, and that show of force is usually intelligence-related. He doesn't have any of that. How were they able to survive for so many years, if not by simply surrendering resources and showing fealty? Magic? Okay.
Now as for when the pirates retaliated and attacked, duh. Their crew was killed and blood was shed. It was even stated in Episode 3 on many occasions that the pirates would seek revenge. **see first spoiler tag for pic**
... Even if they didn't seek revenge, suppose you had one side with not only inferior weaponry, but inferior ability to utilize it. That's called being someone else's bitch. The pirates can essentially do whatever the fuck they want with you.
Fiction isn't always supposed to be believable and accurate.
No shit.
That's the part that makes it fiction. Funny you have an issue with a captain and crew not wanting to kill pirates cus in the real world that is absurd. But you're not ranting about the flying robot from outer space that can nuke a small army in seconds. Seems... absurd don't it?
*Facepalm*
I did have an explanation about this for you, but then I was like "why the fuck am I even bothering?", and took it out. I'm essentially wasting keystrokes on someone that won't/can't actually read anything I put down. To summarize, you still don't understand that
the only really fictional thing about this anime is its setting, do you? Logic and good judgement is a universal concept... it just changes depending on external variables.
I honestly don't have problems with shows that don't try to pretend like they are more than what they are. If this was just supposed to be a slice-of-life (?... granted it's a bad one) moe show with fanservice plastered all over the place, and that's all it advertised... then I wouldn't be complaining. I watched Haganai, I enjoyed it. I watched Seitokai Yakuindomo. I enjoyed it. I watched Seitokai no Ichizon. I enjoyed it. They were just what they were, and they didn't try to incorporate anything outside their realm of expertise in such a silly way.