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I wrote a little short story about a classroom in the distant future, where the world becomes "perfect", and the students are analyzing works of satire from different periods. The teacher uses these works to tell the students that the people of the "old world" all were monsters who endorsed genocide. He and his students believe this because the things that could be criticized are so minuscule that sarcasm has become unnecessary. Could this fundamental lack of understanding of sarcasm and satire come about if it was drilled into people's heads that there was absolutely nothing to criticize?

No.

Your "perfect society" is far from one.

The teacher makes a factually untrue statement about the people of the old world. The government essentially tries to brainwash people to believe there is nothing to criticize. This is an authoritarian system that is fundamentally delusional about itself and detached from reality. A society acting like this would almost certainly be highly inefficient and corrupt. And people would deal with it with sarcasm and satire.

Also, sarcasm and satire are not actually forms of criticism. They are ways to deal with issues that for one reason or another cannot be criticized. A "perfect society" that genuinely had very little real issues would be positively full a satire and sarcasm. I mean, after they installed that weather control system we can't even complain about the weather. And what are we supposed to make fun of if all the politicians are honest and competent? This is the worst government EVER! (Except for all the governments that came before it.)

'The teacher uses these works to tell the students that the people of
the "old world" all were monsters who endorsed genocide'

And exactly how does the teacher do this without being sarcastic of the people from the 'old world'?

It seems that the power brokers of this world maintain their grip over society by actually USING sarcasm and satire against the 'opposition' (old world).

The issue I have is in the use of the word 'teacher'. Is this person a 'teacher' as in 'guiding the development of intelligence' or an 'indoctrinator' as in 'instilling an ideology'?

If the students are not completely brainwashed and intellectually numbed, and the teacher is indeed attempting to promote intellectual discourse instead of wrote learning, I am sure that with enough exposure and experience they would eventually understand that indeed the lesson was entirely sarcastic.

If the students are completely brainwashed, as in the 'Fahrenheit 451' meme, this society would be stagnant and terminally so, and the question would be moot. Hopefully, there will be no blue koolaid.

There is no such thing as a "Perfect" society. When one aspect of the society becomes "perfect" (by whose standard?), it requires other aspects to become imperfect.

For example, if there is no more death, suffering of health or mental diseases, etc, then (a) goodby healthcare profession, insurance, and politics - which destroys the hopes and dreams of many - and (b) no more death = shit ton of people alive across time. Do you implement population control? That's forced oppression against people's desires to have children. Even if everyone "just chose" not to have any more kids, that means a plethora of interesting psychological problems that comes from never having to care for anyone younger than you. We've spent millions of years evolving with the desire (need?) to have children and raise families. What happens to us when we take that away?

I'd hardly consider that "perfect". But I wouldn't consider the idea of death "perfect" either.

It gets more nuanced than that - an extreme Libertarian might view a "perfect" society as one without a government, while an extreme Communist might view a "perfect" society as one with only one government. These are fundamentally incapatible viewpoints. By whose definition of "perfect" is this future world?

The teacher uses these works to tell the students that the people of the "old world" all were monsters who endorsed genocide

and

... if it was drilled into people's heads that there was absolutely nothing to criticize?

An authoritarian, mind-control system of education is far from "perfect" in my mind.

That said, yes, it is possible to brainwash people into not understanding sarcasm or satire. It is possible to force people to believe all sorts of horrible things through violent, oppressive use of force and mind-control programs.

Maybe

There are a sizable number of people now who don't understand satire and sarcasm. I have read the number is as high as one in three. In addition culture can greatly influence peoples perceptions.

I read an intriguing what if story once based around Shakespeare being exiled to the failed Roanoke colony, taken in by native Americans who viewed Hamlet as a comedy and a Midsummer's Night Dream as a horror story.

Kafka viewed his works as hilarious satire. On reading Machiavelli, I wondered if The Prince was in fact satire that no one realized.

Every couple of years there is a story about parents complaining about a Modest Proposal being taught not realizing the joke.

A whole society not being able to tell satire doesn't seem that far fetched.