I think this is a great example of the site working correctly actually! While this answer is not a very good answer, there is obviously a lot of people that agreed with it at one point and thus it got upvoted. (Also it was very early in the site, so it got a lot of upvotes. I doubt that a similar answer would ever get as many upvotes again.)
The site is working correctly, because the better answer is still above this one. I don't think Stack Exchange is meant to never upvote a bad answer. It's goal is that the better answer will eventually get to the top, which will hopefully be the one with evidence.
Yes, someone could get to this answer and think it is correct because it has upvotes, but it is much more likely that they will just read the first answer and move on. Only if the first answer leaves questions for them do they continue to scroll. (Or at least, that's how I use Stack Exchange...) For this question, I assume that your answer will be considered the most right by most visitors.
At the very least, everyone should vote on the question as they see fit. In these cases, definitely down vote the answer. Also, I would comment either asking for a longer explanation. Answers aren't set in stone, so there is a small chance that the original answerer would come back and expand on the answer.
Personally, for future questions, I will almost always convert the answer to a comment. (I feel like I've actually modded a lot of similar answers recently, with the expectation that if they want to make a longer answer, they can repost it with more information.) So, in answer to another part of your question, yes, please do flag answers like this. A lot of short answers also get auto-flagged just for being short.
I'm definitely not going to mod this answer for the time being so this meta question continues to make sense and others can respond if they like. Also, since your (Lodder's) answer has been marked as accepted, it should always be the second answer. Finally, I think the comments on it fill it out a bit as an answer (though that is generally not acceptable to me, so don't let comments save an answer. Edit the answer and make it good!)