> Regulate the industries that need to be regulated of course - finance, health care, etc. Well, most regulation is really about building Maginot lines. Sarbox

> Regulate the industries that need to be regulated of course - finance, health care, etc. Well, most regulation is really about building Maginot lines. Sarbox didn't prevent the financial crisis, and Finreg is unlikely to prevent the next one. Similarly, health care regulation can't solve the fundamental problem, which is that we have access to life-saving technologies (like heart transplantation and brain surgery) which require too much in the way of hard-to-make machines and highly trained personnel for us to mass produce on a very large scale. Over time, cutting edge technology becomes mass produced/cheap (like cars, cell phones, computers), but with health care it particularly stings when you can't afford the latest model. Note that routine healthcare checkups which are based on direct patient-to-doctor payments have always been affordable -- it's the high-tech stuff that can be priced out of reach. Regulation can't solve that fundamental problem of scarcity, and causes many structural changes that are likely to make it much worse. Here is a great example: http://mobihealthnews.com/6932/interview-the-iphone-medical-app-denied-510k/ http://mobihealthnews.com/6932/interview-the-iphone-medical-... “We have determined the device is not substantially equivalent to devices marketed in interstate commerce prior to May 28, 1976, the enactment date of the Medical Device Amendments, or to any device which has been reclassified into class I (General Controls) or class II (Special Controls). This decision is based on the fact that your device has a new indication for displaying medical images for diagnostic use on a mobile/portable device…that alters the diagnostic effect, impacting safety and effectiveness, and is therefore a new intended use. Furthermore, your device has new technological characteristics that could adversely affect safety and effectiveness and raise new types of safety and effectiveness questions… Therefore, this device is classified by statute into class III (Premarket Approval), under Section 513(f) of the Federal Food, Drug, and Cosmetic Act (Act).” For those who don't speak FDA-ese, what they are saying is that a simple iPhone interface to an existing, FDA-cleared piece of imaging software will require class III approval -- the highest regulatory bar, the same bar as pacemakers and implantable devices, costing more than $250,000 in application fees alone plus countless millions in regulatory consultants. All this for a free iPhone app which won the WWDC 2008 award. Obviously it's not worth it for the developers to pursue that kind of clearance, as few iPhone apps will gross enough to justify a $250,000 investment, let alone a multimillion dollar one. Moreover, if you noticed, the FDA language is all based on "precedent" -- so once you take the hit and push something through class III for tens of millions, someone can follow your precedent and get class II clearance for "only" a few million. So that's a concrete example of structural disincentives to innovation caused by regulation. And the following study by Stanford professors shows that this kind of action by the FDA is more the rule than the exception: http://www.advamed.org/NR/rdonlyres/040E6C33-380B-4F6B-AB58-9AB1C0A7A3CF/0/makowerreportfinal.pdf http://www.advamed.org/NR/rdonlyres/040E6C33-380B-4F6B-AB58-...