Why do the most regulated industries have the fewest scandals?

Commercial aviation kills 0.07 people per billion passenger-miles. Cars kill 7.3. That’s a hundred-to-one ratio.

Aviation is also the most regulated form of transport on earth. Every component tracked. Every incident investigated. Every pilot recertified. Every maintenance record auditable.

If regulation is the innovation-stifling burden that its critics claim, aviation should be a mess. Instead it’s the safest way to move a human being from one place to another.

This isn’t a coincidence. It’s a pattern.

The Scoreboard

Aviation. Fatal accident rates have declined more than 99% since 1959. In the most recent five-year period, the rate was one fatal accident per 810,000 flights. The FAA, ICAO, and national aviation authorities regulate everything from pilot rest hours to bolt torque specifications.

Nuclear energy. Zero deaths of workers or public from radiation due to a U.S. commercial reactor incident. Deaths per terawatt-hour: 0.03 — making nuclear the second-safest energy source on earth, behind only solar. The NRC operates as an independent regulator with authority to shut down any reactor at any time.

Pharmaceutical manufacturing. In countries with strict FDA-equivalent regulation, fewer than 1% of medicines are counterfeit. In countries with weak regulatory frameworks, that number is 10–30%. The WHO estimates 72,000 to 169,000 children die annually from pneumonia treated with substandard antibiotics — almost entirely in less-regulated markets.

Now compare:

Cryptocurrency. Essentially unregulated until 2023. Result: over $2 trillion in market losses in a single year. FTX alone lost $8 billion in customer funds. Terra/Luna collapsed and took $45 billion with it. The cascade — Three Arrows Capital, Voyager, Celsius — was possible precisely because there were no capital reserve requirements, no mandatory audits, no segregation of customer funds.

Fast fashion supply chains. Minimally regulated in producing countries. Rana Plaza collapsed in 2013, killing 1,134 workers in a Bangladesh garment factory. Workers had returned to work despite visible structural cracks because factory owners ignored warnings. The industry generates 92 million tonnes of textile waste annually.

The pattern is not subtle.

The Natural Experiment

In 2012, a compounding pharmacy in Massachusetts killed 64 people and sickened 798 with contaminated steroid injections. Fungal meningitis, traced to the New England Compounding Center.

This case is instructive because it’s a near-perfect controlled experiment.

Standard pharmaceutical manufacturers operate under FDA Current Good Manufacturing Practice regulations — mandatory sterility testing, facility inspections, batch tracking, quality control systems. Compounding pharmacies operated under lighter state-level oversight. Both made injectable drugs.

NECC was shipping drugs before sterility test results came back. They never notified customers when results showed contamination. They used expired ingredients. They filled prescriptions using fictional names — including “Michael Jackson” and “Diana Ross.”

The FDA-regulated manufacturers weren’t producing contaminated drugs. The lightly-regulated compounding pharmacy was. Same product category. Different regulatory framework. Sixty-four people dead.

A published study in the Journal of the American Pharmacists Association later confirmed a statistically significant difference in recall severity between FDA-regulated manufacturers and compounding pharmacies, with compounded products showing dramatically higher rates of the most serious recalls.

The Explanation Nobody Wants to Hear

The standard narrative about regulation is that it’s a cost. A burden. A drag on innovation and competitiveness.

What if it’s the opposite?

Not in every case and not automatically. Bad regulation exists. Regulatory capture exists. Compliance theater exists.

But the data is telling a consistent story across aviation, nuclear, and pharmaceuticals: the most constrained industries have the lowest rates of catastrophic failure.

The constraint didn’t create competence. It made incompetence visible before it became catastrophic.

When you’re required to document every decision, trace every component, and explain every deviation — when your operations have to survive scrutiny by an independent authority with the power to shut you down — you build systems that actually work. Not because you’re morally superior. Because you can’t hide what doesn’t.

The “burden” was actually a minimum standard that forced real understanding of your own operations. And that understanding turned out to be valuable independent of the regulation that required it.

The Question This Raises

If constraint produces better outcomes, then the industries fighting hardest against regulation might not be protecting innovation.

They might be protecting the gap between what they claim their operations look like and what their operations actually are.

The companies that can survive scrutiny aren’t the ones asking to be left alone.