Economists have long observed that regulators at, say, the Food and Drug Adminstration face unbalanced incentives. When people die because an unsafe drug got FDA approval, everybody blames the commissioners. When people die because a potentially lifesaving drug never made it to the marketplace (or was never developed in the first place because of costly regulations), the FDA's role is largely invisible. Therefore the commissioners are biased toward excessive caution.

I know of no perfect solution to this problem, but in my new book I've offered an imperfect one: Require the FDA commissioners to hold large portfolios of pharmaceutical stock. Then they'd share in both the costs and the benefits of bringing drugs quickly to the marketplace.

This solution is imperfect because, for example, the commissioners might create roadblocks for Cialis just to keep the price of Viagra high. But with a little fine tuning it could be better than what we have now.

At the same time, we can require airline regulators hold airline stocks, make auto safety regulators hold auto company stocks, and make the Justice Department's obscenity watchdogs hold Internet stocks.

And as for the President of the United States, whose job is to make the entire country a better place to live, a diversified portfolio of American land---a shopping center in New Jersey, a ranch in Montana, some beachfront property in Monterey---might be just the ticket. To a first approximation, the President is doiing a good job when land values in the United States are high. Why shouldn't his pay package reflect that?