>Game it out - if you issue guidelines, people abuse them,

You wind up with smaller gaps with the qualitative and rules based approach than you do with the whack-a-mole list.

>then government agencies get in trouble (isn't it your job to stop this kind of thing?), so government agencies issue strict rules.

Government agencies tend to grow in scope and resources when they screw up. Even when punished, it's not like they go bankrupt and everyone is out of a job.

>Bureaucracies have many fathers, the society we have is the result of conflict and incentives.

And ideology. You can incentivize the Taliban all you want they won't send their girls to school. I postulate that the failure of american regulatory to systems to regulate without sucking is driven in large part by what goes on in the heads of the subset of people who spec out, create and operate said systems.