[cornholio]

The regulator has not only negative feedback when they fail, but also everyday pressure from lobby and interest groups, politicians, companies etc. to do their job faster and "cut the red tape". See for example the very public shaming of FAA by Elon Musk when while expecting launch licenses, tweeting 'sad Escobar in swing' memes etc. And that was just the visible tip of an iceberg of lobbying under the table.

So there is some sort of equilibrium forming, not necessarily an optimal one, but the ratchet does loosen occasionally. For example, FDA has famously succumbed to public pressure and reformed its procedures for drugs for terminal diseases so that patients who have nothing to lose can accept much riskier treatment trials, to speed up development for such drugs.

I say it's not an optimal equilibrium because nobody incentivizes for the common good. Politicians should, but they seldom do. For example, the nuclear industry would lobby and pressure for rapid approval of their existing traditional methods, but they would, as a whole, be very aggressive against a startup with an innovative design. What better way to kill such a competition than to call your regulator, lay out your 'concerns' and bash the startup with thick rulebook, even if those rules are not at all relevant for the new thing, they still have to comply for a 'fair' playing field.