I finally read Glenn Reynolds' article on nanotechnology and regulatory policy, and have a couple of comments, which I'd like to share with everyone rather than do the decent thing and give Prof. Reynolds the chance to respond first.

1) When discussing potential regulatory risks, I think he leaves out one that may become a big deal as the technology becomes more viable - entaglement with health-care politics. Specifically, the history of most new technologies - also applicable to new medical treatments - is that they start out hideously expensive and as such are only available to the rich, and become mass-market as the price drops (with the two reinforcing each other in a virtuous circle). I assume (correct me if you feel this is incorrect) that nanotech medical treatments would also be pretty expensive in their initial phases, even as they really work.
What happens in the interval between demonstrated effectiveness and price reduction? If such treatments are initially covered by insurance (as may be mandated by Congress) then that would place another sever stress on the system, maybe a back-breaking one. If it is not initially covered by insurance, what will happen when such treatments of demonstrated effectiveness are only available to the rich (even for a short time)? Will there be price controls? (If so, that would be an efficient way to destroy the research in the U.S.).
The caterwauling over the "digital divide" of Internet access has fortunately died down without producing any truly harmful policies. Would the same be true when the selectively-available resource is one that is directly live-saving? I'm not sure.
An excellent example of the mindset behind such potential reactions was set forth by Paul Krugman in a 1997 piece for the NY Times Magazine, discussing the potential future of health care. (Click here, then on the "American Economy" sidebar. Scroll down to and click on the 3/9/97 article.)

Some might then say ... we must abandon the idea that everyone is entitled to state-of-the-art medical care. (That is the hidden subtext of politicians who insist that Medicare is not being cut -- that all that they are doing is slowing its growth.) But are we really prepared to face up to the implications of such an abandonment?
We have come to take it for granted that in advanced nations almost everyone can at least afford the essentials of life. Ordinary people may not dine in three-star restaurants, but they have enough to eat; they may not wear Bruno Maglis, but they do not go barefoot; they may not live in Malibu, but they have a roof over their head. Yet it was not always thus. In the past, the elite were physically superior to the masses, because only they had adequate nutrition: in the England of Charles Dickens, the adolescent sons of the upper class towered an average of four inches above their working-class contemporaries. What has happened since represents a literal leveling of the human condition, in a way that mere comparisons of the distribution of money income cannot capture.
There is really only one essential that is not within easy reach of the ordinary American family, and that is medical care. But the rising cost of that essential -- that is, the rising cost of buying the ever-growing list of useful things that doctors can now do for us -- threatens to restore that ancient inequality with a vengeance.
Suppose that Lyndon Johnson had not signed Medicare into law in 1965. Even now there would be a radical inequality in the prospects of the elderly rich and the ordinary older citizen; the affluent would receive artificial hip replacements and coronary bypasses, while the rest would (like the elderly poor in less fortunate nations) limp along painfully -- or die.
The current conventional wisdom is that the budget burden of health care will be cured with rationing -- the Federal Government will simply decline to pay for many of the expensive procedures that medical science makes available. But what if, as seems likely, those procedures really work -- if there comes a time when those who can afford it can expect to be vigorous centenarians, and perhaps even buy themselves smarter children, while those who cannot can look forward only to the biblical threescore and ten. Is this really a tolerable prospect?
...For all we know, the future may belong to the medical welfare state, a state whose slogan might be "From each according to his ability, to each according to his needs."

I think that Congress would feel intense pressure to meddle with the distribution of nanotechnological medical treatments in the early stages of availability, and I doubt the consequences would be beneficial.

2) As an aside, Reynolds alludes to Cass Sunstein's arguments that requiring "best available practices" stifles innovation. Why? In the private sector, wouldn't such a requirement create an incentive to innovate, as the first to discover the new "best practice" would gain a competitive advantage over its rivals who need to catch up?
The reason I fixate on this point is that one of the Official Regulatory Policy Consultants to Blissful Knowledge, Prof. Charles Sabel of Columbia Law School (who is as yet unaware of his position), uses it as one of the bases for his ideas for saving the world, or at least U.S. regulatory policy. He argues that such pressure to innovate can be harnessed for use in the public sector. For those who are interested, check out just about any of his papers or specifically, this Columbia Law Review article (warning: it is NOT easy reading).