I appreciate your response, and I'm struggling to take it seriously, but I think you just admonished me for being one of those knee-jerk deregulationists while in the same breath suggesting that you can replace 5000 pages of regulation with two sentences.
I'll do my best to add a serious comment though:
The government has no business defining products. The government doesn't know what the market wants or what companies can offer, and it has no idea what the appropriate supply and demand curves look like or what features people value or not.
Again, we just witnessed a situation in which an unregulated part of the market bit United in the ass and cost them a few million dollars, and now are they are rushing to fix it, along with all of the other airlines. No intervention from the government was needed, and now the problem no longer exists. I don't understand why you think the government stepping in and "defining" a product is going to help.
There are many reasons why, but I'll just pull one out of my head: Governments have no idea what's coming. Any regulations or definitions for service unavoidably make it harder for new entrants to offer unique services and products.
Maybe one of the airlines wants to move to your two-tiered system. If the government mandates it, then we have one choice, whether it is the best or not.
I struggle to lay out my argument any more clearly, but I feel like you still, deep down, believe that the government has this secret cabal of smart people who are going to step in and, for example, sensibly define all of our products for us. Who are these people?
/edit In the spirit of trying to agree on something, I will agree that regulations are too complex across the board. It's one of my personal causes. That said, calling for "smarter" regulation is not going to help.