I understand your point, but toilets are a really bad example. In my opinion, toilets, light bulbs and automobile fuel efficiency mandates are excellent examples of government rules spurring useful and necessary technological change.
I think people forget how awful the old toilets were before water use restrictions were mandated. As late as early 90's, toilets were uniformly pieces of shit -- 5-6 gallons per flush, low velocity, little attention paid to flushway design, and they could flood your bathroom with a single stoppage. And this was really easy to do. It was easy (especially for a kid) to mistakenly believe a clog was resolved, flush the toilet to check, and end up with five gallons of water on your floor. Fuck that. I'm not going back. I'm not going back to the dark ages, fighting shitty toilets, constantly changing burned out incandescent light bulbs that might collectively suck up kilowatts of electricity and require metal fixtures lest they burn your house down, and constantly fueling up an inefficient car that repays me with noxious fumes.
Toilet manufacturers were lazy. They had no reason to innovate, because there was no consumer demand for it. People simply didn't know what a better toilet would look like, and water was cheap enough that it was never going to happen without a law mandating it.
I occasionally (not often) hear someone wax nostalgic about old toilets, saying that the new ones clog more. It's certainly true that there are bad low-flow toilets, and the technology took a little while to develop, but I also think these folks simply forget how often the old toilets clogged.
I'm a real estate investor and I still encounter these monstrosities regularly. Old toilets are pretty much the first things I replace in a house. I started off years ago using American Standard Champion toilets, but I've switched over completely to Toto. I've installed dozens of Toto low-flow toilets. I have five Totos in my own two houses, and I've never once, in over a decade, had to flush twice due to toilet paper. And I have a wife who uses a lot of toilet paper. When these toilets do clog, you don't have to worry nearly as much about flooding. Toto's bowls are flushways are computer designed and very well tuned. When I do manage to clog one, it's never taken more than a couple strokes with a Korky Beehive plunger to release it, and I don't have to worry about an errant flush flooding my bathroom.
Don't take my word for it though. Ask a plumber. Spend a little time on plumbing forums, hear what plumbers say about toilets. For example, here's a random quote I picked from a quick google search by Terry Love, who created the hugely active terrylove.com plumbing forums:
> "The old five gallon toilets needed a plunger by them. I grew up with five gallons, and plunging was the order of the day. With the new bowls, most people would use a plunger so rarely, that "finding" the plunger is a problem. In my mothers home, three bathrooms and old toilets replaced with the new low water usage toilets and constantly 30-40 people on weekends, we went several years without needing a plunger. That's how good the new stuff is. The new low flow flush with so much power that they even have instructions about what high flow fittings should be used."