You raise two main themes here: NASA/space travel has grown into a Byzantine set of rules, and also that it is an accepted cost of doing business that you'll lose lives.
Do you believe that we'd be better served by simpler (but potentially much more dangerous) craft flown by private industry? If not, why is the NASA approach better, seeing as how it is mired in both politic from without and bureaucracy/process from within?
Yes - I believe a loss of life is acceptable and inevitable. The state of the art is currently the bloated NASA system. My hope is that a leaner, private approach will be more effective and safer. I'm not sure I'm willing to make a prediction on whether that will be true or not. For one thing, NASA doesn't have the problem of profit to be concerned about.
I wish I could upvote your comments more than once. It's interesting that this forum that celebrates taking extreme (financial) risks in exchange for possibly great (financial) reward has a hard time with NASA scientists, engineers, and astronauts taking calculated risks. 100% safety is not a productive strategy.
Hell, even 20-50% safety isn't necessarily a productive strategy, if you pay too much for it.
I think the main trick is to reduce the unit cost/training investment in astronauts so that we can send up more, and making very cheap vehicles to get them there, so that we'll not have to worry about losing a big investment when (not if) something goes wrong. Putting hundreds of millions of trained meat into billions of dollars worth of aerospace tech is not sustainable.
If it would get me to the moon with a 1 in 3 chance, hell, give me a banana and call me Albert VII.
"Extreme financial risk might or might not kill people.
Space shuttles exploding will definitely kill people."
Don't make such a big jump from the first to the second. You could have also said, "Extreme space exploration risk might or might not kill people." Fact is, in both finances and space exploration, in rare cases it has led to the death of those involved (directly or indirectly). But those cases are rare and the rewards are so great, and so we press on.
Why would we allow a private craft to be more dangerous? They probably will be, but because they will be soon be subject to even more strict rules, and sneaky things will have to be done to compete in that environment (see the financial system).
When the person making the rules (the government) is no longer subject to the rules, but held responsible when they're broken, do you think they'll get looser or stricter?
And now not only does your company have to obey safety laws or whatever else applies, you've got insurance companies, shareholder lawsuits, and so on.
The Challenger/Columbia astronauts are (correctly) treated as heroes who sacrificed for the greater good. The Space Inc. astronauts who die will be considered victims of corporate negligence.
I have full confidence in SpaceX having safety at the fore-front of their manned spaceflight program. If they have a fatal mishap and loose the crew, the consequence is that they would effectively be out of business. They would go Bankrupt.
Loosing 7 lives is a tragedy. For the CEO, knowing loosing those lives will cost the company everything, they are going to pay more attention to safety, than a government bureaucracy.