Absolutely true, but it does not explain everything. Talking as a psychologist, I can unfortunately report that this letter has some merit to it, and I can back it up with at least an example: Zimbardo's prison experiment regarding the psychological effects of being a prisoner and a prison guard have deeply changed the way we perceive group dynamics, in-group vs out-group processes and so on.
It is however impossible to replicate it, or do derivative work because the ethics guide of the APA forbid such treatment of individuals (except when torturing them for the "good of the country" - then APA has no problem sending psychologists to Guantanamo). Milgrams work on conformity would be another perfect example. The ironic part is that APA recently had a posting on their webpage celebrating 50 or so years since the groundbreaking experiment.
Many other experimental designs are also not possible due to strict ethic codes, though this was not the case before the 70-80s.
A bit of freedom is badly, badly needed and it does not involve financial aspects.
Disk crisis, please clean up!