A really first-rate piece today by Daniel Roth at brings up the question: As SEC chairman, was Chris Cox behind the curve or ahead of his time? I've heard Wall Street watcher complain that Cox was too focused on implementing XBRL, a technology for making financial data robustly interactive, and that he failed to pay sufficient attention to more fundamental regulatory questions.

In this light, it’s not surprising that in the United States XBRL was viewed, not as a technology decision, but as a major policy initiative (with political overtones) that required a forceful voice at the top. The strong resistance and controversy that met Sarbanes-Oxley (SOX) — a wide-scale and multifaceted response to corporate malfeasance — was likely one factor that compelled the SEC to see that XBRL adoption might follow the same path.

The concern I have is that when XBRL is viewed as a major policy initiative with such high visibility by the agency’s top managers — rather than as a technology improvement implemented at lower management levels — expectations may be raised unreasonably high, especially at a time when there’s a desperate search for solutions to problems in financial markets. Given that surveys of financial professionals still show many have little knowledge of XBRL, I’m not sure it’s widely understood that XBRL financial statements are GAAP financial statements, with all their accompanying limitations. To the extent that GAAP accounting fails to provide sufficient clues about the true exposures and underlying weaknesses of financial institutions and corporations, putting GAAP statements into XBRL isn’t going to help matters.

Chairman Christopher Cox has been a strong friend of the XBRL community. We can only be thankful to Mr. Cox for the leadership he has displayed in championing interactive data and bringing an XBRL mandate close to reality. I only hope in doing so he hasn’t raised hopes too high of what XBRL can accomplish in the current reporting framework.

But was smarter regulation really possible? The Wired piece gets right into Mises/Hayek knowledge problem/fatal conceit territory, arguing:

That's why it's not enough to simply give the SEC—or any of its sister regulators—more authority; we need to rethink our entire philosophy of regulation. Instead of assigning oversight responsibility to a finite group of bureaucrats, we should enable every investor to act as a citizen-regulator. We should tap into the massive parallel processing power of people around the world by giving everyone the tools to track, analyze, and publicize financial machinations. The result would be a wave of decentralized innovation that can keep pace with Wall Street and allow the market to regulate itself—naturally punishing companies and investments that don't measure up—more efficiently than the regulators ever could.

For a radically different view of the economic situation, see Conrad Black at NRO today. This subject gets head-clutchingly complex quickly. I'd love to see a debate between Black and Roth on the subject.