The idea of increasing transparency in government fascinates me. I’ve thought about it mostly in the context of making legislative action, campaign funding, and court rulings accessible online and fully indexable for searching and other transformative uses.
Kurt Cagle considers an application of this transparency that had not occurred to me. He suggests that using standard, structured data formats, in particular eXtensible Business Reporting Language (XBRL), may improve the odds that regulators could enforce existing laws and spot possible trends toward bad events, like the recent crash.
Cagle realistically addresses the limitations of a simple data format, namely that it doesn’t improve the quality of output from garbage input, i.e. cooked books. He also puts his finger on one of the bigger limiters, that public corporations may not welcome increased scrutiny that may be at odds with how they posture to improve investor valuation. In his conclusion, he does hint that a few good actors may help swing us towards a more honest norm, though, that may counterbalance the urge to obfuscation at least a bit.
The biggest upside he points to is the ability to automate analysis. Bad actors may become easier to spot, bogus data a bit more obvious to human discretion. Anything that increases the odds of regulators, legislators and activists to spot and address problems is to the good, even if it is only a part of an overall solution.
My only criticism is I think that there is another source of friction in the way of adopting this sort of transparency. I think the regulators have to have the will to require and use open data formats. Cagle does imply that a silver lining to our current economic woes may be to overcome this challenge, to present unavoidable pressure to do better, perhaps by adopting better transparency in any form.