SEC Chair Christopher Cox applies the lessons of Japanese feudal history to international securities regulation:

[Tokyo] was a castle city and once the headquartes of the shogun, Tokugawa Ieyasu. You might recall that the history of his rise to power was fictionalized in James Clavell's novel Shogun. Tokugawa is a fascinating historical figure: He came to power after years of civil war, and established a system that led to centuries of peace, and the flowering of culture and art. But his was also an odd system, by modern standards, that included strict rules governing virtually every aspect of life.

Some of his rules had unintended consequences. For example, at a time when Japanese gunsmiths were producing some of the finest muskets in the world, Tokugawa centralized all firearms production in a single city. That effectively destroyed the firearms industry — which is probably what Tokugawa intended, because it had the direct consequence of keeping other feudal lords from acquiring the weapons to overthrow his rule. But it also ended up doing something he didn't intend: putting a crimp on technical innovation in Japan. That's because Japanese gunsmiths had developed very sophisticated metal working and mechanical techniques with potentially broad application.

That wasn't the only thing Tokugawa did that had unintended consequences. In order to protect Japan from the aggression of foreign colonial powers, he cut off Japan from almost all foreign contact, including prohibiting Japanese citizens from traveling abroad. That policy was successful in what it was intended to accomplish; but it also had the indirect effect of cutting off Japan from the explosion of economic and technological development that we now call the Industrial Revolution.

Tokugawa's policies offer many lessons for securities regulators today.

But that's only his view.  What if there were four different ways of seeing the exact same event?  Something to think about, when you're reading the whole thing.

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