Peter Orszag has an illuminating post about a subject that is sort of ‘common knowledge’ to anyone who has had to deal with multiple government agencies at once, and that is the technology gap between the private and public sectors:

When many of my colleagues went from the cutting-edge, social media-focused Obama presidential campaign into the federal government, they remarked that it was like going from an X-box to an Atari.

Indeed, a significant IT gap has developed over the past decade and a half between the public and private sectors – and that is a big part of the productivity divide between the two. Closing this IT gap is key to boost efficiency and make government more open and responsive to the wants and needs of the public.

This is a classic example of a complexity catastrophe. Recall that networks face a tradeoff between two opposing forces: degrees of possibility and degrees of freedom. Large networks have an advantage in informational scale; that is, its information processing power increases exponentially upon the addition of extra nodes. This property of networks is likely the key which allowed humanity to advance technologically, instead of simply building stone tools more cheaply.

Of course on some level, the larger the network, the more densely connected the nodes (although humans have invented hierarchy as a way to partially mitigate this problem). As I mentioned in my linked post, more nodes creates greater complexity. While increasing the degrees of possibility of the network, it also decreases the degrees of freedom which the network has to react to specific shocks. This is the reason that Peter Orszag’s speech probably amounts to little more than that — a speech. The government obviously has the means to update its information infrastructure, however due to the fact that changing one part of the network virtually necessitates changing many others, some that don’t even interact in any meaningful sense, once a standard has become entrenched, it becomes very hard to change the network configuration.

Whereas the silicon valley startups that the Obama campaign whiz kids came from had exceptional degrees of freedom to adapt and react to changing technological forces (a thin network, so to speak), the government is exactly the opposite — and people who are accustomed to having large degrees of freedom ostensibly find this problem very frustrating. Indeed, information technology could save the Federal government untold amounts of money, and even make transfer payments more economically efficient — unfortunately, 250 years of lawmaking structure is running up against a decade of rapid technological change…and thus we have a disconnect between possibilities and freedom, a complexity catastrophe.

[H/T Matt Yglesias]