Cecilia Kang, who writes a blog about technology policy for the Washington Post, reports today that FCC chairman Julius Genachowski has been reading my book The Big Switch. Genachowski finds (as I did) that the story of the buildout of the electric grid in the early decades of the last century can shed light on today’s buildout of a computing grid (or, as we’ve taken to saying, “cloud”).

Though, obviously, electric power and information processing are very different technologies, their shift from a local supply model to a network supply model has followed a similar pattern and will have similar types of consequences. As I argue in the book, the computing grid promises to power the information economy of the 21st century as the electric grid powered the industrial economy of the 20th century. The building of the electric grid was itself a dazzling engineering achievement. But what turned out to be far more important was what companies and individuals did with the cheap and readily available electricity after the grid was constructed. The same, I’m sure, will be true of the infrastructure of cloud computing.

As Genachowski said, “An ‘app for that’ could have been the motto for America in the 20th century, too, if Madison Avenue had predated electricity.” Back in the 1920s and 30s, “app” would have stood for “appliance” rather than “application,” but the idea is largely the same.

A commercially and socially important network has profound policy implications, not the least of which concerns access. At a conference last week, Genachowski said that “the great infrastructure challenge of our time is the deployment and adoption of robust broadband networks that deliver the promise of high-speed Internet to all Americans.” Although a network can be a means of diffusing power, it can also be a means of concentrating it.

Toward the end of his strange and haunting 1940 story “Tlön, Uqbar, Orbis Tertius,” Jorge Luis Borges described the origins of a conspiracy to inscribe in the “real world” first a fictional country, named Uqbar, and then, more ambitiously, an entire fictional planet, called Tlön:

In March of 1941 a letter written by Gunnary Erfjord was discovered in a book by Hinton which had belonged to Herbert Ashe. The envelope bore a cancellation from Ouro Preto; the letter completely elucidated the mystery of Tlön. Its text corroborated the hypotheses of Martinez Estrada. One night in Lucerne or in London, in the early seventeenth century, the splendid history has its beginning. A secret and benevolent society (amongst whose members were Dalgarno and later George Berkeley) arose to invent a country. Its vague initial program included “hermetic studies,” philanthropy and the cabala. From this first period dates the curious book by Andrea. After a few years of secret conclaves and premature syntheses it was understood that one generation was not sufficient to give articulate form to a country. They resolved that each of the masters should elect a disciple who would continue his work. This hereditary arrangement prevailed; after an interval of two centuries the persecuted fraternity sprang up again in America. In 1824, in Memphis (Tennessee), one of its affiliates conferred with the ascetic millionaire Ezra Buckley. The latter, somewhat disdainfully, let him speak – and laughed at the plan’s modest scope. He told the agent that in America it was absurd to invent a country and proposed the invention of a planet. To this gigantic idea he added another, a product of his nihilism: that of keeping the enormous enterprise a secret. At that time the twenty volumes of the Encyclopaedia Britannica were circulating in the United States; Buckley suggested that a methodical encyclopedia of the imaginary planet be written. He was to leave them his mountains of gold, his navigable rivers, his pasture lands roamed by cattle and buffalo, his Negroes, his brothels and his dollars, on one condition: “The work will make no pact with the impostor Jesus Christ.” Buckley did not believe in God, but he wanted to demonstrate to this nonexistent God that mortal man was capable of conceiving a world. Buckley was poisoned in Baton Rouge in 1828; in 1914 the society delivered to its collaborators, some three hundred in number, the last volume of the First Encyclopedia of Tlön. The edition was a secret one; its forty volumes (the vastest undertaking ever carried out by man) would be the basis for another more detailed edition, written not in English but in one of the languages of Tlön. This revision of an illusory world, was called, provisionally, Orbis Tertius and one of its modest demiurgi was Herbert Ashe, whether as an agent of Gunnar Erfjord or as an affiliate, I do not know. His having received a copy of the Eleventh Volume would seem to favor the latter assumption. But what about the others?

In 1942 events became more intense. I recall one of the first of these with particular clarity and it seems that I perceived then something of its premonitory character. It happened in an apartment on Laprida Street, facing a high and light balcony which looked out toward the sunset. Princess Faucigny Lucinge had received her silverware from Pointiers. From the vast depths of a box embellished with foreign stamps, delicate immobile objects emerged: silver from Utrecht and Paris covered with hard heraldic fauna, and a samovar. Amongst them – with the perceptible and tenuous tremor of a sleeping bird – a compass vibrated mysteriously. The princess did not recognize it. Its blue needle longed for magnetic north; its metal case was concave in shape; the letters around its edge corresponded to one of the alphabets of Tlön. Such was the first intrusion of this fantastic world into the world of reality.

I am still troubled by the stroke of chance which made me a witness of the second intrusion as well. It happened some months later, at a country store owned by a Brazilian in Cuchilla Negra. Amorim and I were returning from Sant’ Anna. The River Tacuarembo had flooded and we were obliged to sample (and endure) the proprietor’s rudimentary hospitality. He provided us with some creaking cots in a large room cluttered with barrels and hides. We went to bed, but were kept from sleeping until dawn by the drunken ravings of an unseen neighbor, who intermingled inextricable insults with snatches of milongas – or rather with snatches of the same milonga. As might be supposed, we attributed this insistent uproar to the store owner’s fiery cane liquor. By daybreak, the man was dead in the hallway. The roughness of his voice had deceived us: he was only a youth. In his delirium a few coins had fallen from his belt, along with a cone of bright metal, the size of a die. In vain a boy tried to pick up this cone. A man was scarcely able to raise it from the ground. I held it in my hand for a few minutes; I remember that its weight was intolerable and that after it was removed, the feeling of oppressiveness remained. I also remember the exact circle it pressed into my palm. The sensation of a very small and at the same time extremely heavy object produced a disagreeable impression of repugnance and fear. One of the local men suggested we throw it into the swollen river; Amorim acquired it for a few pesos. No one knew anything about the dead man, except that “he came from the border.” These small, very heavy cones (made from a metal which is not of this world) are images of the divinity in certain regions of Tlön.

Here I bring the personal part of my narrative to a close. The rest is in the memory (if not in the hopes or fears) of all my readers. Let it suffice for me to recall or mention the following facts, with a mere brevity of words which the reflective recollection of all will enrich or amplify. Around 1944, a person doing research for the newspaper The American (of Nashville, Tennessee) brought to light in a Memphis library the forty volumes of the First Encyclopedia of Tlön. Even today there is a controversy over whether this discovery was accidental or whether it was permitted by the directors of the still nebulous Orbis Tertius. The latter is most likely. Some of the incredible aspects of the Eleventh Volume (for example, the multiplication of the hronir) have been eliminated or attenuated in the Memphis copies; it is reasonable to imagine that these omissions follow the plan of exhibiting a world which is not too incompatible with the real world. The dissemination of objects from Tlön over different countries would complement this plan… The fact is that the international press infinitely proclaimed the “find.” Manuals, anthologies, summaries, literal versions, authorized re-editions and pirated editions of the Greatest Work of Man flooded and still flood the earth. Almost immediately, reality yielded on more than one account. The truth is that it longed to yield. Ten years ago any symmetry with a resemblance of order – dialectical materialism, anti-Semitism, Nazism – was sufficient to entrance the minds of men. How could one do other than submit to Tlön, to the minute and vast evidence of an orderly plant? It is useless to answer that reality is also orderly. Perhaps it is, but in accordance with divine laws – I translate: inhuman laws – which we never quite grasp. Tlön is surely a labyrinth, but it is a labyrinth devised by men, a labyrinth destined to be deciphered by men.

We are now coming to understand that the failure of the once much-hyped virtual world Second Life was inevitable. It was never that the Web would provide an alternative reality. It was that the Web, a labyrinth devised by men, would become reality. Reality, as Borges saw, longs to yield, to give way to a reduced but ordered simulation of itself. In the constraints imposed by software-mediated social and intellectual processes we find liberation, or at least relief. A meticulously manufactured Tlön can’t but displace an inhumanly arranged Earth.

The end of Borges’ story:

The contact and the habit of Tlön have disintegrated this world. Enchanted by its rigor, humanity forgets over and again that it is a rigor of chess masters, not of angels. … A scattered dynasty of solitary men has changed the face of the world. Their task continues. If our forecasts are not in error, a hundred years from now someone will discover the hundred volumes of the Second Encyclopedia of Tlön. Then English and French and mere Spanish will disappear from the globe. The world will be Tlön. I pay no attention to all this and go on revising, in the still days at the Adrogue hotel, an uncertain Quevedian translation (which I do not intend to publish) of Browne’s Urn Burial.

Computerworld reports on an extensive new Harvard Medical School study, appearing in the American Journal of Medicine, that paints a stark and troubling picture of the essential worthlessness of many of the computer systems that hospitals have invested in over the last few years. The researchers, led by Harvard’s David Himmelstein, begin their report by sketching out the hype that now surrounds health care automation:

Enthusiasm for health information technology spans the political spectrum, from Barack Obama to Newt Gingrich. Congress is pouring $19 billion into it. Health reformers of many stripes see computerization as a painless solution to the most vexing health policy problems, allowing simultaneous quality improvement and cost reduction …

In 2005, one team of analysts projected annual savings of $77.8 billion, whereas another foresaw more than $81 billion in savings plus substantial health gains from the nationwide adoption of optimal computerization. Today, the federal government’s health information technology website states (without reference) that “Broad use of health IT will: improve health care quality; prevent medical errors; reduce health care costs; increase administrative efficiencies; decrease paperwork; and expand access to affordable care.”

As was true of business computing systems in general, at least until the early years of this decade, it’s been taken on faith that big IT investments will translate into performance gains: If you buy IT, the rewards will come. Never mind that, as the researchers note, no actual studies “have examined the cost and quality impacts of computerization at a diverse national sample of hospitals.”

Now, at last, we have such a study. The researchers combed through data on IT spending, administrative costs, and quality of care at 4,000 US hospitals for the years 2003 through 2007. Their analysis found no correlation between IT investment and cost savings or efficiency at hospitals and in fact found some evidence of a link between aggressive IT spending and higher administrative costs. There appeared to be a slight correlation between IT spending and care quality, in some areas, though even here the link was tenuous:

We found no evidence that computerization has lowered costs or streamlined administration. Although bivariate analyses found higher costs at more computerized hospitals, multivariate analyses found no association. For administrative costs, neither bivariate nor multivariate analyses showed a consistent relationship to computerization. Although computerized physician order entry was associated with lower administrative costs in some years on bivariate analysis, no such association remained after adjustment for confounders. Moreover, hospitals that increased their computerization more rapidly had larger increases in administrative costs. More encouragingly, greater use of information technology was associated with a consistent though small increase in quality scores.

We used a variety of analytic strategies to search for evidence that computerization might be cost-saving. In cross-sectional analyses, we examined whether more computerized hospitals had lower costs or more efficient administration in any of the 5 years. We also looked for lagged effects, that is, whether cost-savings might emerge after the implementation of computerized systems. We looked for subgroups of computer applications, as well as individual applications, that might result in savings. None of these hypotheses were borne out. Even the select group of hospitals at the cutting edge of computerization showed neither cost nor efficiency advantages. Our longitudinal analysis suggests that computerization may actually increase administrative costs, at least in the near term.

The modest quality advantages associated with computerization are difficult to interpret. The quality scores reflect processes of care rather than outcomes; more information technology may merely improve scores without actually improving care, for example, by facilitating documentation of allowable exceptions …

[A]s currently implemented, health information technology has a modest impact on process measures of quality, but no impact on administrative efficiency or overall costs. Predictions of cost-savings and efficiency improvements from the widespread adoption of computers are premature at best.

There is a widespread faith, beginning at the very top of our government, that pouring money into computerization will lead to big improvements in both the cost and quality of health care. As this study shows, those assumptions need to be questioned – or a whole lot of taxpayer money may go to waste. Information technology has great promise for health care, but simply dumping cash into traditional commercial systems and applications is unlikely to achieve that promise – and may backfire by increasing costs further.

A correspondent pointed me to this document, dated March 30, 1965, in which an executive with Western Union, the telegraph company, lays out the company’s ambitious plan to create “a nationwide information utility, which will enable subscribers to obtain, economically, efficiently, immediately, the required information flow to facilitate the conduct of business and other affairs.”

The idea of a “computing utility” was much discussed in the 1960s, but this document nonetheless provides a remarkably prescient outline of what we now call cloud computing. Some excerpts:

Over the past century or more there have evolved in this country a limited number of basic systems serving the general public – a group generally termed “public utilities.” These utilities serve, among others, such fields as transportation; communications (telegraph, telephone, cable, radio, the broadcast services, etc.); and the energy systems, distributing power.

What is now developing, very rapidly, is a critical need – as yet not fully perceived – for a new national information utility which can gather, store, process, program, retrieve and distribute on the broadest possible scale, to industry; to the press; to military and civilian government; to the professions; to department stores, banks, transportation companies and retailers; to educational institutions, hospitals and other organizations in the fields of public health, welfare and safety; and to the general public, virtually all of the collected useful intelligence available, through locally-, regionally- and nationally-linked systems of computers. Just as an electrical energy system distributes power, this new information utility will enable subscribers to obtain, economically, efficiently, and immediately, the required information flow to facilitate the conduct of business, personal and other affairs.

There is no substantial technical bar even now to the establishment of such a nationwide information utility. Computers and associated equipment, the methodology, the storage and retrieval techniques, the knowledge required to provide the very broad bandwidth required for high-speed data transmission – all these exist today. Their harnessing into a national system presents no technical problems essentially more difficult than the strategic placements a half-century ago of steam turbines to create electrical energy, and the related building of power grids … Indeed, the computer and the turbine share a common characteristic in that (within appropriate limits of optimum sizes and capacities) the larger the unit, the more efficient it is in terms of unit-cost production … The cardinal economic principle at issue here is that an information utility serving a large number of users can provide service to each more economically than he can provide it for himself, just as a power system can provide energy to its customers at lower cost than they, individually, can generate it for themselves …

We envision, then, the expansion of the existing plant, offices, personnel, and nationwide operations of Western Union, to transform it into a national information system [that] would furnish a uniform, efficient, integrated information service to meet the needs of all types of users, everywhere …

It might be added, here, that any movement by the Bell System to substitute itself for Western Union as the nation’s information utility, as well as the pervasive, dominant power in the telephone field, would obviously create profound national concern on the score of “giantism” – since any further and large assumption of added power would bring about one entity of even more menacing size than now …

Western Union has the skills and experience that uniquely qualify if for such a role; the public need for such a new utility is growing at a rapid rate; the field is already large and the potential tremendous – probably at least as large as any other national utility that exists today.

When the history of cloud computing is written, it may be that Western Union will play the role that Xerox now plays in the history of the personal computer: the company that saw the future first, but couldn’t capitalize on its vision.

Could the status quo of the commercial internet be shaken as a result of an old man’s misinterpretation of a question?

Maybe so.

Earlier this month, Rupert Murdoch sat down for an interview with Sky News Australia (a company that Murdoch’s News Corporation partially owns). A little way into the interview, the following exchange took place:

Interviewer: The other argument from Google is that you could choose not to be on their search engine … so that when someone does do a search, your web sites don’t come up. Why haven’t you done that?

Murdoch: Well, I think we will. Uh, but that’s when we start charging. We do it already, with the Wall Street Journal. We have a wall, but it’s not right to the ceiling. You can get usually the first paragraph of any story, but if you’re not a paying subscriber to wsj.com, there’s immediately – you get a paragraph and a subscription form.

Murdoch seemed to be saying – and was widely reported to have said – that News Corp is planning to block Google from indexing its content. But when you listen to his full answer, in which he confuses opting out of Google’s search engine with raising pay walls on sites, it’s hard to know what he was actually intending to say.

But inadvertent or not, Murdoch’s suggestion that he’ll pull News Corp content out of Google’s database could turn out to be a brilliant signaling strategy, one that, as Mike Arrington has written, could ultimately alter the balance of power on the Net.

Last spring, in my post Google in the Middle, I described the dilemma in which newspapers find themselves when it comes to to Google’s search engine. On the one hand, Google is an important source of traffic for their sites. On the other hand, Google prevents them from making decent money online – by massively fragmenting traffic, by undermining brand power, and by turning news stories into fungible commodities. Individual newspapers can’t live with Google, but they can’t live without it either:

When it comes to Google and other aggregators, newspapers face a sort of prisoners’ dilemma. If one of them escapes, their competitors will pick up the traffic they lose. But if all of them stay, none of them will ever get enough traffic to make sufficient money. So they all stay in the prison, occasionally yelling insults at their jailer through the bars on the door.

Of course, there has always been a way to break out of the prison: If a critical mass of newspapers were to opt out of Google’s search engine simultaneously, they would suddenly gain substantial market power. Newspapers are struggling, but they remain, by far, the world’s dominant producers of hard news. That gives them, as a group, a great deal of leverage over companies like Google who depend on a steady stream of good, fresh online content. Google needs newspapers at least as much as newspapers need Google – a fact that’s been largely hidden up to now.

What Murdoch effectively did in his interview with Sky News was to send a signal to other newspaper companies: We’ll opt out if you’ll opt out. Murdoch positioned himself as the would-be ringleader of a massive jailbreak, without actually risking a jailbreak himself.

There are signs that the signal is working. Bloomberg reports today that the publishers of the Denver Post and the Dallas Morning News are now considering blocking Google in one way or another. More ominously (if you’re Google), Microsoft has apparently responded to the signal by offering to pay News Corp to make Bing the exclusive search engine for its content. Microsoft doesn’t have a lot of weapons to use against Google in the search business, but getting prominent news organizations to block Google would be a very powerful weapon. (Steve Ballmer would be more than happy to reduce the basic profitability of the search business, as that would inflict far more damage on Google than on Microsoft.)

Faced with a large-scale loss of professional news stories from its search engine, Google would likely have little choice but to begin paying sites to index their content. That would be a nightmare scenario for Google – and a dream come true for newspapers and other big content producers.

Of course, for now this is all just speculation. The odds are that none of it will come to pass. The idea that newspapers might come together to pursue a radical and risky strategy seems far-fetched. Then again, maybe the time has finally come for newspapers to take a deep collective breath and apply the leverage they still hold. They don’t have a whole lot left to lose.

Here are links to a few pieces I’ve written that have appeared over the last week or so:

The Price of Free, in the New York Times Magazine, looks at how online video is beginning to reshape the TV business.

The San Francisco Chronicle ran my review of Ken Auletta’s new book, Googled.

As part of its online retrospective about the last decade, Newsweek has a brief piece I wrote about how the Google Guys have altered the way we think.

Germany’s Die Zeit ran an article I wrote about the implications of cloud computing.

Also, today’s edition of Le Figaro, in France, has a piece that draws on my ideas about cloud computing.

Singularity University appears to be in full swing now, which is a great comfort to me. Already I feel much less fearful about being turned into a sex slave for a gang of immeasurably brainy robots.

Ted Greenwald, from Wired’s Epicenter blog, has been hanging out at the Sing U campus – it feels, he says, like “a top-secret installation out of a James Bond movie, crowned with strange domed buildings and adorned by sculptures of airships” – and auditing some classes. You can find a rundown of his reports here.

It bothers me, though, that Sing U doesn’t appear to have a school mascot yet. I certainly understand that the university is unlikely to be a sports powerhouse, but, still, it’s bound to have a few teams – fencing and mental gymnastics, at least – so it really needs a mascot to rally the student body. I’ve been doing some brainstorming and have come up with a few ideas:

The Exponential Curves

The Uploaded Brains

The Odd Ducks

The Supplements

The Transhumans

But these pale beside what I’ve come to consider to be the obvious choice: The Singularity University Methuselahs.

Of course, you can’t have a school mascot without a school fight cheer. I’ve come up with one of those too:

Sing! U!

Outlast ’em!