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“Tip-of-the-Tongue Syndrome,” Transactive Memory, and How the Internet Is Making Us Smarter | Brain Pickings

“Tip-of-the-Tongue Syndrome,” Transactive Memory, and How the Internet Is Making Us Smarter | Brain Pickings.

Vannevar Bush’s ‘memex’ — short for ‘memory index’ — a primitive vision for a personal hard drive for information storage and management.

“At their best, today’s digital tools help us see more, retain more, communicate more. At their worst, they leave us prey to the manipulation of the toolmakers. But on balance, I’d argue, what is happening is deeply positive. This book is about the transformation.”

[…]

One of his most fascinating and important points has to do with our outsourcing of memory — or, more specifically, our increasingly deft, search-engine-powered skills of replacing the retention of knowledge in our own brains with the on-demand access to knowledge in the collective brain of the internet. Think, for instance, of those moments when you’re trying to recall the name of a movie but only remember certain fragmentary features — the name of the lead actor, the gist of the plot, a song from the soundtrack. Thompson calls this “tip-of-the-tongue syndrome” and points out that, today, you’ll likely be able to reverse-engineer the name of the movie you don’t remember by plugging into Google what you do remember about it.

[…]

“Tip-of-the-tongue syndrome is an experience so common that cultures worldwide have a phrase for it. Cheyenne Indians call it navonotootse’a, which means “I have lost it on my tongue”; in Korean it’s hyeu kkedu-te mam-dol-da, which has an even more gorgeous translation: “sparkling at the end of my tongue.” The phenomenon generally lasts only a minute or so; your brain eventually makes the connection. But … when faced with a tip-of-the-tongue moment, many of us have begun to rely instead on the Internet to locate information on the fly. If lifelogging … stores “episodic,” or personal, memories, Internet search engines do the same for a different sort of memory: “semantic” memory, or factual knowledge about the world. When you visit Paris and have a wonderful time drinking champagne at a café, your personal experience is an episodic memory. Your ability to remember that Paris is a city and that champagne is an alcoholic beverage — that’s semantic memory.”

[…]

“Writing — the original technology for externalizing information — emerged around five thousand years ago, when Mesopotamian merchants began tallying their wares using etchings on clay tablets. It emerged first as an economic tool. As with photography and the telephone and the computer, newfangled technologies for communication nearly always emerge in the world of commerce. The notion of using them for everyday, personal expression seems wasteful, risible, or debased. Then slowly it becomes merely lavish, what “wealthy people” do; then teenagers take over and the technology becomes common to the point of banality.”

Thompson reminds us of the anecdote, by now itself familiar “to the point of banality,” about Socrates and his admonition that the “technology” of writing would devastate the Greek tradition of debate and dialectic, and would render people incapable of committing anything to memory because “knowledge stored was not really knowledge at all.” He cites Socrates’s parable of the Egyptian god Theuth and how he invented writing, offering it as a gift to the king of Egypt,

“This discovery of yours will create forgetfulness in the learners’ souls, because they will not use their memories; they will trust to the external written characters and not remember of themselves. The specific which you have discovered is an aid not to memory, but to reminiscence, and you give your disciples not truth, but only the semblance of truth; they will be hearers of many things and will have learned nothing; they will appear to be omniscient and will generally know nothing; they will be tiresome company, having the show of wisdom without the reality.”

That resistance endured as technology changed shape, across the Middle Ages and past Gutenberg’s revolution, but it wasn’t without counter-resistance: Those who recorded their knowledge in writing and, eventually, collected it in the form of books argued that it expanded the scope of their curiosity and the ideas they were able to ponder, whereas the mere act of rote memorization made no guarantees of deeper understanding.

Ultimately, however, Thompson points out that Socrates was both right and wrong: It’s true that, with some deliberately cultivated exceptions and neurological outliers, few thinkers today rely on pure memorization and can recite extensive passages of text from memory. But what Socrates failed to see was the extraordinary dot-connecting enabled by access to knowledge beyond what our own heads can hold — because, as Amanda Palmer poignantly put it, “we can only connect the dots that we collect,” and the outsourcing of memory has exponentially enlarged our dot-collections.

With this in mind, Thompson offers a blueprint to this newly developed system of knowledge management in which access is critical:

“If you are going to read widely but often read books only once; if you going to tackle the ever-expanding universe of ideas by skimming and glancing as well as reading deeply; then you are going to rely on the semantic-memory version of gisting. By which I mean, you’ll absorb the gist of what you read but rarely retain the specifics. Later, if you want to mull over a detail, you have to be able to refind a book, a passage, a quote, an article, a concept.”

This, he argues, is also how and why libraries were born — the death of the purely oral world and the proliferation of print after Gutenberg placed new demands on organizing and storing human knowledge. And yet storage and organization soon proved to be radically different things:

“The Gutenberg book explosion certainly increased the number of books that libraries acquired, but librarians had no agreed-upon ways to organize them. It was left to the idiosyncrasies of each. A core job of the librarian was thus simply to find the book each patron requested, since nobody else knew where the heck the books were. This created a bottleneck in access to books, one that grew insufferable in the nineteenth century as citizens began swarming into public venues like the British Library. “Complaints about the delays in the delivery of books to readers increased,” as Matthew Battles writes in Library: An Unquiet History, “as did comments about the brusqueness of the staff.” Some patrons were so annoyed by the glacial pace of access that they simply stole books; one was even sentenced to twelve months in prison for the crime. You can understand their frustration. The slow speed was not just a physical nuisance, but a cognitive one.”

The solution came in the late 19th century by way of Melville Dewey, whose decimal system imposed order by creating a taxonomy of book placement, eventually rendering librarians unnecessary — at least in their role as literal book-retrievers. They became, instead, curiosity sherpas who helped patrons decide what to read and carry out comprehensive research. In many ways, they came to resemble the editors and curators who help us navigate the internet today, framing for us what is worth attending to and why.

[…]

“The history of factual memory has been fairly predictable up until now. With each innovation, we’ve outsourced more information, then worked to make searching more efficient. Yet somehow, the Internet age feels different. Quickly pulling up [the answer to a specific esoteric question] on Google seems different from looking up a bit of trivia in an encyclopedia. It’s less like consulting a book than like asking someone a question, consulting a supersmart friend who lurks within our phones.”

And therein lies the magic of the internet — that unprecedented access to humanity’s collective brain. Thompson cites the work of Harvard psychologist Daniel Wegner, who first began exploring this notion of collective rather than individual knowledge in the 1980s by observing how partners in long-term relationships often divide and conquer memory tasks in sharing the household’s administrative duties:

“Wegner suspected this division of labor takes place because we have pretty good “metamemory.” We’re aware of our mental strengths and limits, and we’re good at intuiting the abilities of others. Hang around a workmate or a romantic partner long enough and you begin to realize that while you’re terrible at remembering your corporate meeting schedule, or current affairs in Europe, or how big a kilometer is relative to a mile, they’re great at it. So you begin to subconsciously delegate the task of remembering that stuff to them, treating them like a notepad or encyclopedia. In many respects, Wegner noted, people are superior to these devices, because what we lose in accuracy we make up in speed.

[…]

Wegner called this phenomenon “transactive” memory: two heads are better than one. We share the work of remembering, Wegner argued, because it makes us collectively smarter — expanding our ability to understand the world around us.”

[…]

This very outsourcing of memory requires that we learn what the machine knows — a kind of meta-knowledge that enables us to retrieve the information when we need it. And, reflecting on Sparrow’s findings, Thomspon points out that this is neither new nor negative:

“We’ve been using transactive memory for millennia with other humans. In everyday life, we are only rarely isolated, and for good reason. For many thinking tasks, we’re dumber and less cognitively nimble if we’re not around other people. Not only has transactive memory not hurt us, it’s allowed us to perform at higher levels, accomplishing acts of reasoning that are impossible for us alone.”

[…]

Outsourcing our memory to machines rather than to other humans, in fact, offers certain advantages by pulling us into a seemingly infinite rabbit hole of indiscriminate discovery:

“In some ways, machines make for better transactive memory buddies than humans. They know more, but they’re not awkward about pushing it in our faces. When you search the Web, you get your answer — but you also get much more. Consider this: If I’m trying to remember what part of Pakistan has experienced many U.S. drone strikes and I ask a colleague who follows foreign affairs, he’ll tell me “Waziristan.” But when I queried this once on the Internet, I got the Wikipedia page on “Drone attacks in Pakistan.” A chart caught my eye showing the astonishing increase of drone attacks (from 1 a year to 122 a year); then I glanced down to read a précis of studies on how Waziristan residents feel about being bombed. (One report suggested they weren’t as opposed as I’d expected, because many hated the Taliban, too.) Obviously, I was procrastinating. But I was also learning more, reinforcing my schematic understanding of Pakistan.”

[…]

“The real challenge of using machines for transactive memory lies in the inscrutability of their mechanics. Transactive memory works best when you have a sense of how your partners’ minds work — where they’re strong, where they’re weak, where their biases lie. I can judge that for people close to me. But it’s harder with digital tools, particularly search engines. You can certainly learn how they work and develop a mental model of Google’s biases. … But search companies are for-profit firms. They guard their algorithms like crown jewels. This makes them different from previous forms of outboard memory. A public library keeps no intentional secrets about its mechanisms; a search engine keeps many. On top of this inscrutability, it’s hard to know what to trust in a world of self-publishing. To rely on networked digital knowledge, you need to look with skeptical eyes. It’s a skill that should be taught with the same urgency we devote to teaching math and writing.

Thompson’s most important point, however, has to do with how outsourcing our knowledge to digital tools actually hampers the very process of creative thought, which relies on our ability to connect existing ideas from our mental pool of resources into new combinations, or what the French polymath Henri Poincaré has famously termed “sudden illuminations.” Without a mental catalog of materials which to mull and let incubate in our fringe consciousness, our capacity for such illuminations is greatly deflated. Thompson writes:

“These eureka moments are familiar to all of us; they’re why we take a shower or go for a walk when we’re stuck on a problem. But this technique works only if we’ve actually got a lot of knowledge about the problem stored in our brains through long study and focus. … You can’t come to a moment of creative insight if you haven’t got any mental fuel. You can’t be googling the info; it’s got to be inside you.”

[…]

“Evidence suggests that when it comes to knowledge we’re interested in — anything that truly excites us and has meaning — we don’t turn off our memory. Certainly, we outsource when the details are dull, as we now do with phone numbers. These are inherently meaningless strings of information, which offer little purchase on the mind. … It makes sense that our transactive brains would hand this stuff off to machines. But when information engages us — when we really care about a subject — the evidence suggests we don’t turn off our memory at all.”

[…]

“In an ideal world, we’d all fit the Renaissance model — we’d be curious about everything, filled with diverse knowledge and thus absorbing all current events and culture like sponges. But this battle is age-old, because it’s ultimately not just technological. It’s cultural and moral and spiritual; “getting young people to care about the hard stuff” is a struggle that goes back centuries and requires constant societal arguments and work. It’s not that our media and technological environment don’t matter, of course. But the vintage of this problem indicates that the solution isn’t merely in the media environment either.”

[…]

“A tool’s most transformative uses generally take us by surprise.”

[…]

“How should you respond when you get powerful new tools for finding answers?

Think of harder questions.”

Secrets of the Stacks — Medium

Secrets of the Stacks — Medium.

Choosing books for a library like mine in New York is a fulltime job. The head of acquisitions at the Society Library, Steven McGuirl, reads Publishers Weekly, Library Journal, The Times Literary Supplement, The New Yorker, The New York Review of Books, the London Review of Books, The London Times, and The New York Times to decide which fiction should be ordered. Fiction accounts for fully a quarter of the forty-eight hundred books the library acquires each year. There are standing orders for certain novelists—Martin Amis, Zadie Smith, Toni Morrison, for example. Some popular writers merit standing orders for more than one copy.

But first novels and collections of stories present a problem. McGuirl and his two assistants try to guess what the members of the library will want to read. Of course, they respond to members’ requests. If a book is requested by three people, the staff orders it. There’s also a committee of members that meets monthly to recommend books for purchase. The committee checks on the librarians’ lists and suggests titles they’ve missed. The whole enterprise balances enthusiasm and skepticism.

Boosted by reviews, prizes, large sales, word of mouth, or personal recommendations, a novel may make its way onto the library shelf, but even then it is not guaranteed a chance of being read by future generations. Libraries are constantly getting rid of books they have acquired. They have to, or they would run out of space. The polite word for this is “deaccession,” the usual word, “weeding.” I asked a friend who works for a small public library how they choose books to get rid of. Is there a formula? Who makes the decision, a person or a committee? She told me that there was a formula based on the recommendations of the industry-standard CREW manual.

CREW stands for Continuous Review Evaluation and Weeding, and the manual uses “crew” as a transitive verb, so one can talk about a library’s “crewing” its collection. It means weeding but doesn’t sound so harsh. At the heart of the CREW method is a formula consisting of three factors—the number of years since the last copyright, the number of years since the book was last checked out, and a collection of six negative factors given the acronym MUSTIE, to help decide if a book has outlived its usefulness. M. Is it Misleading or inaccurate? Is its information, as so quickly happens with medical and legal texts or travel books, for example, outdated? U. Is it Ugly? Worn beyond repair? S. Has it been Superseded by a new edition or a better account of the subject? T. Is it Trivial, of no discernible literary or scientific merit? I. Is it Irrelevant to the needs and interests of the community the library serves? E. Can it be found Elsewhere, through interlibrary loan or on the Web?

Obviously, not all the MUSTIE factors are relevant in evaluating fiction, notably Misleading and Superseded. Nor is the copyright date important. For nonfiction, the CREW formula might be 8/3/MUSTIE, which would mean “Consider a book for elimination if it is eight years since the copyright date and three years since it has been checked out and if one or more of the MUSTIE factors obtains.” But for fiction the formula is often X/2/MUSTIE, meaning the copyright date doesn’t matter, but consider a book for elimination if it hasn’t been checked out in two years and if it is TUIE—Trivial, Ugly, Irrelevant, or Elsewhere.

[…]

People who feel strongly about retaining books in libraries have a simple way to combat the removal of treasured volumes. Since every system of elimination is based, no matter what they say, on circulation counts, the number of years that have elapsed since a book was last checked out, or the number of times it has been checked out overall, if you feel strongly about a book, you should go to every library you have access to and check out the volume you care about. Take it home awhile. Read it or don’t. Keep it beside you as you read the same book on a Kindle, Nook, or iPad. Let it breathe the air of your home, and then take it back to the library, knowing you have fought the guerrilla war for physical books.

[…]

So many factors affect a novel’s chances of surviving, to say nothing of its becoming one of the immortal works we call a classic: how a book is initially reviewed, whether it sells, whether people continue to read it, whether it is taught in schools, whether it is included in college curricula, what literary critics say about it later, how it responds to various political currents as time moves on.

[…]

De Rerum Natura, lost for fifteen hundred years, was found and its merit recognized. But how many other works of antiquity were not found? How many works from past centuries never got published or, published, were never read?

If you want to see how slippery a judgment is “literary merit” and how unlikely quality is to be recognized at first glance, nothing is more fun—or more comforting to writers—than to read rejection letters or terrible reviews of books that have gone on to prove indispensable to the culture. This, for example, is how the New York Times reviewer greeted Lolita: “Lolita . . . is undeniably news in the world of books. Unfortunately, it is bad news. There are two equally serious reasons why it isn’t worth any adult reader’s attention. The first is that it is dull, dull, dull in a pretentious, florid and archly fatuous fashion. The second is that it is repulsive.”

Negative reviews are fun to write and fun to read, but the world doesn’t need them, since the average work of literary fiction is, in Laura Miller’s words, “invisible to the average reader.” It appears and vanishes from the scene largely unnoticed and unremarked.

[…]

Whether reviews are positive or negative, the attention they bring to a book is rarely sufficient, and it is becoming harder and harder for a novel to lift itself from obscurity. In the succinct and elegant words of James Gleick, “The merchandise of the information economy is not information; it is attention. These commodities have an inverse relationship. When information is cheap, attention becomes expensive.” These days, besides writing, novelists must help draw attention to what they write, tweeting, friending, blogging, and generating meta tags—unacknowledged legislators to Shelley, but now more like unpaid publicists.

On the Web, everyone can be a reviewer, and a consensus about a book can be established covering a range of readers potentially as different as Laura Miller’s cousins and the members of the French Academy. In this changed environment, professional reviewers may become obsolete, replaced by crowd wisdom. More than two centuries ago, Samuel Johnson invented the idea of crowd wisdom as applied to literature, calling it “the common reader.” “I rejoice to concur with the common reader; for by the common sense of readers, uncorrupted by literary prejudices, after all the refinements of subtilty and the dogmatism of learning, must be finally decided all claim to poetical honours.” Virginia Woolf agreed and titled her wonderful collection of essays on literature The Common Reader.

[…]

The Common Reader, however, is not one person. It is a statistical average, the mean between this reader’s one star for One God Clapping and twenty other readers’ enthusiasm for this book, the autobiography of a “Zen rabbi,” producing a four-star rating. What the rating says to me is that if I were the kind of person who wanted to read the autobiography of a Zen rabbi, I’d be very likely to enjoy it. That Amazon reviewers are a self-selected group needs underlining. If you are like Laura Miller’s cousins who have never heard of Jonathan Franzen, you will be unlikely to read Freedom, and even less likely to review it. If you read everything that John Grisham has ever written, you will probably read his latest novel and might even report on it. If you read Lolita, it’s either because you’ve heard it’s one of the great novels of the twentieth century or because you’ve heard it’s a dirty book. Whatever brings you to it, you are likely to enjoy it. Four and a half stars.

The idea of the wisdom of crowds, popularized by James Surowiecki, dates to 1906, when the English statistician Francis Galton (Darwin’s cousin) focused on a contest at a county fair for guessing the weight of an ox. For sixpence, a person could buy a ticket, fill in his name, and guess the weight of the animal after butchering. The person whose guess was closest to the actual weight of the ox won a prize. Galton, having the kind of mind he did, played around with the numbers he gathered from this contest and discovered that the average of all the guesses was only one pound off from the actual weight of the ox, 1,198 pounds. If you’re looking for the Common Reader’s response to a novel, you can’t take any one review as truth but merely as a passionate assertion of one point of view, one person’s guess at the weight of the ox.

“I really enjoy reading this novel it makes you think about a sex offender’s mind. I’m also happy that I purchased this novel on Amazon because I was able to find it easily with a suitable price for me.”

“Vladimir has a way with words. The prose in this book is simply remarkable.”

“Overrated and pretentious. Overly flowery language encapsulating an uninteresting and overdone plot. Older man and pre-adolescent hypersexual woman—please let’s not exaggerate the originality of that concept, it has existed for millennia now. In fact, you’ll find similar stories in every chapter of the Bible.”

“Like many other folk I read Lolita when it first came out. I was a normally-sexed man and I found it excitingly erotic. Now, nearing 80, I still felt the erotic thrill but was more open to the beauty of Nabokov’s prose.”

“Presenting the story from Humbert’s self-serving viewpoint was Nabokov’s peculiarly brilliant means by which a straight, non-perverted reader is taken to secret places she/he might otherwise dare not go.”

“A man who was ‘hip’ while maintaining a bemused detachment from trendiness, what would he have made of shopping malls? Political correctness? Cable television? Alternative music? The Internet? . . . Or some of this decade’s greatest scandals, near-Nabokovian events in themselves, like Joey Buttafuoco, Lorena Bobbitt, O. J. Simpson, Bill and Monica? Wherever he is (Heaven, Hell, Nirvana, Anti-Terra), I would like to thank Nabokov for providing us with a compelling and unique model of how to read, write, and perceive life.”

What would the hip, bemused author of Lolita have made of Amazon ratings? I like to think that he would have reveled in them as evidence of the cheerful self- assurance, the lunatic democracy of his adopted culture.

“Once a populist gimmick, the reviews are vital to make sure a new product is not lost in the digital wilderness,” the Times reports.

Amazon’s own gatekeepers have removed thousands of reviews from its site in an attempt to curb what has become widespread manipulation of its ratings. They eliminated some reviews by family members and people considered too biased to be entitled to an opinion, competing writers, for example. They did not, however, eliminate reviews by people who admit they have not read the book. “We do not require people to have experienced the product in order to review,” said an Amazon spokesman.

Lacktopia – TD

Lacktopia – TD

Superstudio’s Quaderna table

IKEA’s Lack table

As part of Superstudio’s Anti-Design Campaign, the Quaderna table formed a striking contrast to the pop design of the late 1960s, opposing all its curvy, colourful forms. Superstudio was convinced that there can be no renovation of design until ‘structural changes have occurred in society’, as Peter Lang and William Menking wrote in Superstudio – Life Without Objects. Thus they developed a matrix to generate objects for a new rational, social and cultural order.

‘The investigation into the essence of the object started in 1969, when Superstudio launched their Istogrammi project,’ Sander Woertman wrote in Exit Utopia – Architectural Provocations 1956-76. ‘The starting point was a square, the surface of a plane consisting of a regular rectangular grid. What Superstudio intended with this quickly became clear: the diagram could easily be translated into a furniture item, architecture or a landscape. A definitive solution for any kind of space or form had been found.’

The Quaderna, a table presented 37 years ago as a utopian statement against design, rebounded a little more than a decade later, becoming the ultimate design icon. Superstudio unconsciously wrote the lyrics for a world-hit and IKEA made it play.

One could say Lack is the ultimate global compromise, the table of all tables. If the United Nations had an assembly to decide what a world table – representing all the cultures and nations on earth – should look like, Lack would be the outcome. It’s square – avoiding the discussions of which culture invented the wheel; it’s average in height – right between the Asian and Western dimensions; it’s endlessly extendable – seating anywhere from one person to all the people in the world.

Lack avoids any reference to any particular culture; it is the common denominator of all tables of all cultures. It is the ultimate success story of the international style, or better: intercultural style, the style of the global middle class. Lack started a world tour and when it’s done, Lack will have globally reformatted the notion of the table. In the end there will be only one table left: Lack.

Lack is unavoidable; it is neither good nor bad, neither ugly nor beautiful and most important of all, it is cheap.

By omitting the Quaderna quadrangles, the table was released from its theoretical burden, it was liberated from the last evidence of culture that Superstudio ‘forgot’ to remove. By doing this, IKEA managed to turn the whole theory of Anti-Design inside out and baptised it, ironically, Lack.

A World Digital Library Is Coming True! by Robert Darnton | The New York Review of Books

A World Digital Library Is Coming True! by Robert Darnton | The New York Review of Books.

darnton_2-052214.jpg

In the scramble to gain market share in cyberspace, something is getting lost: the public interest. Libraries and laboratories—crucial nodes of the World Wide Web—are buckling under economic pressure, and the information they diffuse is being diverted away from the public sphere, where it can do most good.

Not that information comes free or “wants to be free,” as Internet enthusiasts proclaimed twenty years ago.1 It comes filtered through expensive technologies and financed by powerful corporations. No one can ignore the economic realities that underlie the new information age, but who would argue that we have reached the right balance between commercialization and democratization?

Consider the cost of scientific periodicals, most of which are published exclusively online. It has increased at four times the rate of inflation since 1986. The average price of a year’s subscription to a chemistry journal is now $4,044. In 1970 it was $33. A subscription to the Journal of Comparative Neurology cost $30,860 in 2012—the equivalent of six hundred monographs. Three giant publishers—Reed Elsevier, Wiley-Blackwell, and Springer—publish 42 percent of all academic articles, and they make giant profits from them. In 2013 Elsevier turned a 39 percent profit on an income of £2.1 billion from its science, technical, and medical journals.

All over the country research libraries are canceling subscriptions to academic journals, because they are caught between decreasing budgets and increasing costs. The logic of the bottom line is inescapable, but there is a higher logic that deserves consideration—namely, that the public should have access to knowledge produced with public funds.

[…]

The struggle over academic journals should not be dismissed as an “academic question,” because a great deal is at stake. Access to research drives large sectors of the economy—the freer and quicker the access, the more powerful its effect. The Human Genome Project cost $3.8 billion in federal funds to develop, and thanks to the free accessibility of the results, it has already produced $796 billion in commercial applications. Linux, the free, open-source software system, has brought in billions in revenue for many companies, including Google.

[…]

According to a study completed in 2006 by John Houghton, a specialist in the economics of information, a 5 percent increase in the accessibility of research would have produced an increase in productivity worth $16 billion.

[…]

Yet accessibility may decrease, because the price of journals has escalated so disastrously that libraries—and also hospitals, small-scale laboratories, and data-driven enterprises—are canceling subscriptions. Publishers respond by charging still more to institutions with budgets strong enough to carry the additional weight.

[…]

In the long run, journals can be sustained only through a transformation of the economic basis of academic publishing. The current system developed as a component of the professionalization of academic disciplines in the nineteenth century. It served the public interest well through most of the twentieth century, but it has become dysfunctional in the age of the Internet.

[…]

The entire system of communicating research could be made less expensive and more beneficial for the public by a process known as “flipping.” Instead of subsisting on subscriptions, a flipped journal covers its costs by charging processing fees before publication and making its articles freely available, as “open access,” afterward. That will sound strange to many academic authors. Why, they may ask, should we pay to get published? But they may not understand the dysfunctions of the present system, in which they furnish the research, writing, and refereeing free of charge to the subscription journals and then buy back the product of their work—not personally, of course, but through their libraries—at an exorbitant price. The public pays twice—first as taxpayers who subsidize the research, then as taxpayers or tuition payers who support public or private university libraries.

By creating open-access journals, a flipped system directly benefits the public. Anyone can consult the research free of charge online, and libraries are liberated from the spiraling costs of subscriptions. Of course, the publication expenses do not evaporate miraculously, but they are greatly reduced, especially for nonprofit journals, which do not need to satisfy shareholders. The processing fees, which can run to a thousand dollars or more, depending on the complexities of the text and the process of peer review, can be covered in various ways. They are often included in research grants to scientists, and they are increasingly financed by the author’s university or a group of universities.

[…]

The main impediment to public-spirited publishing of this kind is not financial. It involves prestige. Scientists prefer to publish in expensive journals like Nature, Science, and Cell, because the aura attached to them glows on CVs and promotes careers. But some prominent scientists have undercut the prestige effect by founding open-access journals and recruiting the best talent to write and referee for them. Harold Varmus, a Nobel laureate in physiology and medicine, has made a huge success of Public Library of Science, and Paul Crutzen, a Nobel laureate in chemistry, has done the same with Atmospheric Chemistry and Physics. They have proven the feasibility of high-quality, open-access journals. Not only do they cover costs through processing fees, but they produce a profit—or rather, a “surplus,” which they invest in further open-access projects.

[…]

DASH now includes 17,000 articles, and it has registered three million downloads from countries in every continent. Repositories in other universities also report very high scores in their counts of downloads. They make knowledge available to a broad public, including researchers who have no connection to an academic institution; and at the same time, they make it possible for writers to reach far more readers than would be possible by means of subscription journals.

The desire to reach readers may be one of the most underestimated forces in the world of knowledge. Aside from journal articles, academics produce a large numbers of books, yet they rarely make much money from them. Authors in general derive little income from a book a year or two after its publication. Once its commercial life has ended, it dies a slow death, lying unread, except for rare occasions, on the shelves of libraries, inaccessible to the vast majority of readers. At that stage, authors generally have one dominant desire—for their work to circulate freely through the public; and their interest coincides with the goals of the open-access movement.

[…]

All sorts of complexities remain to be worked out before such a plan can succeed: How to accommodate the interests of publishers, who want to keep books on their backlists? Where to leave room for rights holders to opt out and for the revival of books that take on new economic life? Whether to devise some form of royalties, as in the extended collective licensing programs that have proven to be successful in the Scandinavian countries? It should be possible to enlist vested interests in a solution that will serve the public interest, not by appealing to altruism but rather by rethinking business plans in ways that will make the most of modern technology.

Several experimental enterprises illustrate possibilities of this kind. Knowledge Unlatched gathers commitments and collects funds from libraries that agree to purchase scholarly books at rates that will guarantee payment of a fixed amount to the publishers who are taking part in the program. The more libraries participating in the pool, the lower the price each will have to pay. While electronic editions of the books will be available everywhere free of charge through Knowledge Unlatched, the subscribing libraries will have the exclusive right to download and print out copies.

[…]

OpenEdition Books, located in Marseille, operates on a somewhat similar principle. It provides a platform for publishers who want to develop open-access online collections, and it sells the e-content to subscribers in formats that can be downloaded and printed. Operating from Cambridge, England, Open Book Publishers also charges for PDFs, which can be used with print-on-demand technology to produce physical books, and it applies the income to subsidies for free copies online. It recruits academic authors who are willing to provide manuscripts without payment in order to reach the largest possible audience and to further the cause of open access.

The famous quip of Samuel Johnson, “No man but a blockhead ever wrote, except for money,” no longer has the force of a self-evident truth in the age of the Internet. By tapping the goodwill of unpaid authors, Open Book Publishers has produced forty-one books in the humanities and social sciences, all rigorously peer-reviewed, since its foundation in 2008. “We envisage a world in which all research is freely available to all readers,” it proclaims on its website.

[…]

Google set out to digitize millions of books in research libraries and then proposed to sell subscriptions to the resulting database. Having provided the books to Google free of charge, the libraries would then have to buy back access to them, in digital form, at a price to be determined by Google and that could escalate as disastrously as the prices of scholarly journals.

Google Book Search actually began as a search service, which made available only snippets or short passages of books. But because many of the books were covered by copyright, Google was sued by the rights holders; and after lengthy negotiations the plaintiffs and Google agreed on a settlement, which transformed the search service into a gigantic commercial library financed by subscriptions. But the settlement had to be approved by a court, and on March 22, 2011, the Southern Federal District Court of New York rejected it on the grounds that, among other things, it threatened to constitute a monopoly in restraint of trade. That decision put an end to Google’s project and cleared the way for the DPLA to offer digitized holdings—but nothing covered by copyright—to readers everywhere, free of charge.

Aside from its not-for-profit character, the DPLA differs from Google Book Search in a crucial respect: it is not a vertical organization erected on a database of its own. It is a distributed, horizontal system, which links digital collections already in the possession of the participating institutions, and it does so by means of a technological infrastructure that makes them instantly available to the user with one click on an electronic device. It is fundamentally horizontal, both in organization and in spirit.

Instead of working from the top down, the DPLA relies on “service hubs,” or small administrative centers, to promote local collections and aggregate them at the state level. “Content hubs” located in institutions with collections of at least 250,000 items—for example, the New York Public Library, the Smithsonian Institution, and the collective digital repository known as HathiTrust—provide the bulk of the DPLA’s holdings. There are now two dozen service and content hubs, and soon, if financing can be found, they will exist in every state of the union.

Such horizontality reinforces the democratizing impulse behind the DPLA. Although it is a small, nonprofit corporation with headquarters and a minimal staff in Boston, the DPLA functions as a network that covers the entire country. It relies heavily on volunteers. More than a thousand computer scientists collaborated free of charge in the design of its infrastructure, which aggregates metadata (catalog-type descriptions of documents) in a way that allows easy searching.

Therefore, for example, a ninth-grader in Dallas who is preparing a report on an episode of the American Revolution can download a manuscript from New York, a pamphlet from Chicago, and a map from San Francisco in order to study them side by side. Unfortunately, he or she will not be able to consult any recent books, because copyright laws keep virtually everything published after 1923 out of the public domain. But the courts, which are considering a flurry of cases about the “fair use” of copyright, may sustain a broad-enough interpretation for the DPLA to make a great deal of post-1923 material available for educational purposes.

A small army of volunteer “Community Reps,” mainly librarians with technical skills, is fanning out across the country to promote various outreach programs sponsored by the DPLA. They reinforce the work of the service hubs, which concentrate on public libraries as centers of collection-building. A grant from the Bill and Melinda Gates Foundation is financing a Public Library Partnerships Project to train local librarians in the latest digital technologies. Equipped with new skills, the librarians will invite people to bring in material of their own—family letters, high school yearbooks, postcard collections stored in trunks and attics—to be digitized, curated, preserved, and made accessible online by the DPLA. While developing local community consciousness about culture and history, this project will also help integrate local collections in the national network.

[…]

In these and other ways, the DPLA will go beyond its basic mission of making the cultural heritage of America available to all Americans. It will provide opportunities for them to interact with the material and to develop materials of their own. It will empower librarians and reinforce public libraries everywhere, not only in the United States. Its technological infrastructure has been designed to be interoperable with that of Europeana, a similar enterprise that is aggregating the holdings of libraries in the twenty-eight member states of the European Union. The DPLA’s collections include works in more than four hundred languages, and nearly 30 percent of its users come from outside the US. Ten years from now, the DPLA’s first year of activity may look like the beginning of an international library system.

It would be naive, however, to imagine a future free from the vested interests that have blocked the flow of information in the past. The lobbies at work in Washington also operate in Brussels, and a newly elected European Parliament will soon have to deal with the same issues that remain to be resolved in the US Congress. Commercialization and democratization operate on a global scale, and a great deal of access must be opened before the World Wide Web can accommodate a worldwide library.

Jihad vs. McWorld – Benjamin R. Barber – The Atlantic

Jihad vs. McWorld – Benjamin R. Barber – The Atlantic.

Just beyond the horizon of current events lie two possible political futures—both bleak, neither democratic. The first is a retribalization of large swaths of humankind by war and bloodshed: a threatened Lebanonization of national states in which culture is pitted against culture, people against people, tribe against tribe—a Jihad in the name of a hundred narrowly conceived faiths against every kind of interdependence, every kind of artificial social cooperation and civic mutuality. The second is being borne in on us by the onrush of economic and ecological forces that demand integration and uniformity and that mesmerize the world with fast music, fast computers, and fast food—with MTV, Macintosh, and McDonald’s, pressing nations into one commercially homogenous global network: one McWorld tied together by technology, ecology, communications, and commerce. The planet is falling precipitantly apart AND coming reluctantly together at the very same moment.

[…]

The tendencies of what I am here calling the forces of Jihad and the forces of McWorld operate with equal strength in opposite directions, the one driven by parochial hatreds, the other by universalizing markets, the one re-creating ancient subnational and ethnic borders from within, the other making national borders porous from without. They have one thing in common: neither offers much hope to citizens looking for practical ways to govern themselves democratically. If the global future is to pit Jihad’s centrifugal whirlwind against McWorld’s centripetal black hole, the outcome is unlikely to be democratic—or so I will argue.

[…]

Four imperatives make up the dynamic of McWorld: a market imperative, a resource imperative, an information-technology imperative, and an ecological imperative. By shrinking the world and diminishing the salience of national borders, these imperatives have in combination achieved a considerable victory over factiousness and particularism, and not least of all over their most virulent traditional form—nationalism. It is the realists who are now Europeans, the utopians who dream nostalgically of a resurgent England or Germany, perhaps even a resurgent Wales or Saxony. Yesterday’s wishful cry for one world has yielded to the reality of McWorld.

THE MARKET IMPERATIVE. Marxist and Leninist theories of imperialism assumed that the quest for ever-expanding markets would in time compel nation-based capitalist economies to push against national boundaries in search of an international economic imperium. Whatever else has happened to the scientistic predictions of Marxism, in this domain they have proved farsighted. All national economies are now vulnerable to the inroads of larger, transnational markets within which trade is free, currencies are convertible, access to banking is open, and contracts are enforceable under law. In Europe, Asia, Africa, the South Pacific, and the Americas such markets are eroding national sovereignty and giving rise to entities—international banks, trade associations, transnational lobbies like OPEC and Greenpeace, world news services like CNN and the BBC, and multinational corporations that increasingly lack a meaningful national identity—that neither reflect nor respect nationhood as an organizing or regulative principle.

The market imperative has also reinforced the quest for international peace and stability, requisites of an efficient international economy. Markets are enemies of parochialism, isolation, fractiousness, war. Market psychology attenuates the psychology of ideological and religious cleavages and assumes a concord among producers and consumers—categories that ill fit narrowly conceived national or religious cultures. Shopping has little tolerance for blue laws, whether dictated by pub-closing British paternalism, Sabbath-observing Jewish Orthodox fundamentalism, or no-Sunday-liquor-sales Massachusetts puritanism. In the context of common markets, international law ceases to be a vision of justice and becomes a workaday framework for getting things done—enforcing contracts, ensuring that governments abide by deals, regulating trade and currency relations, and so forth.

Common markets demand a common language, as well as a common currency, and they produce common behaviors of the kind bred by cosmopolitan city life everywhere. Commercial pilots, computer programmers, international bankers, media specialists, oil riggers, entertainment celebrities, ecology experts, demographers, accountants, professors, athletes—these compose a new breed of men and women for whom religion, culture, and nationality can seem only marginal elements in a working identity. Although sociologists of everyday life will no doubt continue to distinguish a Japanese from an American mode, shopping has a common signature throughout the world. Cynics might even say that some of the recent revolutions in Eastern Europe have had as their true goal not liberty and the right to vote but well-paying jobs and the right to shop (although the vote is proving easier to acquire than consumer goods). The market imperative is, then, plenty powerful; but, notwithstanding some of the claims made for “democratic capitalism,” it is not identical with the democratic imperative.

THE RESOURCE IMPERATIVE. Democrats once dreamed of societies whose political autonomy rested firmly on economic independence. The Athenians idealized what they called autarky, and tried for a while to create a way of life simple and austere enough to make the polis genuinely self-sufficient. To be free meant to be independent of any other community or polis. Not even the Athenians were able to achieve autarky, however: human nature, it turns out, is dependency. By the time of Pericles, Athenian politics was inextricably bound up with a flowering empire held together by naval power and commerce—an empire that, even as it appeared to enhance Athenian might, ate away at Athenian independence and autarky. Master and slave, it turned out, were bound together by mutual insufficiency.

The dream of autarky briefly engrossed nineteenth-century America as well, for the underpopulated, endlessly bountiful land, the cornucopia of natural resources, and the natural barriers of a continent walled in by two great seas led many to believe that America could be a world unto itself. Given this past, it has been harder for Americans than for most to accept the inevitability of interdependence. But the rapid depletion of resources even in a country like ours, where they once seemed inexhaustible, and the maldistribution of arable soil and mineral resources on the planet, leave even the wealthiest societies ever more resource-dependent and many other nations in permanently desperate straits.

Every nation, it turns out, needs something another nation has; some nations have almost nothing they need.

THE INFORMATION-TECHNOLOGY IMPERATIVE. Enlightenment science and the technologies derived from it are inherently universalizing. They entail a quest for descriptive principles of general application, a search for universal solutions to particular problems, and an unswerving embrace of objectivity and impartiality.

Scientific progress embodies and depends on open communication, a common discourse rooted in rationality, collaboration, and an easy and regular flow and exchange of information. Such ideals can be hypocritical covers for power-mongering by elites, and they may be shown to be wanting in many other ways, but they are entailed by the very idea of science and they make science and globalization practical allies.

Business, banking, and commerce all depend on information flow and are facilitated by new communication technologies. The hardware of these technologies tends to be systemic and integrated—computer, television, cable, satellite, laser, fiber-optic, and microchip technologies combining to create a vast interactive communications and information network that can potentially give every person on earth access to every other person, and make every datum, every byte, available to every set of eyes. If the automobile was, as George Ball once said (when he gave his blessing to a Fiat factory in the Soviet Union during the Cold War), “an ideology on four wheels,” then electronic telecommunication and information systems are an ideology at 186,000 miles per second—which makes for a very small planet in a very big hurry. Individual cultures speak particular languages; commerce and science increasingly speak English; the whole world speaks logarithms and binary mathematics.

Moreover, the pursuit of science and technology asks for, even compels, open societies. Satellite footprints do not respect national borders; telephone wires penetrate the most closed societies. With photocopying and then fax machines having infiltrated Soviet universities and samizdat literary circles in the eighties, and computer modems having multiplied like rabbits in communism’s bureaucratic warrens thereafter, glasnost could not be far behind. In their social requisites, secrecy and science are enemies.

The new technology’s software is perhaps even more globalizing than its hardware. The information arm of international commerce’s sprawling body reaches out and touches distinct nations and parochial cultures, and gives them a common face chiseled in Hollywood, on Madison Avenue, and in Silicon Valley. Throughout the 1980s one of the most-watched television programs in South Africa was The Cosby Show. The demise of apartheid was already in production. Exhibitors at the 1991 Cannes film festival expressed growing anxiety over the “homogenization” and “Americanization” of the global film industry when, for the third year running, American films dominated the awards ceremonies. America has dominated the world’s popular culture for much longer, and much more decisively.

[…]

This kind of software supremacy may in the long term be far more important than hardware superiority, because culture has become more potent than armaments. What is the power of the Pentagon compared with Disneyland? Can the Sixth Fleet keep up with CNN? McDonald’s in Moscow and Coke in China will do more to create a global culture than military colonization ever could. It is less the goods than the brand names that do the work, for they convey life-style images that alter perception and challenge behavior. They make up the seductive software of McWorld’s common (at times much too common) soul.

Yet in all this high-tech commercial world there is nothing that looks particularly democratic. It lends itself to surveillance as well as liberty, to new forms of manipulation and covert control as well as new kinds of participation, to skewed, unjust market outcomes as well as greater productivity. The consumer society and the open society are not quite synonymous. Capitalism and democracy have a relationship, but it is something less than a marriage. An efficient free market after all requires that consumers be free to vote their dollars on competing goods, not that citizens be free to vote their values and beliefs on competing political candidates and programs. The free market flourished in junta-run Chile, in military-governed Taiwan and Korea, and, earlier, in a variety of autocratic European empires as well as their colonial possessions.

THE ECOLOGICAL IMPERATIVE. The impact of globalization on ecology is a cliche even to world leaders who ignore it. We know well enough that the German forests can be destroyed by Swiss and Italians driving gas-guzzlers fueled by leaded gas. We also know that the planet can be asphyxiated by greenhouse gases because Brazilian farmers want to be part of the twentieth century and are burning down tropical rain forests to clear a little land to plough, and because Indonesians make a living out of converting their lush jungle into toothpicks for fastidious Japanese diners, upsetting the delicate oxygen balance and in effect puncturing our global lungs. Yet this ecological consciousness has meant not only greater awareness but also greater inequality, as modernized nations try to slam the door behind them, saying to developing nations, “The world cannot afford your modernization; ours has wrung it dry!”

Each of the four imperatives just cited is transnational, transideological, and transcultural. Each applies impartially to Catholics, Jews, Muslims, Hindus, and Buddhists; to democrats and totalitarians; to capitalists and socialists. The Enlightenment dream of a universal rational society has to a remarkable degree been realized—but in a form that is commercialized, homogenized, depoliticized, bureaucratized, and, of course, radically incomplete, for the movement toward McWorld is in competition with forces of global breakdown, national dissolution, and centrifugal corruption. These forces, working in the opposite direction, are the essence of what I call Jihad.

Jihad, or the Lebanonization of the World

OPEC, the World Bank, the United Nations, the International Red Cross, the multinational corporation…there are scores of institutions that reflect globalization. But they often appear as ineffective reactors to the world’s real actors: national states and, to an ever greater degree, subnational factions in permanent rebellion against uniformity and integration—even the kind represented by universal law and justice. The headlines feature these players regularly: they are cultures, not countries; parts, not wholes; sects, not religions; rebellious factions and dissenting minorities at war not just with globalism but with the traditional nation-state. Kurds, Basques, Puerto Ricans, Ossetians, East Timoreans, Quebecois, the Catholics of Northern Ireland, Abkhasians, Kurile Islander Japanese, the Zulus of Inkatha, Catalonians, Tamils, and, of course, Palestinians—people without countries, inhabiting nations not their own, seeking smaller worlds within borders that will seal them off from modernity.

A powerful irony is at work here. Nationalism was once a force of integration and unification, a movement aimed at bringing together disparate clans, tribes, and cultural fragments under new, assimilationist flags. But as Ortega y Gasset noted more than sixty years ago, having won its victories, nationalism changed its strategy. In the 1920s, and again today, it is more often a reactionary and divisive force, pulverizing the very nations it once helped cement together.

[…]

The aim of many of these small-scale wars is to redraw boundaries, to implode states and resecure parochial identities: to escape McWorld’s dully insistent imperatives. The mood is that of Jihad: war not as an instrument of policy but as an emblem of identity, an expression of community, an end in itself. Even where there is no shooting war, there is fractiousness, secession, and the quest for ever smaller communities.

[…]

Among the tribes, religion is also a battlefield. (“Jihad” is a rich word whose generic meaning is “struggle”—usually the struggle of the soul to avert evil. Strictly applied to religious war, it is used only in reference to battles where the faith is under assault, or battles against a government that denies the practice of Islam. My use here is rhetorical, but does follow both journalistic practice and history.) Remember the Thirty Years War? Whatever forms of Enlightenment universalism might once have come to grace such historically related forms of monotheism as Judaism, Christianity, and Islam, in many of their modern incarnations they are parochial rather than cosmopolitan, angry rather than loving, proselytizing rather than ecumenical, zealous rather than rationalist, sectarian rather than deistic, ethnocentric rather than universalizing. As a result, like the new forms of hypernationalism, the new expressions of religious fundamentalism are fractious and pulverizing, never integrating. This is religion as the Crusaders knew it: a battle to the death for souls that if not saved will be forever lost.

The atmospherics of Jihad have resulted in a breakdown of civility in the name of identity, of comity in the name of community. International relations have sometimes taken on the aspect of gang war—cultural turf battles featuring tribal factions that were supposed to be sublimated as integral parts of large national, economic, postcolonial, and constitutional entities.

[…]

Neither McWorld nor Jihad is remotely democratic in impulse. Neither needs democracy; neither promotes democracy.

McWorld does manage to look pretty seductive in a world obsessed with Jihad. It delivers peace, prosperity, and relative unity—if at the cost of independence, community, and identity (which is generally based on difference). The primary political values required by the global market are order and tranquillity, and freedom—as in the phrases “free trade,” “free press,” and “free love.” Human rights are needed to a degree, but not citizenship or participation—and no more social justice and equality than are necessary to promote efficient economic production and consumption. Multinational corporations sometimes seem to prefer doing business with local oligarchs, inasmuch as they can take confidence from dealing with the boss on all crucial matters. Despots who slaughter their own populations are no problem, so long as they leave markets in place and refrain from making war on their neighbors (Saddam Hussein’s fatal mistake). In trading partners, predictability is of more value than justice.

[…]

Jihad delivers a different set of virtues: a vibrant local identity, a sense of community, solidarity among kinsmen, neighbors, and countrymen, narrowly conceived. But it also guarantees parochialism and is grounded in exclusion. Solidarity is secured through war against outsiders. And solidarity often means obedience to a hierarchy in governance, fanaticism in beliefs, and the obliteration of individual selves in the name of the group. Deference to leaders and intolerance toward outsiders (and toward “enemies within”) are hallmarks of tribalism—hardly the attitudes required for the cultivation of new democratic women and men capable of governing themselves. Where new democratic experiments have been conducted in retribalizing societies, in both Europe and the Third World, the result has often been anarchy, repression, persecution, and the coming of new, noncommunist forms of very old kinds of despotism.

[…]

To the extent that either McWorld or Jihad has a NATURAL politics, it has turned out to be more of an antipolitics. For McWorld, it is the antipolitics of globalism: bureaucratic, technocratic, and meritocratic, focused (as Marx predicted it would be) on the administration of things—with people, however, among the chief things to be administered. In its politico-economic imperatives McWorld has been guided by laissez-faire market principles that privilege efficiency, productivity, and beneficence at the expense of civic liberty and self-government.

For Jihad, the antipolitics of tribalization has been explicitly antidemocratic: one-party dictatorship, government by military junta, theocratic fundamentalism—often associated with a version of theFuhrerprinzip that empowers an individual to rule on behalf of a people.

[…]

How can democracy be secured and spread in a world whose primary tendencies are at best indifferent to it (McWorld) and at worst deeply antithetical to it (Jihad)? My guess is that globalization will eventually vanquish retribalization. The ethos of material “civilization” has not yet encountered an obstacle it has been unable to thrust aside.

[…]

…democracy is how we remonstrate with reality, the rebuke our aspirations offer to history. And if retribalization is inhospitable to democracy, there is nonetheless a form of democratic government that can accommodate parochialism and communitarianism, one that can even save them from their defects and make them more tolerant and participatory: decentralized participatory democracy. And if McWorld is indifferent to democracy, there is nonetheless a form of democratic government that suits global markets passably well—representative government in its federal or, better still, confederal variation.

[…]

It certainly seems possible that the most attractive democratic ideal in the face of the brutal realities of Jihad and the dull realities of McWorld will be a confederal union of semi-autonomous communities smaller than nation-states, tied together into regional economic associations and markets larger than nation-states—participatory and self-determining in local matters at the bottom, representative and accountable at the top. The nation-state would play a diminished role, and sovereignty would lose some of its political potency. The Green movement adage “Think globally, act locally” would actually come to describe the conduct of politics.

This vision reflects only an ideal, however—one that is not terribly likely to be realized. Freedom, Jean-Jacques Rousseau once wrote, is a food easy to eat but hard to digest. Still, democracy has always played itself out against the odds. And democracy remains both a form of coherence as binding as McWorld and a secular faith potentially as inspiriting as Jihad.

Why New York Real Estate Is the New Swiss Bank Account — New York Magazine

Why New York Real Estate Is the New Swiss Bank Account — New York Magazine.

“The global elite,” says developer Michael Stern, “is basically looking for a safe-deposit box.”

[…]

The influx of global wealth is most visible on the ultrahigh end, as Stern and other builders are erecting spiraling condo towers and sales records are regularly shattered by foreign billionaires, like the Russian fertilizer oligarch Dmitry Rybolovlev, purchaser of the most expensive condo in Manhattan’s history ($88 million), and Egyptian construction magnate Nassef Sawiris, who recently set the record for a co-op ($70 million). But much of the foreign money is coming in at lower price points, closer to the median for a Manhattan condo ($1.3 million and rising). In fact, if you’ve recently been outdone by an outrageous all-cash bid for an apartment, there’s a decent chance that, behind a generic corporate name, there’s a foreign buyer and an offshore bank account.

[…]

The Census Bureau estimates that 30 percent of all apartments in the quadrant from 49th to 70th Streets between Fifth and Park are vacant at least ten months a year.

To cater to the tastes of their transient residents, developers are designing their projects with features like hotel-style services. And the new economy has spawned new service businesses, like XL Real Property Management, which takes care of all the niggling details—repairs, insurance, condo fees—for absentee buyers.

[…]

Even those with less reflexively hostile reactions to foreign buying competition might still wonder: Who are these people? An entire industry of brokers, lawyers, and tight-lipped advisers exists largely to keep anyone from discovering the answer. This is because, while New York real estate has significant drawbacks as an asset—it’s illiquid and costly to manage—it has a major selling point in its relative opacity. With a little creative corporate structuring, the ownership of a New York property can be made as untraceable as a numbered bank account. And that makes the city an island haven for those who want to stash cash in an increasingly monitored global financial system. “With everything that is going on in Switzerland in terms of transparency, people are being forced to pay taxes on their capital that they used to hold there,” says Rodrigo Nino, the president of the Prodigy Network. “Real estate is a great alternative.”

[…]

“Real estate is a wonderful way to cleanse money. Once you buy real estate, the derivation of that cash is forgotten.”

[…]

Every year, the British real-estate brokerage Knight Frank publishes a document called “The Wealth Report.” The latest edition produces the curiously precise estimate that there are 167,669 individuals in the world who are “ultrahigh net worth,” with assets exceeding $30 million. “Of course, the big question is: are the rich getting richer?” the report asks. It answers gleefully in the affirmative, forecasting that over the next decade, the ranks of the ultrarich will increase by 30 percent, with much of the growth coming in Asia and Africa.

This new global wealth is being lavished on the usual status items—planes, yachts, contemporary art—but Knight Frank is pleased to report that the rich favor real estate most of all. Real estate can serve as a convenient pied-à-terre, an investment hedge against a wobbly home currency, or an insurance policy—a literal refuge if things go bad. Other financial centers boast a similar mix of glamour and apparent security—Knight Frank’s list of the top-ten “global cities” includes London, Paris, Geneva, and Dubai—but New York is forecast to add more ultrahigh-net-worth individuals than any city outside Asia over the next decade.

[…]

As expensive as New York’s luxury real estate might seem, it’s a bargain compared to other global capitals; a million dollars will buy twice as much space here as it does in Monaco or Hong Kong. New York is perceived to be more stable than Miami, Shanghai, and Beijing. It is much cheaper than London, where tabloid-fanned outrage over property prices has created an uncomfortable political climate and various new or proposed taxes are aimed at foreign investors and offshore entities. In New York, by contrast, buyers of new construction often qualify for a tax abatement.

[…]

The first rule of selling property to the ultrarich is that you can’t try to sell them property—you offer them status, or a lifestyle, or a unique place in the sky. A marketing video for 432 Park Avenue, scored to “Dream a Little Dream,” features a private jet, Modigliani statuary, and Harry Macklowe himself costumed as King Kong. One recent morning, at the development’s sales office in the GM Building, Wallgren led me down a hallway lined with vintage New York photographs, through a ten-by-ten-foot frame meant to illustrate the building’s enormous window size, to a scale model of Manhattan.

“If you bend down like this,” Wallgren said, stooping to street level, “you can really appreciate the height of it.”

[…]

“Rich people come to the U.S., and these people are busy,” he said. “What is, for these people, very important? I am asking you! To save the time.” Perepada doesn’t drag his clients to a bunch of open houses. He takes them to Jean Georges, gets them hockey or Broadway tickets, rents helicopters or horse carriages, sets them up with plastic surgeons. He says that by building a rapport, he is able to sell 80 percent of his properties with a simple phone call.

[…]

“Did you see The Wolf of Wall Street?” Perepada asked as we drove. “I love this movie. You see how he works? Amazing. ‘If you trust me, you have to buy. If you don’t trust me, you need to work with someone else.’ This is my regulation: Trust me, take it.”

[…]

Jajan believes the most important service he offers is reassurance. “The client wants an adviser here; he wants to feel comfortable knowing he has someone he can trust here in the United States.” Jajan’s firm offers a range of management functions. “We recently purchased a vacuum cleaner,” he told me. “It was for one of our high-net-worth clients that bought $15 million worth of property this year. We’re not about to say, ‘We don’t do that, we’re lawyers.’ ”

[…]

An anonymous high-net-worth client of Credit Suisse, who spoke to U.S. Senate investigators after taking advantage of an amnesty for tax cheats, described the process by which he would manage his funds when visiting Zurich. A remote-controlled elevator would take him to a bare meeting room where he and his private banker would discuss his money; all printed account statements would be destroyed after the visit.

The theatrical secrecy is designed to build personal trust between such bankers and their clients, which is especially vital when the goal of the transactions is to conceal assets from the prying eyes of rivals, vengeful spouses, or tax collectors. Moving the money itself is a relatively simple matter: A wire or a suitcase can convey cash from China to Singapore, or from Russia to an EU member state like Latvia, and once the funds have made it to a “white list” country, they can usually move onward without triggering alarms. Concealing the true ownership of a property or a bank account is trickier. That’s where the private bankers, wealth advisers, and lawyers earn their exorbitant fees.

Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker. “It will be in some file, but not necessarily a computer file,” says Markus Meinzer, a senior analyst at the nonprofit Tax Justice Network. “It could be a black book.” If an investor wants to sell the property, he doesn’t have to transfer the deed—an act that would create a public paper trail. He can just shift ownership of the holding company.

Recently, scrutiny from the United States has punctured some of the traditional secrecy of Swiss banks. But that has just pushed clients to boutique advisory firms, often run by the same personnel. “Banks like working with those firms,” Meinzer says, “because they are then legally in the clear, without the risk of going to prison.” As international blacklisting has pushed some offshore locales toward greater legal compliance, new havens have arisen. New Zealand trusts offer similar secrecy to those of the Caymans, without the stigma.

It’s a sophisticated, well-oiled system that rarely requires crude subterfuge. Though U.S. authorities track all transfers over $10,000, a wire into a real-estate lawyer’s escrow account should look perfectly routine. “A lot of times, I don’t even know where my clients are from,” says the lawyer Bruce Cohen. “But I know that certain countries are very careful about the money that leaves their country.”

[…]

The best—though still fuzzy—global estimates say as much as $1.5 trillion in criminal proceeds is laundered each year. The United Nations figures that as little as one-fifth of one percent of that is ever recovered.

 

Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money | International Consortium of Investigative Journalists

Sun and Shadows: How an Island Paradise Became a Haven for Dirty Money | International Consortium of Investigative Journalists.

Like most small tax havens, Seychelles has an outsized impact that belies its modest market share. As Al Jazeera’s undercover muckrakers discovered, offshore patrons and the accountants, bankers and other operatives who help them usually don’t settle for a single offshore company or bank account. They create elaborate webs that use multiple jurisdictions, multiple front men and multiple layers of ownership. Smaller havens such as Seychelles are crucial links in these chains of secrecy and in the wider offshore system.

They support a system that, critics charge, caters to drug traffickers, fraudsters, money launderers and high-net-worth tax dodgers, fueling onshore corruption and poverty. By one estimate, as much as $32 trillion in private financial wealth is hidden is offshore havens — roughly equivalent to the annual output of the U.S., Chinese and Japanese economies combined.

[…]

Seychelles is happy to help offshore clients embrace the flexibility of the international tax system: “Paying less tax as long as it is within the parameter of the law is legal. It is not even your patriotic duty to pay a cent more.” 

[…]

in a nation where the president’s party controls 31 of 32 seats in the legislature, Michel’s silence on questions about his offshore assets will close the door on any discussion of the issue.

“A president and his cronies stashing their money in an offshore account, in order to keep it away from their own tax authorities — in any other part of the world, these people would be on their knees, begging for forgiveness,” says Ferrari. “Here, guess what? It’s just business as usual.”

[…]

The offshore action in Seychelles centers on the main square, in a series of unlovely multi-story office complexes. Accountants and corporate operatives work in mostly interchangeable, white-walled offices, on desks cluttered with manila folders. They take their lunches at one of the Victoria members-only clubs, and spend the afternoons receiving a steady stream of foreign clients, or chatting on the phone with the European and American lawyers who help steer new business their way.

[…]

In 1995, the Republic of Seychelles enacted the Economic Development Act, a law that offered broad immunity from prosecution and extradition to any foreign national who invested at least $10 million in the local economy.

U.S. officials described it as the equivalent of a “Welcome, Criminals” banner. Britain’s Serious Fraud Office called it “the perfect present for drug barons, fraudsters and money launderers.” Under international pressure, the government backed down, at least on paper. The law was taken off the books.

[…]

For critics of tax havens, the argument that banks are integral to the offshore world isn’t a defense; it’s evidence of how deep offshore abuses are rooted in the global financial system. Many of the world’s biggest banks — including HSBC and JPMorgan Chase & Co. — have been sanctioned for failing to follow anti-money laundering rules. Barclays itself paid $298 million tosettle U.S. criminal charges that it shifted hundreds of millions of dollars on behalf of banks and individuals in Cuba, Iran, Libya and other rogue nations.

[…]

Around the world, offshore financial centers are often touted as economic engines that help small, resource-starved places improve themselves. But it is often a few well-connected locals — along with expatriate lawyers and accountants from the U.S., the U.K., Australia and other rich nations — who enjoy most of the profits.