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That's not snarky, and you have a point. But even if things seem "really obvious" and we can tell "just by looking at the facts", I feel better if someone has

That's not snarky, and you have a point. But even if things seem "really obvious" and we can tell "just by looking at the facts", I feel better if someone has looked at the data and shown that to be the case. We aren't living in the feudal era, and a lot of people like to think that the reason people move to the cities is because of (for instance) bars and restaurants, museums and the opera, high-paying jobs and so on. This proximity to wealth may be a symptom of some third factor or it may be the driving factor. That's why I appreciate it when smart, hard-working people take their time to figure it out for me.

antisthenes 10y ago
The problem is, as often in economics, defining the terms and building a model that approximates life. It's not as trivial as a sorting algorithm or a simple 1 parameter regression. How do you define wealth concentration, for example? If your definition is flawed, you can throw out the entire model.
- Paul-ish 10y ago
  I suppose that is why people spend their entire academic career looking at these things.
glibgil 10y ago
> bars and restaurants, museums and the opera, high-paying jobs And these would actually be rent seeking activities? Is that the idea?
- startupdiscuss 10y ago
  That wasn't what I was thinking of. I was just contrasting two different types of reasons for why people cluster in those cities. Type I, the optimistic theory Information is more efficient and trust is better when people meet in person. Industries need to co-ordinate trust and information flow through lots of people, so they have to be in the same place. They produce a lot of value, which produces wealth and increases productivity. That wealth pays for all these great things. This causes a happy cycle of smart and educated people being attracted to the "good" things in life coming to the cities, and providing labor for the companies and so on. Type II, the pessimistic theory In order to get industries going (tech startups, new Oil and gas company etc) you need capital, and the capital exists in these enormous clusters. So the people who want to fund the industry has to go to these clusters of existing capital and convince them to invest them. The returns from the success of the industry go back to the same place and so on. The existence of the bars, restaurants and museums are compatible with both, but only have causal power in the first type of theory.
  - CPLX 10y ago
    It's not all that complicated. People go to where resources are. Sometimes resources are grasslands with plentiful wild animals that you can spear and eat. Sometimes it's gems or petroleum buried underneath the rocks. And yes, resources are things like museums or pretty views or available five star restaurant meals. But the dynamic throughout human history is reasonably understandable, you can observe the same basic concept in a Petri dish. The biggest resource of all in modern society is financial wealth. So people go to places that have it. Unlike the grassland, where new arrivals quickly deplete the available resource, in this modern scenario the result tends to be the creation of more wealth, and the cycle reinforces itself.
- acchow 10y ago
  Is that a typo? Rent seeking refers to a specific kind of behavior https://en.m.wikipedia.org/wiki/Rent-seeking https://en.m.wikipedia.org/wiki/Rent-seeking
  - glibgil 10y ago
    Exactly what I meant. Bars and museums require wealth
    - acchow 10y ago
      How is a bar owner rent seeking? They are providing a good and charging market prices for it. If bars in the city got together and introduced a bar-density limit within the city so as to limit the number of bars that can exist and thus allow them to raise prices, that would be rent seeking. If a bar hired a bunch of people to attend town hall meetings preventing new bars from opening up and allowing itself to raise prices - that would be rent-seeking. If prices of drinks are going up naturally because people are making more money, "rent" for real estate is going up, etc. that is not "rent-seeking".
      - nickjarboe 10y ago
        Not sure if I'm missing a sarcasm tag in your comment but most places in the US restrict the number of places selling hard alcohol by having a restricted number of liquor licenses that trade on the open market like taxi medallions. In San Francisco for a restaurant this will set you back a cool 1/4 million[1] and the type 48 license you need to open a bar seem be sold so rarely in San Francisco I can't find any price reference online. [1]http://www.mercerrestaurantgroup.com/how-to-open-a-restaurant/2015/2/1/everything-you-ever-wanted-to-know-about-liquor-license-continued http://www.mercerrestaurantgroup.com/how-to-open-a-restauran...
  - deleted 10y ago
    [deleted]
closeparen 10y ago
It takes relatively wealthy people (or at least big spenders) to make trendy upscale bars and restaurants work. Museums, opera, symphony, most theater, etc. are kept alive by the philanthropy of the local rich. High salaries are paid by rich VCs looking for return, or companies with more cash than they know how to handle commissioning prestige projects. (How many people at Google actually work on revenue generation? That doesn't happen at Joe's Computers in Nowheresville). Concentrated wealth is the reason cities can have these things.
- jethro_tell 10y ago
  It should be noted that the vast majority of the IT industry isn't startups. Lots of the drive of rent is not funded by VCs.
  - Mtinie 10y ago
    I'd argue that what you're identifying as those businesses in the majority were at one time, startups themselves. Without the previous generation of concentrated wealth those businesses would not be in the position they are. I do, however, also agree with your counter-point to the previous comment.
  - aplomb 10y ago
    Prices are driven on the margins - that is the last transaction
- andruby 10y ago
  If you've ever played city building games like Rome, Anno, The Settlers, Banished this will be familiar. They encoded the dynamic of number of people, increasing needs and critical mass well imho.
figers 10y ago
A large share of units in Boston rent to mostly college students who's parents pay the ever increasing rent. Harvard, MIT, BU, etc aren't going anywhere...

antisthenes 10y ago

The problem is, as often in economics, defining the terms and building a model that approximates life. It's not as trivial as a sorting algorithm or a simple 1 parameter regression. How do you define wealth concentration, for example? If your definition is flawed, you can throw out the entire model.

Paul-ish 10y ago
I suppose that is why people spend their entire academic career looking at these things.

glibgil 10y ago

> bars and restaurants, museums and the opera, high-paying jobs And these would actually be rent seeking activities? Is that the idea?

startupdiscuss 10y ago
That wasn't what I was thinking of. I was just contrasting two different types of reasons for why people cluster in those cities. Type I, the optimistic theory Information is more efficient and trust is better when people meet in person. Industries need to co-ordinate trust and information flow through lots of people, so they have to be in the same place. They produce a lot of value, which produces wealth and increases productivity. That wealth pays for all these great things. This causes a happy cycle of smart and educated people being attracted to the "good" things in life coming to the cities, and providing labor for the companies and so on. Type II, the pessimistic theory In order to get industries going (tech startups, new Oil and gas company etc) you need capital, and the capital exists in these enormous clusters. So the people who want to fund the industry has to go to these clusters of existing capital and convince them to invest them. The returns from the success of the industry go back to the same place and so on. The existence of the bars, restaurants and museums are compatible with both, but only have causal power in the first type of theory.
- CPLX 10y ago
  It's not all that complicated. People go to where resources are. Sometimes resources are grasslands with plentiful wild animals that you can spear and eat. Sometimes it's gems or petroleum buried underneath the rocks. And yes, resources are things like museums or pretty views or available five star restaurant meals. But the dynamic throughout human history is reasonably understandable, you can observe the same basic concept in a Petri dish. The biggest resource of all in modern society is financial wealth. So people go to places that have it. Unlike the grassland, where new arrivals quickly deplete the available resource, in this modern scenario the result tends to be the creation of more wealth, and the cycle reinforces itself.
acchow 10y ago
Is that a typo? Rent seeking refers to a specific kind of behavior https://en.m.wikipedia.org/wiki/Rent-seeking https://en.m.wikipedia.org/wiki/Rent-seeking
- glibgil 10y ago
  Exactly what I meant. Bars and museums require wealth
  - acchow 10y ago
    How is a bar owner rent seeking? They are providing a good and charging market prices for it. If bars in the city got together and introduced a bar-density limit within the city so as to limit the number of bars that can exist and thus allow them to raise prices, that would be rent seeking. If a bar hired a bunch of people to attend town hall meetings preventing new bars from opening up and allowing itself to raise prices - that would be rent-seeking. If prices of drinks are going up naturally because people are making more money, "rent" for real estate is going up, etc. that is not "rent-seeking".
    - nickjarboe 10y ago
      Not sure if I'm missing a sarcasm tag in your comment but most places in the US restrict the number of places selling hard alcohol by having a restricted number of liquor licenses that trade on the open market like taxi medallions. In San Francisco for a restaurant this will set you back a cool 1/4 million[1] and the type 48 license you need to open a bar seem be sold so rarely in San Francisco I can't find any price reference online. [1]http://www.mercerrestaurantgroup.com/how-to-open-a-restaurant/2015/2/1/everything-you-ever-wanted-to-know-about-liquor-license-continued http://www.mercerrestaurantgroup.com/how-to-open-a-restauran...
- deleted 10y ago
  [deleted]

closeparen 10y ago

It takes relatively wealthy people (or at least big spenders) to make trendy upscale bars and restaurants work. Museums, opera, symphony, most theater, etc. are kept alive by the philanthropy of the local rich. High salaries are paid by rich VCs looking for return, or companies with more cash than they know how to handle commissioning prestige projects. (How many people at Google actually work on revenue generation? That doesn't happen at Joe's Computers in Nowheresville). Concentrated wealth is the reason cities can have these things.

jethro_tell 10y ago
It should be noted that the vast majority of the IT industry isn't startups. Lots of the drive of rent is not funded by VCs.
- Mtinie 10y ago
  I'd argue that what you're identifying as those businesses in the majority were at one time, startups themselves. Without the previous generation of concentrated wealth those businesses would not be in the position they are. I do, however, also agree with your counter-point to the previous comment.
- aplomb 10y ago
  Prices are driven on the margins - that is the last transaction
andruby 10y ago
If you've ever played city building games like Rome, Anno, The Settlers, Banished this will be familiar. They encoded the dynamic of number of people, increasing needs and critical mass well imho.

figers 10y ago

A large share of units in Boston rent to mostly college students who's parents pay the ever increasing rent. Harvard, MIT, BU, etc aren't going anywhere...