> bars and restaurants, museums and the opera, high-paying jobs
And these would actually be rent seeking activities? Is that the idea?
And these would actually be rent seeking activities? Is that the idea?
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.
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.
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".
[1]http://www.mercerrestaurantgroup.com/how-to-open-a-restauran...