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In don't think "zero sum game" means what you think it means. Lots of people in San Francisco engage in transactions, and lots of people in New York engage in reducing transaction costs. Neither are "zero sum" endeavors. Insurance is a great example. My office used to sit in the shadow of the Met-Life building. They don't make anything, so they must be zero sum. Wrong. Insurance enables transactions to happen that wouldn't otherwise happen, adding value to the economy. That's the crux of many of New York's economic sectors: finance, advertising, insurance, law, consulting. Its abstract, and service oriented rather than product oriented, but its not zero sum.

Now one can argue about the amount of value created by these industries, or rather how much of the value created is absorbed by the industries themselves. You can also question how much value is created by yet another web app getting funded in SV, so I don't know if you're on firm ground there.

Sure, finance is valuable, up to a point. We reached that point about 100 years ago. Since then, the geniuses of Wall Street have been figuring out how to capture more of the value created by other people. That's a zero sum game.

Having worked in finance, I can promise you that a lot of people in finance are playing zero-sum games. All trading is basically zero sum. No trader goes home saying, "Hey, honey, I imperceptably increased global liquidity today; yay me!" They say things like, "I'm fucking awesome. I gutted those chumps in the LIBOR pit. Whores for everybody!" [1]

Anybody working for those people is also essentially playing a zero-sum game, in that their activity is just aiding in shifting value from one pocket to another. Which is why I no longer work in finance; I wanted to do something useful.

[1] Yes, I have actually heard traders say "Whores for everybody!" in the office. At least in the office they were joking.

Even if some traders think that they are playing zero-sum game - it does not mean that traders actually play zero-sum game.

Benefit of trading is increased liquidity.

It matters entirely for the psychology of the industry's culture.

However, increased liquidity is of no direct value. It only matters if people get better prices, or get deals closed significantly sooner. For a trader's participation to be positive sum, the benefit of their capital has to be larger than the costs they impose. Given that every trader is working to make the opposite true, surely many of them are negative sum. Especially given that capital can be deployed to reduce liquidity just as well as increase it.

Your essay http://paulgraham.com/cities.html really hit the differences between Boston, NYC and SF the best way I have seen.

As someone that spends time in NYC for work, lives in Boston, has lived in DC and Santa Clara the largest and most important distinction are how people measure each other.

While ideas are worthless on their own, they seem to be the currency that matters in conversations in SF. Money matters in NYC. Political affiliation and who you are affiliated with matter in DC. Boston has the most odd culture because people weigh each other on something that happened far in the past rather than in the future, the choice of school that they went to.

The thing that really makes SF stand out is that people are ambitious toward being part of something bigger than themselves and growing it to benefit many others.

The culture in the Bay Area seems to be to get people addicted to their employer as fundamental to their identity, not just the money it gives them. This may be because SF doesn't have the level of services you get in NYC, but that's a cause/effect problem from lack of disposable income and lack of population density.

For example, a Google employee that moved from elsewhere in the country to San Francisco, and takes the Google bus to Mountain View because they don't have a car has an absolutely terrifying dependency on Google that they would not have if they were freely spending their own money to get the same services.

How is it terrifying? If they left Google, they could ride another big company's bus, or ride a bike, or take public transit, or purchase a car, or move to a different neighborhood.

Other people being willing to pay for something doesn't necessarily make it positive-sum or economically productive. A lot of startups (certainly not all) seem to be trying to win tournaments: http://en.wikipedia.org/wiki/Tournament_theory

In that sense, SF is is similar to Hollywood. And the result is that society devotes too many resources to the next big social network or the next big summer blockbuster, and not enough to, say, making comfortable chairs.