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Re:Rents in Megacities Can't Go Up Forever by startupdiscuss on Thursday March 23, 2017 @10:34AM (#13940060)
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.

Re:Rents in Megacities Can't Go Up Forever by closeparen on Thursday March 23, 2017 @12:44PM (#13941438)
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.

Re:Rents in Megacities Can't Go Up Forever by jethro_tell on Thursday March 23, 2017 @01:40PM (#13942052)
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.
Re:Rents in Megacities Can't Go Up Forever by Mtinie on Thursday March 23, 2017 @04:01PM (#13943674)
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.

Re:Rents in Megacities Can't Go Up Forever by aplomb on Friday March 24, 2017 @12:58AM (#13946714)
Prices are driven on the margins - that is the last transaction
Re:Rents in Megacities Can't Go Up Forever by andruby on Friday March 24, 2017 @04:21AM (#13947448)
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.
Re:Rents in Megacities Can't Go Up Forever by figers on Thursday March 23, 2017 @01:07PM (#13941693)
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...
Re:Rents in Megacities Can't Go Up Forever by antisthenes on Thursday March 23, 2017 @11:00AM (#13940289)
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.

Re:Rents in Megacities Can't Go Up Forever by Paul-ish on Thursday March 23, 2017 @01:42PM (#13942082)
I suppose that is why people spend their entire academic career looking at these things.
Re:Rents in Megacities Can't Go Up Forever by glibgil on Thursday March 23, 2017 @11:11AM (#13940402)
> bars and restaurants, museums and the opera, high-paying jobs

And these would actually be rent seeking activities? Is that the idea?

Re:Rents in Megacities Can't Go Up Forever by startupdiscuss on Thursday March 23, 2017 @11:31AM (#13940616)
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.

Re:Rents in Megacities Can't Go Up Forever by CPLX on Thursday March 23, 2017 @11:36AM (#13940676)
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.

Re:Rents in Megacities Can't Go Up Forever by acchow on Thursday March 23, 2017 @03:06PM (#13943069)
Is that a typo? Rent seeking refers to a specific kind of behavior

https://en.m.wikipedia.org/wiki/Rent-seeking

Re:Rents in Megacities Can't Go Up Forever by glibgil on Thursday March 23, 2017 @06:00PM (#13944754)
Exactly what I meant. Bars and museums require wealth
Re:Rents in Megacities Can't Go Up Forever by acchow on Thursday March 23, 2017 @07:56PM (#13945448)
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".

Re:Rents in Megacities Can't Go Up Forever by nickjarboe on Friday March 24, 2017 @01:42PM (#13950703)
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-restauran...