To be clear, when I talk about “high-wage areas” with expensive housing, I am not talking about US cities in general. I’m talking specifically about particularly expensive places like NYC and London.
I don’t think London is expensive or has high wages because it’s productive. I think that’s because rich people brought money to London from elsewhere because:
their property rights are secure there (relative to Russia/etc)
there were lots of high-end stores
they could get luxury services like butlers and high-touch financial management
there were other rich people there to network with
Now that you can get some services and goods online, and there’s more international competition for those rich people, you see whole sections of London where rich people have houses that just seem dead to ordinary people on the street, with luxury stores that are closed most of the time, houses that are occupied 1⁄3 the year and have private chefs when they’re occupied, and so on.
You make a convincing case that their are forces that encourage very rich people to congregate relatively close together, I don’t think its the main force behind what is going on but I can see that it exist. Other forces also exist, like those I outlined above. Mine is not a productivity argument, and you could if you wanted even lump my suggestion under “there were other rich people there to network with” where “network” here means “marry” and “rich people” here means “people with a career, not a job.”
To be clear, when I talk about “high-wage areas” with expensive housing, I am not talking about US cities in general. I’m talking specifically about particularly expensive places like NYC and London.
I don’t think London is expensive or has high wages because it’s productive. I think that’s because rich people brought money to London from elsewhere because:
their property rights are secure there (relative to Russia/etc)
there were lots of high-end stores
they could get luxury services like butlers and high-touch financial management
there were other rich people there to network with
Now that you can get some services and goods online, and there’s more international competition for those rich people, you see whole sections of London where rich people have houses that just seem dead to ordinary people on the street, with luxury stores that are closed most of the time, houses that are occupied 1⁄3 the year and have private chefs when they’re occupied, and so on.
You make a convincing case that their are forces that encourage very rich people to congregate relatively close together, I don’t think its the main force behind what is going on but I can see that it exist. Other forces also exist, like those I outlined above. Mine is not a productivity argument, and you could if you wanted even lump my suggestion under “there were other rich people there to network with” where “network” here means “marry” and “rich people” here means “people with a career, not a job.”