“Companies appear to locate in absolutely the worst places,” Moretti writes. “They pick very expensive areas—the Bostons, San Franciscos, and New Yorks of the world. With sky-high wages and office rents, these are among the costliest places in America to operate a business. We would expect these cities to be unattractive for firms, especially those that compete globally.”18 But they’re not. It’s the firms that locate outside these cities that struggle. The money you save in rent doesn’t make up for the talent and knowledge that dissipate over distance.
