Paul Krugman has an an interesting commentary on what he calls the return the rentier city, on his blog.

Basically, from a few hundred years ago (yes, I know not technically medieval) and before, the very rich in a city did not make their money there. They had some sort of holdings that generated their money elsewhere, typically hereditary lands, but they lived in the city.

More recently, the rich in the city have made their money in and around that city, through manufacturing, shipping, publishing, etc. Cities have been centers of business, but the rentier city is returning:

But these days, everything old is new again. Today’s Wall Street Journal (sub. Req.) has a story about the sources of London’s current boom: an influx of very wealthy foreigners, whose income comes from elsewhere. Middle Eastern sheiks, Russian beeznessmen, Indian industrialists, have become the backbone of London’s economy. It’s all helped a lot by British tax law, which gives big breaks to people who live in Britain but are “domiciled” elsewhere (don’t ask.)

Local town authorities are, of course, falling all over themselves, on the theory that it benefits the economy.

Personally, I’m of the belief that they are more of a burden than a benefit, as they push the middle class out of the cities, and raise the cost of housing and other services for everyone.

One comment on his post was very interesting, “But it doesn’t amaze me how 21st century America is starting to look like an accelerated rise and fall version of the Roman Empire: outsourcing civil functions, mercenaries, the Patriot Act, and now rentier cities.”