Markets and incentives work, and businesses respond to them. If SF thwarted innovation, we would see less of it there and more of it elsewhere, like Kansas City.

There are exogenous factors too. North Dakota will be rich due to oil even with incredibly corrupt and inefficient local governments.

Indeed, as are Texas, Alaska, and Saudi Arabia.

Resources must be extracted where they exist. No such physical constraints bind the development of search engines, social networks, etc.