Certainly building more housing will bring down the price, and that will make life easier for tech workers who will still be well-paid. But that won't do anything for the homeless who are unemployed or making minimum wage, who are still going to be vastly outbid compared to tech salaries.

Given the geographical constraints and the velocity of tech growth, it's really unlikely that a free market would build so many units that all the high-paid tech workers who could possibly come to the Bay Area were situated, and landlords were forced to start catering to the working poor. We have to force them to, because market incentives won't.

Companies could build offices in other towns. That's an option too.

Oddly, one way to encourage that is to make the permitting process easier. Tech companies want to all be in the location, because its much more desirable to tech workers, and the belief that the best talent is worth the price means that money is made available for that.

Without the restrictions on development (which are designed to keep the area desirable, and succeed at that, as shown by market prices) desirability would drop -- because you'd have more people, and less money for services per person -- along with prices, and tech companies would be more likely to locate elsewhere.

You'll get no argument from me on that front. I still believe tech companies should go with other locations now because there is already incentive and opportunity to do so.

Yes, but as with landlords building low-income housing when there are high-income people left to serve, probably not one a rational actor will choose.

Forgive me, I don't understand. Are you saying developers need to be forced to build housing? Developers will do anything to build more units, if you ask them to set aside units for affordable housing they will. In SF it's almost impossible for them to build anything..

It seems like observing behavior of market participants shows developers won't build affordable units if asked:

http://www.sfchronicle.com/bayarea/article/Developer-pulls-o...

That "asking" is exactly the form of regulation I'm advocating. They won't do it out of the goodness of their hearts, but they'll do it if it's a prerequisite to build luxury housing.

>However, cities are barely approving residential zoning and this artificial distortion is amplifying the homeless problem.

Aren't "cities" just manifestations of players within the greater market system coming together to assert their interests and preferences?

Or is this an example of how a group can act to block the proper functioning of a market, kind of like a cartel?

Cities (and countries) are democratic communities that can choose to deploy markets if and to the extent that they are useful for some resource allocation problems. And they are quite useful. But communities come first; when the market does something that opposes its values, the community can and should override it. The difference between regulation and a cartel is that regulations pervert the market for public gain at private expense and cartels are the other way 'round.

The problem with that theory is voter turnout.

In San Francisco, the latest new regulation against housing was passed by a simple majority of the vote, with 8.5% of San Francisco residents voting in favor. In the latest election, the moderate District 3 supervisor was replaced by a rabid anti-growth supervisor with the approval of 12% of the district’s residents.

This is actually sort of by design. Americans in general are pathetic (I do not mean apathetic) about their civic responsibilities, but aggressive home ownership policies were pushed partly to get people more involved in politics. Turns out that this promotes narrow-minded personal interest rather than the good of society.