There also is the issue of how many people can actually be served from Hetch Hetchy (for the peninsula) and the various other places (various rivers) for the rest of the BA. Already Hetch Hetchy is being stretched. The water levels there also depend on the California drought situation. A headline from not that long ago: "Hetch Hetchy levels a major concern for water officials" (http://www.ktvu.com/news/4607391-story)
So adding a few hundred thousand or even more people to the Bay Area doesn't seem to be such an easy proposition and "purely political" to me? The politics sure also exist, but when I follow those discussions as an interested bystander - as someone who used to live there - I always hear the arguments about politics (which are of course true) but I never see things like water even mentioned. I'm not saying I know, I'm saying I wonder that it's not even mentioned. I would happily be educated and find out that those concerns have been solved or don't exist, but I'm suspicious because nobody even mentions them. Even if politics takes care of changing laws and starting construction, is it even feasible, especially the water question? And if I remember the climate model predictions right California will have more droughts than in the past decades (https://www.washingtonpost.com/news/energy-environment/wp/20...).
Predictions by a California government agency: http://www.water.ca.gov/climatechange/
Reading just the first few paragraphs on that page shows that they expect a negative impact on just the water sources the Bay Area depends on.
I think the earth quake hazard is undervalued in comments asking for more construction, and at least when I lived there - I left about 10 years ago after having lived there for about 7 years - water was a serious future problem too. It was still okay but they were looking at huge amounts of deferred maintenance and construction just to update the water supply. Even when I lived there I could read about significant leakage of water for the peninsula on the way from Hetch Hetchy.
So if they decide to build more and more densely, I'm not sure what a) infrastructure like water will do, and b) what happens when the next major earth quake inevitably strikes - admittedly it is more likely to strike in the ("less valuable") East Bay.
Nor do I understand why it needs to happen. You said some of it yourself. There really is no reason for everyone to actually be there in order to work in an IT job. There are people who will argue that presence in their experience is a must, okay, so they can do that. But there are plenty of examples of projects and companies that have shown that purely remote does work for a lot of people and companies.
Why put ever more people into that small congested area that has to get basics like water from very far away, and will have huge problems with earth quakes? I immensely enjoyed living there, in places like the Presidio in SF itself, or in San Ramon, Mountain View and Redwood Shores (I kept moving) - and in the Oakland hills, a wonderful, gorgeous place with miles and miles of open spaces and trails and horses right in front of my door, with a view over the Bay to SF.
I don't see why the Bay Area of all places (meaning the physical limitations, water and quakes) should be made into Hong Kong density. Few people who (have to) work there actually benefit from the often touted benefit of "potential connections".
[0] https://ww2.kqed.org/science/2014/02/28/bay-area-do-you-know...