>The solution has to be at the broader government level (i.e. in Sacramento in this case), wrenching back some of the control that has traditionally been local in the interests of the broader population and not just, say, Palo Alto residents.

The current hole was dug by local governments being very involved in telling property owners what they could and couldn't do over many decades.

Why will recursion fix the problem?

The bay area is rich enough and enough of that is tied up in property that if it perceives it needs to buy influence in government in order to keep it's wealth it will probably be able to do so then the problem will be even more entrenched because it will be entrenched at the state level.