The demand comes from the 'social marker' heuristic that a university degree conveys (ie, social proof) for employment and personal networking. Until there is a competing "commodity" whith this aspect of social utility, a degree with have economic value proportional to GDP, in a way like housing stock. The main problem with broad based inflation of the costs of college is that there is only so much "beach front" real estate in the degree system. The top 10 schools are typically the ones that matter, for social signalling, and quite frankly nobody cares how much you paid to get the degree. A "free" degree from cambridge (UK) has a good value, just like a $$$ degree from MIT or Stanford. Heck, many will argue a <dropout> from a top 5 school has more going for them than a degree holder from a middle of the pack school.
The great thing about Berkeley is its one of the few state schools that has a powerful global reputation. And in that sense it remains good value for money (if you are a resident Californian). But the taxpayers and politicians seem to be playing a rather sophisticated game of stealth-taxation with the Higher Education system as a whole. It really doesn't matter the details until one unpacks how the system is really working. And what is driving supply and demand at a more 'meta' level.
Not to mention, barely anyone pays the "listed price" in the USA for any school.
What an amusing and inaccurate stereotype. Brits who repeat it have apparently never been to the further reaches of England. For example, Birmingham or Liverpool... See how stereotyping isn't helpful?
[1] There is a long history of "fleecing" rich foreign kids at schools, where they are looked at as cash cows. This is both true in the US (where they pay 'retail' with no financial aid) and in places like the UK/EU where locals are heavily subsidized.
It's not entirely due to the increase in student population, either, although that's part of it. If you look at just the total funding column, it's gone down since the '80s, despite the state's increasing population and GDP. Someone should double-check my numbers, but last time I looked into this I remember a back-of-the-envelope calculation that California used to put ~0.3% of state GDP into the UC system, and now puts in only about 0.1%.