Inequality and the City

From Gord Price today:
Paul Krugman, probably the most-read columnist in the New York Times, comments on the causes of gentrification:
The story for many of our iconic cities is, instead, one of gentrification, a process that’s obvious to the naked eye, and increasingly visible in the data. Specifically, urban America reached an inflection point around 15 years ago: after decades of decline, central cities began getting richer, more educated, and, yes, whiter. Today our urban cores are providing ever more amenities, but largely to a very affluent minority. But why is this happening? …
It’s a familiar fact (even if the usual suspects still deny it) that the concentration of income in the hands of a small minority has soared over the past 35 years. This concentration is even higher in big metropolitan areas like New York, because those areas are both where high­-skill, high­-pay industries tend to locate, and where the very affluent often want to live. In general, this high ­income elite gets what it wants, and what it has wanted, since 2000, has been to live near the center of big cities.
Still, why do high-­income Americans now want to live in inner cities, as opposed to in sprawling suburban estates?  …the modern high earner, with his or her long hours — and, more often than not, a working partner rather than a stay­-at-­home wife — is willing to pay a lot more than the executives of yore for a central location that cuts commuting time. Hence gentrification. And this is a process that feeds on itself: as more high earners move into urban centers, these centers begin offering amenities: — restaurants, shopping, entertainment — that make them even more attractive.
We’re not just talking about the superrich here, or even the 1 percent. At a guess, we might be talking about the top 10 percent. And for these people, it’s a happy story. But what about all the people, surely a large majority, who are being priced out of America’s urban revival? Does it have to be that way? The answer, surely, is no, at least not to the extent we’re seeing now.
Rising demand for urban living by the elite could be met largely by increasing supply. There’s still room to build, even in New York, especially upward. Yet while there is something of a building boom in the city, it’s far smaller than the soaring prices warrant, mainly because land use restrictions are in the way. And this is part of a broader national story.
… national housing prices have risen much faster than construction costs since the 1990s, and land­-use restrictions are the most likely culprit. Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation. The good news is that this is an issue over which local governments have a lot of influence. New York City can’t do much if anything about soaring inequality of incomes, but it could do a lot to increase the supply of housing, and thereby ensure that the inward migration of the elite doesn’t drive out everyone else.
Full column here: http://www.nytimes.com/2015/11/30/opinion/inequality-and-the-city.html?&moduleDetail=section-news-4&action=click&contentCollection=Opinion&region=Footer&module=MoreInSection&version=WhatsNext&contentID=WhatsNext&pgtype=Blogs