Virginia Postrel explains how zoning and other land use restrictions contribute to income inequality and economic slowdown. Here’s her summary:
As I have argued elsewhere, there are two competing models of successful American cities. One encourages a growing population, fosters a middle-class, family-centered lifestyle, and liberally permits new housing. It used to be the norm nationally, and it still predominates in the South and Southwest. The other favors long-term residents, attracts highly productive, work-driven people, focuses on aesthetic amenities, and makes it difficult to build. It prevails on the West Coast, in the Northeast and in picturesque cities such as Boulder, Colorado and Santa Fe, New Mexico. The first model spurs income convergence, the second spurs economic segregation. Both create cities that people find desirable to live in, but they attract different sorts of residents.
As I’ve mentioned before I live in a neighborhood where plumbers live next door to middle managers. When you value this lifestyle, you necessarily value the conditions that foster it. Anything else is just kvetching.