What you have is people from all over the world swarming SV because you can't get that job in Cork or Boise.
Everything doesn't need to be in silicon valley. If someone is willing to live in their car for a job, with all the social baggage, sneaking around and unhygienic side effects that entails, surely they would be willing to move to a less crowded place like Portland to do the same job.
If the nexus for every single tech company must remain in SV then these companies could set up satellite offices around the country or allow people to telecommute with robust teleconferencing setups that turn a monitor into a window. Then just hang it up on the wall in your office and turn it off when you're not working.
Seriously people. You don't have to live like animals. I have a decent software job where I live. I pay $700 rent and look what I get to do every weekend