This is completely correct. It's one more reason that the cure for our ills is not hoping for local governance to overcome NIMBYism but rather for reform in land-use policies which will achieve more fairness.
I don't see that anyone has a right to live in any particular place, and much of what people like about the city is a result of "Real Estate NIMBY-ism". Also, it's hard to see how "a few entitled people" control what people are doing with their property, unless that's become new slang for "the majority of voters".
In this case, that's exactly what it's slang for. The only people who can vote for these things are the ones already entitled enough to live in the city. Everyone else that was forced to the east bay and down south has no voice.
For a primer on the philosophical reasons behind government, I recommend _Leviathan_ (1651) by Thomas Hobbes.
We have different levels of government for a reason.
EDIT: To other points occur to me: 1) I've never found Hobbes very compelling. And 2) If "these other people affect me" is your (not you you, but the general you) idea of a casus belli, you will perpetually be at war no matter how large or small your government.
I think there's merit in this, but when you expand it to the bigger problem of the landed and the landless, you see how it fails to scale: a Coasean solution to landlessness is equivalent to a Coasean solution to slavery-- but slaves can't exactly afford to buy themselves out of their situation...