GDP would be enormously increased, if eg more people could move to New York City or Silicon Valley.
See also https://www.mercatus.org/publications/monetary-policy/shut-o...
The problem historically has been the distribution of that additional wealth. It's common to see cycles of increasing rent seeking, followed by de-urbanization/migration, and then a gradual return to cities.
Though if more and higher construction were legal, they could afford a bigger place in dense urban cities, too.
(Of course, the number of plots for single family houses is limited. But there's no limit to how big your apartments can be, if you are willing to stack them.)
Increase in GDP means that someone is making more money. And you seldom have to _require_ anything to get people to make more money. Companies and workers already have the option to negotiate remote working arrangements. And had for a long time.
> Imagine if every small town in the country had HN types bringing money into the local economy instead of taking it out.
They'd just take it out to another 'local' economy. What makes some random spot more deserving than some other random spot?
And in any case, on a macro scale there's basically as much money in the national economy as the Fed wants there to be.
If there's some process that makes money magically vanish (eg perhaps those wacky foreigners selling you goods but then just burying the cash you pay them, instead of spending it), then the Fed will just issue more money to make up for the shortfall.
Similarly, if those foreigners dig the money back up, the Fed will just sell a few items off their balance sheet to soak up the extra money.
Inflation adjusted GDP is a completely independent measure/concept/entity/quantity from money supply.
(I agree that the parent comment is unconvincing.)
They are independent entities as measured state of an economy at single points in time. Money supply doesn't tell you what GDP is, or vice versa. Normalizing GDB for inflation is about removing even that connection.
But as far as the dynamics of an economy everything is related to everything. Changes happening to one spill into effects on the other, although as we both know, often not in a simple way.
The first was about real GDP, and natural incentives vs legal requirements.
The second was about money supply vs worrying about keeping money in the local economies.
Productivity is really mostly a measure of value capture.
So when we say 'productive' we can just mean 'rich people in specific companies hoarding profits and income' and then assume that this is 'productive' by the more common definition.
The problem is that those areas may not quite be more 'productive' per say, but that there's a power imbalance.
I believe that actually they are more productive, but the White Collar workers are playing on a global scale, but the plumber can still only work on a local scale.
It probably would require a 'multi pronged' solution of tweaking taxes, services, building more homes, upping the interest rate, getting companies to spread out a bit etc..
Those people who want to be crammed (in return for higher income) should be allowed to cram.
As a nice side-effect, that leaves more of the rest of the world free for non-crammers.