Paul Krugman makes far more sense when he talks microeconomics. Here he is explaining how housing inequality can be cured by housing deregulation:
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. As Jason Furman, the chairman of the White House Council of Economic Advisers, recently pointed out, 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.
If possible, the story is more urgent in Auckland!
Hat tip to David Henderson at EconLog, who has a nice story about inequality, chainsaws, and Lyndon Baines Johnson …