It's not a binary choice of dense-area-of-Manhattan and Smallville. Historically, for better or worse, a lot of people have decided/voted that they want an urban environment that's dense but not "too" dense. You may disagree--especially if you feel you have to live in the area of question--but it's really not irrational from the perspective of current residents.
Sure, agreed: I think the point is that "what is the right level of density for which areas?" is probably not something that should come from federal government loan regulations.
It is a problem; people tend to vote in their own best interests (except in Presidential elections - Zing!), and that generally means voting against new housing nearby.
Sure, but we literally have one Manhattan in the entire country. Maybe we could try having as many as three or four real cities in the country? Maybe one on the west coast?
But sure. Persuade whatever West Coast city to aggressively build for density. For better or worse, we don't do these things as top-down directives in the US.
The point is that Smallville is also illegal. The article is talking about the Main Street of yore, the closest thing to which is built today is an exurban strip mall with an enclosed parking lot.
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