In his defense of the newest Charles Murray book, Ross Douthat raised what may be the heart of the issue [emphasis mine]:
Second, “Coming Apart” offers a convincing account of how meritocracy has exacerbated the problems that Murray describes — encouraging the best and brightest to work and live and (especially) mate within the cocoons of what he calls the SuperZIPS, segregating Americans by intelligence to an unprecedented degree, and creating a self-reinforcing pattern in to those with much social capital, much more is given, while to those without, even what they have is taken away. Again, he’s drawing on other authors and other works — Bill Bishop in “The Big Sort,” Richard Florida (by implication) in his various paeans to the so-called “creative class” and the “creative cities” they call home. But Murray has been thinking and writing about these issues for a long time, and it shows. I’ve rarely read a better distillation of the case for meritocracy’s in-egalitarian, anti-communitarian, and even anti-democratic tendencies, and what the cultivation of a meritocratic elite can mean for the people left behind.
I would argue that the mechanism for this segregation is the unaffordability of property values in these SuperZIPs. Many of America’s great liberal cities and enclaves are unaffordable as Dan Reed recently documented in detail for the DC area. Given that most American schools are funded by property taxes, those areas that are affordable are often unattractive for those with children. I think this could also partially explain why so many young people have responded to the bad economy by moving back in with their parents. Saving money on rent is nice, but moving in with your parents might be the only way may young people can get into a neighborhood with good opportunities.
In the larger sense, this gets to the issue of why Blue States subsidize Red States. Many poor people live in Red States (although the poor people there are still fairly economically liberal). So why don’t these people just move to Blue States which have more jobs and often a better social safety net ? Why be in the lower class in Alabama when you could be poor in Massachusetts? Cultural issues and proximity to family shouldn’t be discounted, but I think the answer is property values again. If you want a nice house or even a crummy house and a rental but in a nice school district, I suspect it’s easier to find it in a Red State. Yglesias specifically argues that this is a big driver of population growth in Texas.
I think the affordable housing movement will help at the margins, but I don’t think set asides and subsidies and the like have managed to scale. Charles Murray argues that the solution to the top 5% bubble is to preach what your practice, Andrew Gelman does a good job of examining this argument and showing its flaws. I think the solution is different, we need to break down the barriers to increasing the supply of housing for rent or purchase in blue state cities and inner suburbs. Segregation by class is a fundamental in justice and we can do things about it. Local politics can be one of the easiest places to influence, albeit also the place of the most vicious fights. The battleground against inequality may well be homeowners meetings, zoning hearings, battles over accessory apartments, attempts to block new townhouses and multistory buildings. My favorite related issue is mass transit, which can expand the reach of cities and inner suburbs and enables density as roads are inevitably overwhelmed with congestion. I should also add, I don’t think I’m doing full justice to Sheryll Chasin’s argument, but many of these ideas I developed after reading her book “The Failures of Integration.”