"Build more housing" will tend to make developers very wealthy while doing relatively little to reduce rents or property prices, just like "build more roads" doesn't help traffic.
One part of the solution is to drastically curtail subsidies for landlords (depreciation/mortgage interest deduction)
For areas like LA, you can assume that there is a very large pool of people with at least some desire to migrate in (just like NYC, Chicago, etc). One of the primary throttling influences on this migration is the cost of housing, just like one of the primary throttling influences on "Will I drive to location X" is "how bad is traffic between here and there?" (what is the cost of driving).
Increase the housing stock (build more roads) and it will almost immediately be soaked up by those eager to migrate in (drive), before it has the chance to sit on the market for a while and exert downward pressure on prices.
Just being in a "larger economy" may mean each person is burdened with more air pollution (e.g. China and India) and more crowded conditions than when the economy was smaller, while reducing access to various natural attractions (e.g. beaches, forests, open spaces).
Where are the economic models that take these sorts of economic costs to people into account?
I'm often surprised so many people are persuaded to embrace various policy positions by general statements to the effect of "studies say this increases GDP."
As in the old saying "War is much too important to be left up to the generals", it seems the economy is too important to be left up to the economists.
Maybe I should have elaborated more in my reply. My point was that I've heard that argument /a lot/ but I never hear alternatives or what I feel like is an honest discussion (maybe I'm just out of the loop). The scenario usually starts with, "a road is busy and citizens what something done about it." The obvious choice is to expand the road. This obvious response is, "that won't fix traffic." What I'm saying is there are other reasons to expand and I also haven't heard alternatives to expanding the road that are any more proven to work--which I'm genuinely curious about.
There are two goals that are in direct conflict in your scenario: one is 'keeping voters happy', the other is 'make efficient use of infrastructure, and minimize externalities of transport' (this goes for other issues as transport, for example water management, but let's keep it concrete for now). The 'solution' in your example is simple, from an engineering point of view: toll roads, congestion charges, smaller and more dispersed schools and healthcare facilities, denser residential development in fewer urban centers (=less sprawl), and a bunch of other, smaller measures.
Obviously this is impossible (no single administrative unit can do all or even several of those things), as well as too slow (we're talking 5-10 year implementation timelines, + another 5 or 10 for the effects to really set in). It's all about trade offs, and stopgap measures to keep things rolling in the mean time. I've been on all sides of this: informing the public about these things (haha good luck, even the 'average' citizen who has time to get involved in this is a raging lunatic, in my experience - let alone the real troublemakers), convincing policy makers to (also) look at the long term, infrastructure builders/maintainers who are essentially firefighting most of the time, ...
One of my former colleagues wrote his PhD thesis on the effect of remote working on transport demand; if you're really interested, email me and I'll see if I have a pdf somewhere.
(I've been working in this field for 15+ years, which is not to say that I know everything or even that that means that I'm right at all, but I've thought about this longer and harder and studied it more rigorously than 99.9999% of the population)