He's talking about Los Angeles specifically, not California generally.
> Agglomeration of an industrial sector in a particular area is normal and fine. It happens, even though companies have to pay higher rents and higher salaries, because it's advantageous to productivity to concentrate a wide variety of specialists for a certain field in a particular area. If companies want to spread out more, of course that's fine, but forcing them to do so would almost certainly hurt their performance. If you want lots more high-paying jobs, maybe not the best idea.
The essence of his point is that there's a tradeoff between livability and productivity. As an LA resident (though not a homeowner, so I don't have NIMBY-skin in the game), traffic is horrendous, and substantially increasing the population would make it unbearable. Now, you can argue that we should build better mass transit infrastructure, and I think that's a good idea. But that needs to happen first, and the point I think is that there are really a complex set of tradeoffs here between the character of a place (along many axes) and its population density. I do think that the scales are often overly tilted towards NIMBYism and against dense housing, but I also think its important to acknowledge the reality of the tradeoffs.