Towards the end of his latest Bloomberg column, Tyler Cowen writes:

It’s well known in economics that when prices and opportunities change, it is the elastic factors of production (those that can change their plans readily) that gain the most, and the inelastic factors that are most likely to bear losses. Insiders and long-term residents are so often the inelastic ones while outsiders and newcomers have the greater willingness or ability to adjust.

Actually, it’s not well known because it’s not true. It is true that when demand for factors falls, those factors that are more elastically supplied lose the least. (They don’t, as Tyler says, gain.) But when the demand for factors increases, those factors that are inelastically supplied gain the most. Just draw a demand curve and an inelastic supply. Then shift the demand curve up and see what happens to price. Presto.

Indeed, it’s in part because many long-term residents of a city like San Francisco bought their houses long ago, before government regulation made the supply of housing inelastic, and then the housing supply became inelastic due to government regulation, that we see people with 5-figure incomes having 7-figure net worths.