As Yglesias suggests, our current development patterns exist due to some combination of rules and consumer demand. Changing the rules in some places has long been desirable, and now changing consumer demand might force those changes to happen.
Since no matter how much I write about this stuff there are still people who misunderstand me let me spell out my radical plan to convert all of America into Manhattan:
1) More money for mass transit, including, where appropriate, subway, light rail, better bus systems, commuter rail, and high speed medium haul trains. In development corridors, right of ways should be preserved for future rail lines, with strong commitment to build them when the population moves in.
2) Changing land use rules especially around transit stops and stations, encouraging higher density and mixed used zoning.
3) Better pedestrian integration between nearby lower density development and higher density development near transit stops.
4) Reverse trend of construction of single access road development.
5) Within existing urban areas, a reversal of the car-centric planning which damages the urban streetscape.
None of this is actually all that radical and will only have a direct impact on a relatively small geographic footprint. There are lots of existing transit corridors where local residents have resisted higher density development; these people will be affected. Both existing and newer suburbs would essentially retain their character, just be more like the 40s versions and less like the 90s-00s versions. All this would ideally reduce car dependency and give more people easier access to mass transit and at least some small walkable town center type areas. Aside from shifting a wee bit of that Iraq money to build some SUPERTRAINS, the policy changes I imagine are actually surprisingly minor, though over a longer period they could have larger impacts on how we live.
It's important to remember, again, that what happens results from an intersection between consumer demand and policy. Suburbs exist the way they do in part because people like them and in part because they're the natural outcome of certain policies which are pretty universal in this country. I'm not telling people how they should live, I'm suggesting that relatively minor tweaks to those policies might result in the potential for better places which still have the character that people want.
I imagine more people than currently do would like to live in a world where they don't have to have one car per driving age family member, where their non-driving teens have some independent mobility, and where they can walk to get a cup of coffee or a beer occasionally. And, yes, their yards too.
