The truly great Dr. Sowell blows it here, at least as far as the San Francisco peninsula goes. It IS a peninsula. There is only so much land. Many people want to live there because it is beautiful. Completely unrestricted landuse would only delay the advent of skyrocketing housing prices that would result whenever the last acre of space was built over.
In general, he is correct. but not for those few places that everybody would like to live if given the opportunity. By definition, the free market will drive prices in these places out of sight.
Have you ever compared the ratio of populated land to developable "open space" on the SF peninsula? There's plenty out there, even in the vicinity of San Jose. San Mateo County is barely populated. It's mostly poison oak. Housing prices here have never found an equilibrium that wasn't artificially maintained. If you own a house, even a hovel, it's a gravy train (as long as you can make the mortgage), so I'm not complaining.
T'aint necessarily so. When you're done with building "out" you can build "up". And the choice is not between zero land planning and the current death-grip that planning has on development. A good start would be to return to a basic legal respect for the private-property rights of landowners, so that the full cost of zoning decisions is born by those benefiting from the regulation.
In the present case, California is looking at an annual housing deficit of (I think I recall correctly) something like 200,000 units per annum. Those people have to live somewhere, and the current approach to land use planning will result only in further polarization of land use and housing costs.