[sgc]

My observation was that the people buying into that demonization don't do it because they are dumb, but because it serves their purposes.

I agree with your last sentence, but this works because that last group is a minority (even if barely), so the larger society votes against them. it only takes a small amount of poorer people who don't want growth for nostalgic / quality of city life reasons, and you have a pretty sizable majority coalition against change.

[Aloha]

The culture war issues largely forces some weird alignments, its a weird mashup of left social issues, an even weirder mix of left wing and right wing economics and "progressive" requirements that everyone hew to proper "optics". (My gripe with the progressives is that saying the right thing often appears to be more important than doing the right thing.)

In the end, its simply a recipe for never fixing any of the actual problems, with the added benefit of giving your base and activists plenty of ideological wars that can never be won.