Opinion: a reactionary government policy from 1899 has turned Washington DC into a city of low buildings, expensive floor space and rampant inequality. A few skyscrapers could change all that, says Matthew Yglesias, executive editor of Vox.

Washington DC is the capital of the mightiest empire the world has ever known. It is a curious fact that the seat of the government that sequenced the human genome and that put a man on the moon is oddly averse to one particular aspect of modern technology: the skyscraper.

The city is not innocent of the concepts of steel-frame construction or elevators. But it exists almost as if it were. Offices downtown are constructed with modern methods and modern conveniences. But they don't truly take advantage of them.

Instead of the towers of a contemporary city, the central business district consists of slightly strange, squat structures — all wider than they are tall, and, generally, rectilinear rather than tapered. Twelve or, more often, ten or fewer storeys high, they could have been built a hundred or more years ago.

Fans of the DC status quo flatter themselves to think that the low-slung profile lends the city a Parisian ambiance. This strikes me as an optimistic assessment of the aesthetics. Central Paris is low-slung because it is well preserved. Downtown Washington, outside the immediate environs of the National Mall, is a thoroughly modern city.

The short buildings around L'Enfant Plaza, Farragut Square, or Chinatown aren't classics of a bygone age. They're simply short. Even neighbourhoods that essentially didn't exist until the 21st century – such as "NoMA" and Mt. Vernon Triangle – refuse to take advantage of the modern talent to stack several dozen floors atop each other without facing any crippling structural challenges.

This situation, so anomalous among major American cities, came to pass because of a backlash against the construction of the 164-foot Cairo Hotel (now an apartment building) way back in 1894.

The Cairo certainly was a tall building for its time, and is a pretty large building for a quiet residential street in any city (it is well outside the CBD in Dupont Circle). That people at the time of its construction found it a bit alarming is natural, even forgivable.

Cities all around the world had to respond then to the kind of concerns – crowding, access to daylight – such new buildings raised. The normal approach was to adopt codes limiting tall buildings to particular sections of the city, and generally to require some kind of tapering, or setback, to preserve light on the street below.

But in 1899 Congress chose to give the District not just a zoning code, but the Height of Buildings Act. This measure, modified slightly in 1910, caps downtown buildings at a height based on the width of the street they face. In general, this means the largest buildings in the city are just 130 feet tall (a small section of Pennsylvania Avenue qualifies for heights up to 160 feet) with many downtown blocks limited to 110 feet or shorter.

Forcing a city to limit its buildings to 19th-century heights doesn't turn it into a 19th-century city. Washington's downtown office buildings generally come with underground parking garages and its inhabitants enjoy large modern dwelling spaces. Consequently, DC's 10,000 residents per square mile actually puts its population density closer to Fargo, North Dakota, than to a French capital that is over five times as dense.

The true consequence of the stunting is less to make Washington into an American Paris than to force it to serve as an American Versailles, an exclusive community dedicated to ruling a country rather than being an integral piece of the country it rules.

Throughout the long years of urban divestment that followed the introduction of the automobile in the 1950s, the riots of the 1960s, and the crack epidemic and subsequent crime waves of the 1980s, the Height Act seemed perhaps not so significant. Relatively few people wanted to live in the District or build much of anything there. But the city, like so many others in America, turned itself around in the 1990s with a judicious mix of improved public policy, falling crime, and a renewed fashion for urban living.

Today the city is thriving. But the flourishing Washington co-exists with a rather unhappy one – a blacker, more working class city disgruntled with festering high unemployment and terrified of gentrification and displacement. Thriving Washington has become a source of substantial resentment at a time when the United States has been having a rough economic go of it.

Writing in the New York Times, the paper's then Washington bureau chief David Leonhardt said that DC's prosperity "uncomfortably calls to mind the rapacious Capitol in Suzanne Collins's Hunger Games series".

It is true that average incomes in the DC metro area are among the highest in the country. But the cause is less relentless expropriation than broad economic trends that have benefitted all American metropolitan areas with highly educated workforces. The regions surrounding Minneapolis, Boston, San Francisco, and Charlotte don't have an enormous amount in common, but they all share high median incomes and large numbers of college graduates.

Of course it's true that Washington is a mecca for educated people largely because the federal government is here. But this has very little to do with the expensive and politically controversial aspects of the government – Social Security, Medicare, Medicaid, Food Stamps, and the rest of the welfare state. These programs cost vast sums of money, but the money is paid out to citizens all across the country. Retirement hubs such as Florida and Arizona are, in this sense, much more dependent on the federal government than the DC area is.

The truly regrettable thing about Washington in 2014 isn't that it's become prosperous. It's that it's become so exclusive.

In principle, a city full of relatively well-paid college graduates ought to also be a decent place to cook food or cut hair or drive a cab or fix cars or remodel kitchens or sell groceries or perform any of the myriad other service-sector jobs that account for the vast majority of employment in every American city. But if you rig the supply of inhabitable square footage, you naturally create a scarcity. Scarcity means high prices. And, indeed, Washington has become close to the top of the list for American cities in terms of housing prices, office rents, and hotel rooms.

For the relatively small number of Americans with careers and skills specifically tied to the federal government, that's a price worth paying. But for everyone else, the prosperity of Washington is illusory, with any income gains immediately eaten away by higher prices.

Washington is hardly unique in having become underbuilt and overpriced. But the capital city of a country plays a unique role relative to other cities, and so it is particularly galling for it to be exclusionary. Even worse, the most prominent mechanism of exclusion – the Height Act – is a measure taken by Congress rather than the municipality.

If the national government is going to meddle in a city's affairs it should be to force a broader view of the national interest, not to play NIMBY from afar. A Congress willing to repeal the act and open the city to tall, modern structures would do the country an enormous favour. The capital wouldn't cease to be prosperous. But unlike The Capitol of Collins' Hunger Games nightmares, it would be a beating heart of prosperity for the entire country rather than a refuge of a narrow elite. Think of a London or Tokyo or Berlin – a thriving capital city that is a centre of business and culture and not just government. Even at home we have the example of state capitals like Boston and Austin, multi-functional cities where politics is important to the local economy without dominating it.

Even tourism is affected. Right now the market for downtown hotel rooms in Washington is expensive and overwhelmingly dominated by business travellers. Opening downtown to skyscrapers would lead to a surge of hotel rooms, and more affordable prices for families looking to visit the Smithsonian and the National Zoo. This would be a nice favour to an American population whose tax dollars support the attractions. It would also mean many more jobs in the hospitality industry, jobs available to working-class people and those with skills outside the political sphere.

But the construction of skyscrapers downtown would have broader and more significant implications. The federal city really only needs so much office space, and, with proper buildings, that space could be provided with a quarter or less of the current footprint. That would open up space for two key things the capital currently lacks. One is ample housing, and the other is office space that's not reserved for companies willing to pay a premium for access to the levers of political power.

The housing would, in effect, un-gate the city, opening its doors to all Americans. The Hunger Games is not a tract on economic geography. But it's clear that the only way to maintain the systematic inequality between the residents of the rich capital and the poor coal mining culture of District 12 is to prevent people from moving. This is precisely what authoritarian governments around the world do.

The United States, conversely, has always been a land of opportunity in part because people have been able to move to opportunity. That's the story of immigration to the New World, of course. But it's also the story of the Great Migration of African-Americans away from the sharecropping economy of the Jim Crow South and toward the wider vistas of northern cities. It's the California Gold Rush of 1848 and the settling of the western frontier as people struck out from the homes in search of affordable farmland.

People living in communities that have been negatively impacted by economic trends would, of course, prefer for those problems to simply go away. But picking up and moving has always been a good second option. And yet, the rate of internal geographic migration in the United States has fallen almost in half since the beginning of the 1990s. The reasons for this are partly demographic – the country is older now – but the waning availability of affordable housing in high-income areas is another large factor.

Bringing high-rise apartments to the centre of the capital city would only make a partial dent in a national problem. But it would be a powerful statement of principle, as well as a constructive step in its own right.

Last, but by no means least, allowing office towers downtown would bring DC more office space. One of the main reasons why the city attracts a demographic some imagine to be "parasitic" is that America's capital houses very few nationally recognised firms that aren't related to the business of governing. This isn't for a lack of talents or ideas. Instead, it's a consequence of the high cost of doing business.

If your company lobbies Congress or litigates before regulatory agencies, then high rents are a small price to pay for direct access to the federal institutions. But companies with other kinds of ideas tend to end up fleeing. The handful of exceptions, such as the daily deals website Living Social, tend to persist only thanks to generous tax subsidies offered by the city government – subsidies that can only scale so far. A Washington dotted with skyscrapers would have much less scarcity of square footage, and much more opportunity for firms to grow and thrive no matter what line of work they're in.

Put it all together, and a taller Washington DC would be a much healthier city. Today, it's a mid-sized, high-income, exclusionary metropolis with an economic monoculture. But it could become a diverse giant that serves as an engine of economic opportunity for people all throughout the country. To get there, it needs to dream big – just as its founders did – and get ready to build bigger.

A longer version of this essay appears in The Future of the Skyscraper, a new book published by Metropolis Books in collaboration with Skidmore, Owings & Merrill. It is the first volume in a series that features essays about architecture by writers outside of the discipline. Matthew Yglesias is the executive editor of Vox and author of the book The Rent Is Too Damn High.