re: How can the NBA create more parity among its teams?

A lot of interesting ideas, but most of them are either impossible due to the CBA, or self-defeating.

Contraction isn't going to happen. That's not even a good idea. The league has a perfectly good number of teams, and is likely to expand in the next decade or so. You aren't flushing the volume of product you put on the floor, for purposes of trying to artificially generate competitiveness.

Hard caps have been a goal for a while, but the union has shot them down consistently.

Realistically, they can do some measured things to improve resignability for players in drafted markets; they can make Bird rights/players untradeable for a number of years after signing-- you want that big resigning deal, you have to stay in town. They can pitch it to the union as security-- you sign your higher value supermax deal, and you are both tethered together-- the team has an inventive to build around you, and you get more money.

They could increase the penalty on repeat violators of the Salary Cap, for non-franchise drafted Supermax players-- say you draft 2 Supermax quality guys-- you did a good job, your franchise should be rewarded. You acquire them through FA? Pay through the nose for them in luxury tax dollars. You can't buy your way to a championship or have a sustainable model built around a Durant/LeBron fleeing to a better situation model.