The problem with this approach lies in the "social costs", removing peoples "roots" can lead to social alienation and increased crime.
So is it the best thing for the American economy as a whole to have permanent pockets of despair (which current morals say require support) offset by materially wealthier pockets of social disruption?

Wouldn't it be better to apply both approaches?
This would at least put the wealthy in proximity to the destitute so they can see the consequences.

Us folks in the Great Lake states will gladly sell the
dry states water at $5/gallon.

I see Personal Income came out today.

71% of the growth of personal income - 94.9 Billion of 133.2 - was due to the reduction of the Social Security taxes.

I hope everyone saved that money - savings rose by only 56.2 Billion - so I don't have to hear the whiners in the future.

Remember, when that cut expires, it's a tax hike.

Gotta love that ACT/SAT score ranking of Texas.
http://www.economist.com/blogs/democracyinamerica/2011/02/unions

I guess everything is bigger and stupider in Texas.

Regards

Don't forget that the Fed-created housing crash has also hurt labor mobility by trapping people in underwater houses.

Hard to move to Detroit for a job when you can't sell your California house.

Michigan's governor has proposed tax changes designed to do exactly what RA suggests: drive people out. The taxes on a single parent with 2 children making $22k a year go up by $689, which is more than the taxes go up on a family with 2 kids earning over $250k a year ($663 increase). Taxes on retirees go up even more, with a couple making $48k a year (from social security and pension, 401(k)) would have a tax increase of $2560 a year. A pensioner making $22k gets a tax increase of $739.

Since it will be difficult for these poorer people to feed & clothe themselves or their children, let alone pay for utilities, the new taxes seem designed to cause so much pain that people get out of Michigan.

BTW, this an example of the "tax the poor" movement which has gripped the GOP. Michigan will eliminate the earned income tax credit - originally designed by the GOP to encourage the poor to work. The numbers are somewhat frightening: imagine trying to make do with $200 less per month on a fixed income or trying to pay for heat when your tiny income is reduced by $50 a month.

So we have an interesting public policy experiment: drive out the poor and the elderly while trying to encourage the richest to remain. Makes me ashamed to come from Michigan.

For those who don't bother to check statistics, these came from the State of Michigan and are the official examples provided by the Treasury to the governor's office.

"Do all that, and I guarantee you that Detroit will be growing like mad in ten years."

RA needs to study what states have been doing for decades. Most of what he recommends most states have been practicing for decades and with little benefit. The fact is that bureaucrats understand very little about economic development and don't want to learn. Those who do understand go into business.

Also, study what urban planning experts have to say. Indianapolis is an example of what to do for a declining city. Decades ago it faced similar problems to those of Detroit. It turned things around by selling off assets, reducing taxes and improving streets and utility services.

@hedgefundguy

Thought I'd cheer you up by mentioning that our current financial obligations (mortgages, rent, car payments, credit cards, etc) are the smallest share of disposable income since 1995.

So those spendthrifts are getting better, perhaps.

To clarify, since I actually care about accuracy, the examples in my comment above are from the Michigan Treasury but the effect of current rates was calculated by an accounting firm at the behest of The Detroit News. That is, the state provided the new material but didn't show how the examples raised or lowered taxes from current law. I think they were trying to hide the effects, but whatever.

BTW, Michigan is not Detroit and Detroit is not Michigan. And many of things other cities have done have also been done in Detroit, notably more government agency control over the entire metro area - which is now being forced through regarding Detroit's water. Some problems don't respond. Detroit had nearly 2 million people when the auto industry was minting cash. Given that the Big 3 couldn't rationally have expected to hold on to 90+% of the US market, quality and production issues aside, one can't reasonably expect that Detroit would have remained as large, as vibrant when its rise was so dependent on one cluster of production. That cluster generated tremendous wealth but it was a bubble of sorts as well because it couldn't sustain at that rate.

It is insane to talk about importing people from abroad to help revitalize economically depressed areas in the U.S. For decades it has been the de facto policy of the U.S. to export jobs and to import people. As in the case of all Ponzi Schemes, this bubble burst and we now have, predictably, massive national unemployment.

The United States today is unsustainable; we import something like two thirds of the petroleum we consume and something like 20 percent of the food we eat. We have exported our heavy industries and in so doing have lost the skill communities that were essential to the continuation of heavy manufacturing. We now talk about expanding nuclear energy and renewing our national electrical grid. It's not clear that the remaining American industrial community could do the manufacturing that is necessary for these renewals. It seems that we would have to go on bended knee to foreign manufacturers to try to purchase the heavy industrial equipment needed for our national survival which tragically, is dependent on people who believe in perpetual sustainable growth. "Sustainable growth" is an oxymoron. The sooner we recognize this fundamental law of nature, the sooner we can start rebuilding a system that has a chance of lasting into the long-term future.

We need to stop and then reverse U.S. population growth to get our population and rates of resource consumption down to sustainable levels.

Tell me if exporting jobs and importing people makes any sense at all.

corporateanarchist:
How much are roots worth when your unemployed?
Speaking from experience, I can say that when you move to an area because of its high growth, you will be surrounded by other people newly moved to the area, all of whom will be open to creating new networks of friends etc.
This is especially true for families with young children. The school experience allows you to meet more people.

Jomiku:
These less affluent families are probably being given good advice, albeit painfully. The sooner they move, the better for them.

"Aside from the advantages of having an oil industry amid high oil prices, what can we learn from Texas' success?"

Uh, how about that it's not really a 'success', so much as gimmicky accounting?

"A budget shortfall as high as $27 billion is projected as lawmakers work through the 2011 legislative session, according to estimates from economists and the Texas comptroller's office."

I can't believe the number of people who continue to talk about the "Texas success story." It's not a success story. They're just as screwed as everyone else. They just happened to be lucky that they didn't have to do their budgeting until this year because of the biennial nature of their budgeting cycle.

Something danish came to mind when reading the above where they improve labour mobility and maintain stable family values by offering a travel tax allowance to those who commute over a certain distance when they lose their local job for a newer one further away.Thereby allowing the family to continue living where they were,kids to remain in the same school and other partner to remain in their own job.All equalling minimal upheavel.Not sure how that would work in the likes of UK or USA,though.

CAJason80, do you see any Detroits in TX? No, TX is not a perfect libertarian state. If it were, it wouldn't have a $27 billion shortfall. But what scares the hell out of socialists is that Texas offers low tax rates which are attracting businesses from all over the country.

Growth in state population and employment is a function of how well a state is managed. Private business the backbone of any economic growth will only move to an area if it has the resources it needs. Every industry has different needs be it resource, capital, industrial or service based. Every state has its specialty or natural advantage in particular resources. Whether a state desires to export these resources to forgo the local opportunity cost is their business. The problem is piting state against state with these financial grants/subsidies. THIS IS WRONG !!!!

Congestion is anti-productive. Large cities need not grow furthur by encouraging development in less developed areas.
Bring the people to the industrial areas only if one has to, since congestion will occur. Bringing industry closer to the resource they use the most, and is most costly to move is the best option to increase profits. Energy is becomming more expensive.

heated

If you tried to explain how to lower the 10% US unemployment rate you lost me

If you don´t know that little populated rural states have a much higher employment rate, to begin with, you are lost yourself

If you realize that, then you point out to people to move to those states and they take your advice ... Well, everybody is in trouble

If you try to think a bit (it is painful and can make you seat) you may find out that we are pretty much back to 1929 when the banks went crazy and unregulated.

If you could tell us the truth: i. e. that the taxpayer will foot the bill and there is a solid chance that it all will begin again with 25%+ unemployment, we might be headed to some serious thinking

If John M. Keynes raised from the grave he would quickly go back to it with a massive heart attack listening to the US Republican Party and reading the Economist

Kind of ironic that Detroit--a city that initially rose to prominence and wealth due to its advantageous location astride major freshwater shipping lanes--bubbled and collapsed due to its embrace of the overland combustion vehicle industry. Oh yeah, and maybe also because lots of its backbone communities fled to avoid inclusionary housing policies that offended their preference for free association. Then again, here in Miami we blame not the newcomers who upended our community, but rather those natives who ran in fear from diversity and thus aided a wholesale shift to the other extreme.

Excellent article. Since the dawn of pre-history, humans have moved from less advantageous to more advantageous locations. They continue to do so, in spite of barriers such as national borders, and probably always will. The best government response to poor economic conditions is to adopt policies which encourage entrepreneurial activity, such as light-handed regulation and planning and IR laws; to make it easier for people to spot and exploit profitable opportunities. Dropping all interventionist policies and attendant public servants and directing the savings to lower business taxes might help.

Of course getting people to leave lagging areas is not unlike everyone competing with taxes for the same businesses. You're all working at cross purposes as everyone tries to ship their poor and sick away. That and it would require a government to be actively trying to get its people to leave its jurisdiction through punitive measures. Now I know you suggested investment in people, but that's just pointless if you're expecting those people to leave. Punitive measures against undesirables make more financial sense.

As for Texas...if a state with as enormous social deficiencies and financial problems as it has is competing for businesses as strongly as it is, (As has been the case for a long while) then that suggests that states competing with other states for businesses is a win for none of them. (Which wouldn't be a huge surprise)

Carreverte: "If John M. Keynes raised from the grave he would quickly go back to it with a massive heart attack listening to the US Republican Party and reading the Economist"

The early Keynes, maybe, but not the later Keynes. Before he died Keynes said he was not a Keynesian. In other words, he didn't like the direction his "followers" had taken his theories, and he probably realized how wrong he had been, too. Hayek, who was a good friend, asked him about the inflationary policies of some of his followers and Keynes said he would straighten them out. But before he could, he died.

"Start with a special visa programme, in which skilled immigrants from other countries are offered easier visa terms and an expedited road to citizenship if they accept a visa that requires them to work in the Detroit area for five years."

Yeah that's easy! Oh wait, there aren't any jobs in Detroit. Dang it! How do we create jobs in Detroit so that people will immigrate?

Keynes died in 1946. By that time he would have seen the nations of the world pull themselves out of the great depression and begin rebuilding after WW2. Somehow I doubt he would have looked at his policies achieving the success he hoped for and then decide that he was wrong or that they had gone too far. (Even if he did...so what? Such economic policies worked.)