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Last week NYT columnist and economist Paul Krugman wrote a very popular column pointing to Texas' revenue shortfall and declaring it an example of the failure of conservative government.  I found the whole piece a muddled mess and dismissed it, but you can't believe the notes I've gotten from people requesting a response.

The thing is, I don't really get his point. The bad national economy was going to cut state revenues no matter what. Is he saying we'd be better off if we had a fat government with easy cuts, instead of a lean government with tough cuts?  How much sense does that make?

The nice thing about delaying my response is that others have already made great cases against the column (saving me the work).  Kevin Williams at the National Review is a bit sarcastic for my tastes, but makes several great points - the main ones being:

Bill Watkins here at New Geography also lays into Krugman's fuzzy thinking:

"People are not as stupid as many Nobel Prize winners might think; they move for opportunity, not just for cheap houses or low-paid work."

Then he comes up with a great new acronym:

"A business moves to or expands in a region based on a whole host of reasons. These include available infrastructure, resource availability, market size and location, labor supply and costs, worker productivity, facilities costs, transportation costs, and other costs. Those other costs include what I call DURT (Delay, Uncertainty, Regulation, and Taxes)."

Conveniently, the Wall Street Journal made the case for Texas' growth and opportunity the next day:

WSJ.com - Opinion: The Great Lone Star Migration

Today one out of 12 Americans lives in Texas—the same proportion that lived in New York City in 1930.

...Finally there is Texas. In 1930 there were (rounded off) six million people in the Lone Star State versus 13 million in New York. In 1970 there were 11 million in Texas and 18 million in New York: Each had grown by about five million. But in 2010 there were 25 million in Texas and 19 million in New York.

Back in the 1930-70 period, liberal political scientists hoped and expected that America would become less like Texas and more like New York, with bigger government, higher taxes and more unions. In one important respect—the abolition of legally enforced racial segregation—that has happened. But otherwise Americans have been voting with their feet for the Texas model, with its low tax rates, light regulation and openness to new businesses and enterprises.

Today one out of 12 Americans lives in Texas—the same proportion that lived in New York City in 1930. Metropolitan Dallas and metropolitan Houston, with about six million people each, threaten to overtake our fourth largest metro area, San Francisco Bay (population about seven million), in the next decade.

That doesn't seem to be much of an indictment of Texas' approach to governance...

That's not to say the next budget is going to be easy.  A lot of hard tradeoffs will have to be made.  But it's pretty clear Texas is a very far cry from being a failed state.

According to the 2010 Census population data for the United States, the Midwest region was the slowest growing of the four Census regions, at a 3.9% increase overall. South Dakota led the Midwest for population with an increase of 7.9%, while the lowest was the battered state of Michigan at -0.6%. These numbers seem to suggest a shift from the Rust Belt to the Great Plains.

This is more apparent when considering CNN Money’s list of the top 100 best cities to live in for 2010. Four cities represented the Dakotas on this list while only one city, Ann Arbor, stood for Michigan at number 46. The four cities from the Dakotas were Bismarck, ND at 74; Sioux Falls, SD at 77; Fargo, ND at 86; and finally Grand Forks, ND at 97.

The odds seem to be against the growing state of South Dakota when compared to the once-great Michigan. Michigan has 32 Fortune 500 companies (the largest being GM, Ford, and Dow), a notable IT strength, three well-known universities (University of Michigan, Michigan State University, and Wayne State University), and is one of the biggest leaders of industrial research and development. However, Michigan’s weaknesses lie in its disintegrating manufacturing industries whereas South Dakota has attained a more promising outlook.

South Dakota’s major city is Sioux Falls in Lincoln county, which has been named one of the “best counties to find a job” with a 67% increase in job growth in the last decade. Sioux Falls has been named one of the “best places to start a business” by CNN where operating a business costs an estimated 45% less there than it does in New York City. It also boasts a crime rate that is half the national average, is home to offices of many financial giants including Citibank and Wells Fargo that come to the state for its slackened usury laws and positive banking regulations, and has some of the region’s leading hospitals. A determined arts scene and a strong retail sector round out the package.

Can Sioux Falls be compared to the crumbling Detroit? When considering Sioux Falls to be the major hub of its region (the most proximate major cities are Omaha and Minneapolis, both over 150 miles away) it’s no wonder that many people are flocking there to be a part of its thriving economy that can’t be found for miles. Detroit, on the other hand, is a homogenous product in a competitive market. Other Rust Belt cities find themselves in a corresponding situation, offering a similar lifestyle while depending on declining industries.

Could these awful events in Tucson really forge a national “cooling off period?”

Many would make the case that American tragedies are exploited by media and government elites to manipulate public sentiment.

But even if that’s true, I believe there is an American community that grieves, celebrates and grows together.

Despite my dedicated opposition to George Bush, for example, I was moved four years ago by his memorial speech after the Virginia Tech massacre.

Americans look to the president for comfort.

In November ’09 I watched President Obama’s reaction to the Fort Hood shootings and was appalled by his dispassionate affect.  I criticized him in my blog for sounding like a white house staffer reading a prepared statement.

I want and expect Obama to console Americans over the next several days and not just to gain political advantage. 

But to make us feel less confused.  (I was unsettled by the way cable and the internet went into overdrive seconds after the rampage: weekend tv anchors stumbling through worthless conversations with elected officials and over-the-top instant online analysis).

This is a time for the country to rise above political differences.

And this is an opportunity for Barack Obama to show all Americans that he is – after all – one of us.

This first appeared at laborlou.com

Despite the rejection of high-speed rail in many states, Illinois is trying to revive it. The Illinois Department of Transportation recently made a cooperative agreement with Union Pacific and Amtrak to fund passenger rail improvements for its line from Chicago to St. Louis with a $1.1 billion federal high-speed rail grant. The project, to be completed in 2014, would make transit more efficient between the two cities, but as many other states have realized, the numbers indicate that this efficiency is not worth the cost or the trouble.

The high-speed trains set to carry passengers 284 miles from Chicago to St. Louis would do very little to drastically change the commute experience. When the Illinois Department of Transportation first applied for this grant one year ago, they claimed that the trains would cut travel time between the cities from 5 hours 20 minutes down to 4 hours 10 minutes. However, current estimates now put the trip time at around 4 hours 32 minutes. As with every high-speed rail proposal, it seems, planners set the bar too high and end up either spending more than the public bargained for or overestimating the benefits of these billion dollar projects. How efficient will high-speed rail be if it costs more than people can afford and does relatively little to enhance the commute?

Union Pacific’s terms in the agreement are not settling for riders either. According to CEO Jim Young, the company’s priority is “to protect Union Pacific’s ability to provide the exceptional freight service our customers need and expect,” and not necessarily passenger rail operations. Not only that, but there are no consequences stipulated in the agreement for if the railroad fails to meet on-time performance standards for passenger service, stipulations withdrawn from the initial agreement by the Federal Railroad Authority. High-speed rail was advertised to the public who would be paying for it with tax dollars and the divergence of their tax dollars from the state’s other pressing needs, but those developing the system do not seem as concerned with this large pool of customers.

Local governments all over the country are recognizing the flaws with high-speed rail projects and are starting to act. The incoming governors in Wisconsin and Ohio have cancelled plans for a high-speed rail line while Florida governor Rick Scott doubts the cost effectiveness of what Michael Grunwald of TIME magazine calls a “glorified Disney shuttle.” Many inside and outside of California have also vehemently voiced their opposition to the “railroad to nowhere,” a line that would connect Corcoran and Bakersfield and would be the first costly step in its overall plan to connect San Francisco and Anaheim. Since projects are stalling in many other states as well, it might be worth it to take a second look at the necessity of high-speed rail at the present time.

The influx of Republicans into Congress along with this local opposition may pressure the Obama administration to cut back funding for high-speed rail and work on fixing the deficit. However, this high-speed rail grant for Illinois shows that the federal government is not about to abandon the pipe dream yet.

China has been urbanizing at a break-neck pace. Between 1980 and 2010, nearly China's urban areas have added 450 million people, nearly 1.5 times the population of the United States. Nearly one-half (47%) of the nation's population now lives in urban areas and the figure is expected to exceed 60% by 2030, according to United Nations data.

According to The Asia Times, 230 million of these new residents are temporary migrants. They are people who have migrated from rural areas to take jobs in factories or other generally lower paid occupations. Under the nearly 60-year old Chinese residency permit system ("hukou") citizens have either rural or urban residency rights. A principal purpose of this system was to limit the flow of rural residents to the urban areas.

As Deng Xiaoping's reforms took effect in the early 1980s, industrial production and exports skyrocketed and this required rural labor to migrate to the urban areas. Migrants were granted temporary status, but not permanent. It is possible, but difficult to transfer one's hukou from rural to urban. Yet the demand for such transfers has been overwhelming.

Yet, an article in the national newspaper, China Daily could mean a slowdown in the trend. The issue is the cost of living. Reporter Wang Yan notes that, for the first time, there is now a growing demand for transferring hukou residential status from urban to rural. There are currently no routine national procedures for such transfers.

A survey of 120,000 temporary migrant workers in urban areas working by the Chinese Academy of Social Sciences research center found that only 25 percent would be interested in trading their rural residency permits for urban residency permits. The survey covered working age adults in 106 prefectures with large urban areas.

The driving factor is economic. As in the United States, where differences in housing affordability are strongly associated with domestic migration trends, costly urban housing in China could be fueling a new attraction for rural areas. The cost of housing has risen substantially in China's urban areas. At the same time, the cost of housing is near-zero in the rural areas. Further, residents of rural areas within prefectures with large urban areas have the hope of selling their land for urban development in the longer run and making a substantial profit. However, this new-found affection for the countryside is likely to be limited to areas relatively close to urban centers, to which rural residents can commute for better paying jobs.

The government has announced plans to reform the hukou residency permit system. According to Zhang Yi, director of the Chinese Academy of Social Sciences research center is a system that "ensures freedom of migration."

The United Nations projections may be right. The stated preferences identified in the Chinese Academy of Social Sciences survey may not ultimately reveal themselves in actual behavior. But predictions are no more than predictions.

Picture: Shenzhen: Luxury Housing (foreground) and Migrant Housing (background)