A Krugman Agglomeration revisited

Local agglomeration resists central planning.

If there is one thing we should all take from Krugmans Nobel research is that fact, agglomeration is a firm to firm coordination, independent of Federal planning. Local government matters for agglomeration, but local government works when it is focused on local issues, especially transportation.

So Krugman decides today the problem is lack of federal planning. Federal planing like imposing the issue of national high speed rail on local transit officials who are mainly interested in getting work, people and goods to match up most efficiently. It is the uncertainty of federal planning that creates constraints on local transportation. How soon does the HSR arrive? What are the cost over runs? Should local transit officials play along and generate the appropriate vu grafs, or should they invest millions today on HSR for their transit centers?

If local transit tries to solve local problems, should they wait to see how things turn out in Washington DC, where government employees have a 7% unemployment rate? Should local government wait for federal pension bailouts or solve the pension problems themselves?

The boom starts when Congress, like Bill Clinton before, decides the era of Big Government is over. That point frees up the local agglomeration solutions and we generate a hundred million jobs.