Basically, when everyone stays where they are, there’s lots of slack everywhere. But if we moved some people to new markets, such that those markets had no slack, then the local economies would get moving, leading to national recovery. Of course, the hard question is how to produce the migrations. It could be the case, however, that a very narrowly targeted stimulus, geographically speaking, could do the job.
I think NYC Mayor Bloomberg is suggesting just such an approach, though the Big Apple isn't a "new market." President Obama symbolically offered up Denver as a destination for economic recovery. Of course, I'm sticking with Greater Pittsburgh.
But engineering migration is notoriously difficult and Americans are becoming less geographically mobile. As far as I can tell, people aren't leaving bust-towns such as Phoenix so much as economic migrants have stopped moving there. I'm beginning to doubt we are going to see anything like the population shifts of the early 1980s when Pittsburgh emptied out in dramatic fashion. Any migratory stimulus must start with the home ownership crisis. Much of the best talent is saddled with too much debt.
My best guess is that we will see a dramatic rise in boomerang migration, allowing opportunists to leverage strong social networks and thus mitigate relocation costs. This pattern of labor movement could be enhanced, but that will take time and money. Youngstown State University's Grow Home campaign is a good model. Since I doubt anything is forthcoming from the Federal Government, localities and regions should take the initiative and explore Avent's idea a bit further.