So the rural/small town economy can and will carry itself once it shrinks to the right size, and it’s probably close to that now.

Indianapolis doesn’t have to carry rural Indiana, with one significant caveat: barring significant natural or immigrant population growth. If Indianapolis does have to carry both immigrants and the excess sons and daughters of rural Indiana, we’re likely in trouble without significant commercial and industrial job creation.

P.S. Both Singapore and Hong Kong have significant hinterlands in the countries they were originally in. Singapore has Johor, Hong Kong has Shenzhen. Both Johor and Shenzhen are growing explosively due to their proximity to global cities and are among the richest cities in their respective countries.

For the past 20 years, maybe longer, we’ve been borrowing to inflate consumption. Government borrowing, consumer borrowing, corporate debt, etc. I remember thinking in 2000, well, I guess we were wrong. We can have prosperity while de-industrializing. Now I’m thinking we were right.

The dot com bubble and the housing bubble made us feel rich enough to take out the credit card. So now we have tons of retail and fast food, while industrial employment falls by the hour. The number of jobs has sort of kept up, but they are crap jobs and they are probably going away.

There are five Home Depots within 10 minutes of my house. Five! In a shrinking county. Plus Lowes, Target, Officemax/Depot/Staple. Petco. Petland. Pet Plus. I will be very surprised if these all survive to 2012.

From the civil war to the 1950s, falling need for agricultural workers synched up with the rising need for industrial workers. We could afford to limit hours to 40, mandate safety precautions, raise wages, and still let in immigrants. Today, the market is not creating jobs. Policymakers need to get off their ass and try something. Adjust the tax code, adjust the labor laws, offer general subsidies (if we can’t pick winners). People’s entire working lives are passing without an opportunity for steady middle class work.

Will it? It’s still early days. Backers of bio science and biotech say they’re now where computers were 30 years ago, before they virtually reinvented the economy. Ditto nano. Ditto new energy. We can hope that all these will be big job generators in the future. But so far, the results aren’t there.

In my book, I pointed out that, while economies are becoming increasingly centralized in major cities, these cities can’t carry the regions around them. Chicago can’t carry the Midwest, Des Moines can’t carry Iowa, Indianapolis can’t carry Indiana, etc. All these regions once generated a lot of jobs on their own, in farming or industry. No more. So if economies are urbanizing, then cities have to make up both for their own job losses and the losses in the surrounding regions. If cities can’t even compensate for their own job losses (which seems to be the case in Chicago), what hope then for the countryside?