It's straight-forward to get a healthy enough economy to provide full employment. (Not `easy', because things are seldom easy in politics.) We even know how to afford a social safety net at the same time.
To not keep you in suspense: - tell the central bank to keep nominal GDP level on a stable growth path - untax labour and capital, put all tax burden on land (whose supply is perfectly inelastic) - use the tax to finance public infrastructure and a social safety net
If you are feeling like it add:
- remove most red tape from the labour market (the part that prevents hiring and firing; keep OSHA and the like)
http://www.economist.com/blogs/freeexchange/2011/10/monetary...
http://www.economist.com/news/leaders/21647614-poor-land-use...
(Not that the Economist is the best source for everything, but they write short pieces to the point.)
> That's going to be a massive decrease in competition, job growth, etc, overall [when producers move to a cluster].
Can you expand on that? I don't see how---especially if we agree that the clustering is more economically efficient. (If we don't agree on that, we need to talk about it first.)