Are States Outdated?

"Matthew Yglesias, in a post entitled "The Trouble With States," says that citizens have national concerns in common and certainly have issues in common with fellow residents of metro areas, but "we don't really live our lives 'at the state level.'

And insofar as co-residents of a single state do have idiosyncratic issues in common that tends to be because important fiscal and regulatory powers have been allocated to state government rather than because it actually makes sense for them to have been allocated this way."