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FrameBenignly comments on Natural Selection of Government Systems - Less Wrong
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People decide to move when the advantages of moving outweigh the relocation costs. Sweden might be a better run country than Greece, but personal relocation costs are high (mainly due to the language barrier). In the US, the relocation costs are much smaller but moving from one state to another makes little practical difference for most people (compared to the central government the states have little actual power).
State and local governments in the US have primary responsibility over education, road construction, utilities, policing, the courts, licensing restrictions, zoning laws, and public transportation. The federal government can and does sometimes overrule them in these areas, but they are mostly left to themselves. Federal government action tends to be restricted towards various welfare programs, foreign policy, and the health care system. I would not describe state and local governments as having little power.
State and local governments may have significant spending power, but limited freedom of using it. The central government can very effectively pressure states to comply with its policies by providing or withdrawing federal subsidies (e.g., NCLB). It can also directly veto any politically controversial decision by a state on how to spend its money (e.g., California Proposition 187).
This graph would be more interesting and persuasive with a better caption.