It's 2050. The partner-in-charge for PWCDEY's autonomous vehicle advisory division wakes at 6.30am. Another hectic day at work is about to start. Stepping to the window she opens the curtains. On the horizon, the Leichardt River meets the Gulf of Carpentaria in a hazy group of mangroves. Long-legged birds peck in the shallows but no other creatures move. She dresses and flicks a switch. Immediately, dozens of other workspaces are projected, in three dimensions, into the space around her desk. Some of her colleagues are already hard at work and she greets them. So the day begins…
For thousands of years, economies have run on trust. Trust of the sort you can only build eye to eye.
The butcher, the baker and the candlestick maker all live in the one village because it makes their trade easier. Partly this is due to efficiencies in shipping and storing goods but partly it is due to the need for human contact to build trust. The trust aspect is easy to overlook until you think who crowds the modern city. The centre of cities are full of firms that have no physical outputs at all. Accountants, consultants, bankers and marketers clamber all over each other to occupy a small share of the land in the centre of our cities. Jobs in tall buildings tend to be high-paid, high-productivity jobs.
The explanation is that proximity lowers the cost of real-world contact with colleagues, suppliers and clients. That contact is apparently indispensable to the firms' success. Economists have, quite recently, fallen upon this realisation in delight and built whole theories about information sharing and agglomeration economics to explain why cities exist, why firms cluster, etc.
Did you know, for example, that bigger cities make everyone in them more productive? A city of 10 million tends to see everyone in it being 15 per cent more productive than a city of five million.
This train of thought reached its apotheosis in the much-admired book of Harvard Economist Edward Glaeser, The Triumph of the City. A contrary thread of scholarship also exists. The idea computers could kill the city was raised in the 1990s. A seminal article in The Economist by Frances Cairncross coined the phrase "the death of distance."
It got a lot of airplay and now the backlash is evident in mocking articles suggesting the hypothesis was always and self-evidently wrong-headed. That's certainly what the present shows us. Evidence for the value of proximity is all around: In Melbourne, the Peter MacCallum Cancer Centre is just 3 kilometres from the Royal Melbourne Hospital. But when an opportunity arose to move immediately across the road from the hospital, the giant cancer-fighting juggernaut voted for proximity. The new building amplifies the effect of proximity by linking the two institutions at more than just street level. There will even be a bridge between them.
Silicon Valley is the ultimate expression of how even the most cutting-edge technology firms cluster into one space. The new CEO of Yahoo, Marissa Meyer actually banned working from home in order to give her company a boost.
It is possible electronic communication doesn't substitute for face-to-face communication - it is actually a complement. We contact by electronic media those people whom we also see face-to-face most often. Check your phone. Most messages are with your partner, your kids, your closest friends, your boss. That would suggest that as technology advances, so will face-to-face contact. So for now, proximity rules. Cities are still paved with gold. Or at least copper.
But extrapolating that out forever would be bold. Skype, Facebook et al are not finished improving. The first iterations of a technology rarely include the killer app. The internet was on mobile phones for a long time before the iPhone, for example, and Bebo and Hi-5 pioneered social networking prior to Facebook.
"Across the world, geniuses are trying to come up with tech that can kill centralised offices and in-person meetings once and for all. If someone somewhere can, they will be the next Bill Gates. Expect technology in this field to mutate rapidly, seeking the right combination of features that allow not just words and pictures to flow by optical fibre, but trust."
The death of distance is not certain to kill cities. But it is worth pondering - consider it a low-probability, high-consequence event. If the threads that hold our cities together begin to loosen, people will be able to live where they choose. Commuting time will cease to factor. Instead, you select your residence based on something radical - your preferences.
Want to live near the beach? Australia has thousands of kilometres of coastline to choose from and it's almost all cheaper than living in the city. Japan is even more clustered around Tokyo or at least Osaka because of a cultural inclination to proximity. But why not live in Okinawa with its pristine beaches and longest living inhabitants? Changes in communication technology could wreak the sort of havoc in real estate and infrastructure markets that they brought to newspapers, books and music.
Expensive city neighbourhoods may empty out. Traffic will be a thing of the past. City centre skyscrapers might see vacancy rates creep up. If this happens, it could strand a lot of investment. Would London's tube be so busy if fewer people needed to get to The City for work? The death of distance would be a boon but might also be a tidal wave of value destruction. It's worth keeping an eye on.