My take on why the best jobs and the best employees are local jobs and local employees[1] is modeled in terms of the bandwidth and latency issue of communications.

I did a lightning talk at the 2009 Great Lakes Software Excellence Conference using that theme. I posted the text and slides of that talk on my blog:

http://jerryjousting.blogspot.com/2009/11/joe-plumber-and-co...

[1] Distributed companies do work, but it is a lot harder to make them work well.