But density has consequences. Cramming more than half the world’s population and production onto a relatively small area of mostly coastal land means that the cost of natural catastrophes of all kinds will rise dramatically. This year’s earthquake in Japan, which caused more than $300 billion in economic damage, was just a preview; a decade and a half from now, a single hurricane or earthquake will come with a potential price tag of $1 trillion or more. Imagine a world in which economic damage equivalent to that caused by a major war or the detonation of a midsized nuclear weapon in a major city could materialize with a warning of only a few days (in the case of a hurricane) or just one second (an earthquake).

We can look forward to bigger and more frequent financial catastrophes as well. Think of equity capital as land, industry segment as location, and financial risk as density. Concentrating all of these means greater productivity, but it also means that we are inviting ever more catastrophic financial hurricanes. How could the defaulted home loan of a strawberry picker in California wipe out $16 trillion in global financial market value and put so many people out of a job? You might as well ask how O’Leary’s cow, kicking over a lantern in a barn on DeKoven Street, could have caused the Great Chicago Fire of 1871.

The world’s exponentially increasing density of, and dependence on, information technology poses similar risks.