The NY/Chicago arb trade is futures vs equities. In other words it's two separate products with highly correlated prices. On one side are the futures contracts and on the other side are the underlying stocks (and ETFs). As long as the two separate products exist, you'll always have fast arbitrageurs. This is true whether the matching engines are 1000 miles apart or in the same rack.

That makes no sense. Here let me rephrase it:

"Americans love commuting. If not, they wouldn't be spending millions of hours in their cars each year to get to work!

I'm sure they'd rather not be paying for microwave links, but they have to because everyone else is doing it. End result: everyone wastes lots of money to get no additional benefit.