People don’t expect just electricity and plumbing, they also expect modern construction techniques, roads, police, fire suppression, emergency response, schools, full-service hospitals, telecommunications, airports, parcel delivery, ....
A big reason that rural / exurban living is cheap in the USA is that we massively subsidize services for people living very spread out.
I think you massively overestimate the rural "subsidies". Make it easy to move rural and "go green" with minimal regulations, and you may find the problems nearly solve themselves.
Western Washington state subsidizes Eastern Washington state greatly, and that isn’t even as sparse as South Dakota (or as I like to call it, Tropical Dakota).
There will soon be 11 billion people in the world.
This is a pipe dream, but if it came to fruition it would wreck the planet very quickly.
World arable land is ~26.2 million square miles, or about 2.2 acres per person. At 11 billion people (projection world population peak by ~2100, you get about 1.5 acres of arable land per person. There is literally, physically not enough space on Earth to put your plane into action.
I like nature, but I think you underestimate the subsidies given for rural development and infrastructure and just how unsustainable our development style in the US is.
I agree that gathering people into larger population centers is way more efficient for us and the planet, but I don't think anyone's arguing for us all to spread out on 10 acre farmsteads.
The middle ground is just to build more decently-sized cities in all of the vast available land. Why fight for overpriced artificially scarce land in San Francisco when there are 20 other SF-equivalent cities a state or two away (existing ones, or ones that could be hypothetically built). "Location, location, location" has got to stop being the reason people choose a city.
As a side bonus: by moving a bunch of coastal persons back into the flyover country, you're re-exporting newer cultural norms into those backwaters, perhaps enough to cause meaningful cultural and political reform in places that sorely need it!
Why? I want to live where I get to do the things I enjoy. I would say most people I know prefer temperate, low humidity weather, access to fresh fruits and vegetables, beaches, mountains, lakes, good water quality and security, etc. The places that have these features will cost the most, since more people will be bidding up the price.
Running water? Gotta run the pipes further. Road access? Gotta pave (and maintain) more road Power? Same thing
Plus having decent response times for emergency services, quick commute to things like groceries as you mentioned.
Not to mention having critical mass for a commercial district with any sort of variety within reasonable distances of each other to compete and cross-pollinate.
They don't even have to be in the state, right? Because the core concept was that a remote-working code-slinger could live anywhere.
Another neat point about Rugby: it's apparently got gigabit ethernet service through North Dakota Telephone Co, although you'll pay $220/mo for that service.
It's incredibly easy to move there. My hometown of ~1,400 has something like a couple dozen vacant properties right now which you could probably buy for $150k or less because all the townies are moving out to the lake. But once you're there, there aren't a lot of good paying local jobs, there is very little to no culture, very few amenities. Not much to do unless you're into hunting and motorcycles. There's a reason it's sparsely populated.
Until we can smoothly emulate meatspace with VR, I don't think you can replace face-to-face interaction. If you can't do that, then people will still want to be close to jobs and similar businesses, so they'll continue to urbanize in a natural distribution.
And even if you had your new VR tech with enough bandwidth to run it nicely, you'd still need to be able to provide it to your offworld coloni--I mean rural exclaves.
Economic clusters aren't just valuable for people being in the same office. They produce value because people and ideas meet in bars and restaurants and coffee shops and backyards. All of this is stuff you'd need to replace to "disaggregate the knowledge economy".
This is not something you can accomplish with GitHub and teleconferencing.
We're getting to the point where maybe the work part works. College may be able to be fully remote fairly soon (Western Governors University is there already, but only has select majors). Specialized doctors, though... that might be a bit harder.
I mean, yes, you can do "face to face" via Skype. You can't do blood tests that way, though...