Your argument about investors and quality developers only being in SFBA is a strawman. There are successful startups all over the world. Unicorns? Probably not, but that's a perception issue, not a quality issue (current unrealistic valuations will continue to come back down to Earth)
The number of orgs supporting remote, even fully remote, grows all the time: https://github.com/lukasz-madon/awesome-remote-job#companies... ; if an employee chooses to expose themselves to outrageous housing expenses due to the employer's ability to externalize this cost to the employee (with no penalty to the employer, because "that's just the way it is"), this will never change.
That was not my argument. I said most, or "almost all," not all. And that's true! Even the NYC startups have to come to the Bay Area to meet with VCs.
The reason why it happens is the same reason why VC have historicly had negative returns; VC's as an industry make most of their money by convincing investors to part with there money not from actual returns. As such they like having a dog and pony show in the area while they try and fleece more people.
This sets up boom and bust cycles and many market distortions. As VC's still want positive returns it's just not their #1 goal.
You can't really do that. You underestimate the powerful network effect Silicon Valley has on the tech industry. Almost all of the investors are here, and many of the world's best software engineers choose to live here and will not move elsewhere for work. There are only a few other cities that have a lot of software jobs and also a large pool of software talent, and they also have a high cost of living -- NYC, Boston, and Seattle come to mind.