Probably best to rent a postal box in the Vatican City, collect that sweet super high pay check and actually live somewhere cheaper :)

Because otherwise, after COL, you might only save $10k per year in a developed country, and $30k per year in a developing country.

That would be just as lopsided and unfair to your remote workers as paying them all market rate, so that your employees in developed countries get paid $80k per year and your employees in India get paid $8k per year.

Or do you expect your developers in America to relocate to India?

Why not subsidize everyone's lifestyle so they all save the same amount of money, regardless of spending?

Would you pay more money for the exact same product made in a different city? How is hiring developers different?

If you've identified the "best" candidate for a position and want to hire or retain that person, you're now competing with the other offers available to that candidate (which include CoL-adjusted offers), not with the salaries you're paying other employees.

Well, I think the idea is meant to be that you get the best developers possible, regardless of where they are, while still trying to keep expenses minimal.