Maybe. But they're competing against developers that aren't subject to these limitations. Art assets often make up the bulk (50-70%) of the development costs of modern games. If one studio has to pay 3D modelers $50,000 a year and another only has to pay $10,000 a year (not to mention no healthcare, retirement fund, etc) then the former is at a huge disadvantage.

Outsourcing isn't a hypothetical. Naughty Dog started outsourcing art asset production to Asia with Uncharted 3. Music recording has been outsourced for at least a decade. Sure, the company hires experienced people (like art directors and composers) in house but the heavy lifting is done offshore.

The heavy lifting in game music is not outsourced. It’s really only the orchestra musicians that are outsourced. The music direction, supervision, engineering, orchestrating, score prep and copy services, editing, mixing,mastering, integration and testing is still done in-house or by a contracted music service, usually US based. The reason for outsourcing orchestras is ironically to avoid overly strict contracts with AFM, the musicians union. This is why Nashville is bursting with video game scoring sessions. Tennessee is a right-to-work state.

The former Soviet countries probably have a bunch of low cost talent as well.

Guess it's time for a outsource music and art tariff.