The assumption dorwi's asking you to make is that moving to Silicon Valley somehow makes you work twice as fast, or that only engineers who work twice as fast live there.
Basically, lunarhustler is making the assumption that humans who can program end up at roughly the same quality no matter where they live or how much you pay them, while dorwi is making the assumption that how much you are paid is directly related to your productive output.
Beyond that, highest paid people I know aren't paid well because they're 5x as productive, they're paid well because they solve really hard problems - the types of problems you don't run into at most companies.
To use an analogy: neurosurgeons aren't expensive because they're really good at "doctoring". Even if you had all the $$$ in the world you wouldn't consult one for a sprained ankle.