But an 'arms race for scarce talent' probably benefits a large proportion of the readers here, and harms a much smaller proportion.
And in spite of the better developer salaries, many startups can still not afford to let developers be makers and creators, and must instead focus on deadlines and other business metrics driven by fundraising.
If the runway for startups were longer, then longer-term thinking and strategy would be more prevalent. Easy money reduces the penalty of a failed startup, and makes it easier for anyone involved (including investors) to jump ship.
Since a startup is a stance about the future, this constrains startups who can get funding to those that are able to show traction after about a year, since there is little incentive to continue beyond that, and even a big series A won't pay for much talent in the valley anymore.
I think there is just an inevitable tension between investment as a visionary stance about the future vs investment as fuel for a machine that is hungry to grow. Both are essential aspects of the startup ecosystem, but inflated prices and easy money benefits the growth stage startup much more by crowding out the kind of environment needed for ambitious future stuff.
You've got this backwards. People who would have chosen banking are the ones who are attracted 'just because of the money'. IMO most people who become developers do so because they're interested in software/tech, but most people who become bankers do so mainly/exclusively because of the money (and perception of prestige).
"...and must instead focus on deadlines and other business metrics driven by fundraising."
This is not an issue for bootstrapped startups. For funded/fundable startups, being beholden to funding cycles is the flip side of getting access to capital.
In the short term, yes. In the long term, it can lead to crashes where a large number of the readers here may struggle to get jobs at any price for a period of time.
You mean because high salaries, over the medium term, may result in increased supply of developers?