The same argumentation is usually used to argue that people have to be in the office or they won't do work - it's wrong in that case, it is wrong in this case. People often do good work without being forced to.
Based on my life experience it is absolutely true that average people work much less if not in an office or other organized workplace. Many times even by their own accounts.
This does not mean that there is a minority that can work wherever, or that work even better at home. It all depends on their interest, on the job etc.
But yes, offices provide a lot of productivity boosts.
I went from a private office to an open office and worked there for two years a while back. One of my fears going in was that the increased visibility would force people to work more, but in the end it seemed like there was a silent agreement that we'd all turn a blind eye to the fact we were all working six hour days, including the boss...
If morale is high, people are motivated (like a nonprofit working for a praiseworthy cause) and there are other feedback mechanisms (like market forces in a startup) then you don't need your employers to be in an office, constantly monitored.
But none of that is true for the NSA.
Well, I can only say I'm happy you made this experience. In no company I worked until now I could see this. The quality was always horrible, and only carrot&stick could at least improve it to bearable.
It seems you've worked in some horrible companies - good luck in finding better ones in the future. (no sarcasm intended, I really think it's horrible if the only option to get colleagues to work is carrot&stick)