People tend to price a glass of water at how expensive drinks around the place are, not the value this glass provides (crucial for life). Do you find this irrational or otherwise wrong?
My opinion is living in an expensive city is a life choice. Just like choosing to purchase a BMW or a new home. You should not be paid more because you own a BMW and your co-worker drives a 10 yr old Toyota.
I have been told no by several companies when they found out I live in abroad and make "SF money", because it wouldn't be fair to their existing remote staff despite having the budget if I lived in SF.
Developers abroad selling themselves short on compensation might be fair, but it does make it hard for people who do earn "SF money" to relocate and keep their high salaries. It doesn't seem irrational to complain about that situation.
But I agree with you if you are pointing out that it's terrible that developers who aren't in the valley (or similar regions) don't demand higher wages, allowing employers to get away with paying based on location instead of value.
But if they do have the budget and they still want to price you to your city, then boo on them.