Even if this were true at a macro level, I've got to imagine there are plenty of investing opportunities at the micro level. Smart people with the right skills who for various reasons don't want to live in SF, NY, etc. And because their expenses are lower, they are happy to work for a lower salary than their peers in those cities.

And who knows - maybe if top talent can be enticed back to these places then the trends you describe above might start to reverse.