Exactly. The fact is you can develop from anywhere in the world if you have an Internet connection. That’s not true of machining titanium, or stamping steel, or refining oil, or even growing pineapples. I can develop software - in Shanghai, Seattle, or Chaiyaphum without a problem.
The reason IT wages are dropping is not H1-Bs; it’s the fact there is essentially NO barrier to entry to becoming a developer, and being a productive one. Some time spent learning and a $200 computer and you have the tools needed to be productive.
As long as Joe Sixpack refuses to pay $1000 for the latest software title, it will get developed overseas.
In a perverse kind of way, it’s fun to talk to those who rail against H1-Bs and the dropping wages of IT workers, especially about open source. Most are huge open-source supporters, and most have pirated copies of software and/or music on their computers. They want the wages of IT kept high, but do not want to pay the prices (or even ANY price) to get the results. You can’t have both...