Yes, let's all keep believing that. If companies realized that all programmers can actually work decentralized, we might not be able to command a decent salary as it becomes a global race to the bottom...
As a developer, I've specifically pushed to maintain a co-located team, precisely because the type of work my team does works far better when co-located.
I do decentralized development regularly, and for some kinds of work it works fine. For other kinds of work, it makes simple tasks take an order of magnitude longer.
The Linux kernel does distributed development quite successfully, and scales extremely well. However, it does so partly by sacrificing some forms of coordination between developers; for instance, kernel maintainers don't consider duplicated effort to solve the same issue a problem, because the overall process still scales even if some individual developers end up wasting their time.
On the other hand, the development of any one individual patch series to implement one feature typically occurs either by one developer, or by a set of co-located developers in one organization, not by geographically distributed developers. And some other kinds of work, such as backporting or rebasing a series of patches, doesn't work well when geographically distributed.
You can work decentralized but it's not particularly great, especially because remote communication isn't a solved problem. You communicate a ton of stuff in an actual face to face conversation through a variety of different ways and even video calls don't really capture that.
Supposedly this has already happened with offshore development, and yet, here we still are, paying top salaries for US developers in the midst of a tech shortage.
I worked at a 100% telecommute shop local to Chicago for 10 years. We also used offshore development firms on some projects, and I can tell you, if anyone ever seriously had the idea of replacing us with them, they were quickly dissuaded by the experience of working with these firms.
Most programming is work that can be done in a decentralized fashion. Some can't be. In either case the salary commanded is influenced by a number of factors other than supply (quality of the supply, for example). So I'm not sure a "global race to the bottom" of the apocalyptic kind you imply would result in such a realization.
I do decentralized development regularly, and for some kinds of work it works fine. For other kinds of work, it makes simple tasks take an order of magnitude longer.