Devil's advocate here, I don't personally think a company should adjust pay based on location and tend to agree with the thrust of your point. But one might think of it as FB (or whomever) paying an employee enough to live up to a certain standard of living/being able to save money in their given locale, rather than a strict salary number. Because that number is different depending on locale, it would make sense to vary it based on locale. X salary allows one to live a "good life," being able to go out regularly, afford luxuries, live in a nice place in a nice area of town, in San Francisco. X salary * .7 (or whatever) allows the same lifestyle in Cleveland. Your work isn't devalued, you're getting the same lifestyle.
I tend to think I should be paid X and should I choose to live in a more expensive region, that's the price I pay for choosing to reside in that region. If I decide saving million dollars is more important to me, then I move to Cleveland, maybe don't have the same scene as SF, but am able to save more, my choice.
Company should pay me X money for Y hours of work. Company should never care where and how I live. If I move somewhere cheaper (and can still do the same job as before), is my work worth less?
I tend to think I should be paid X and should I choose to live in a more expensive region, that's the price I pay for choosing to reside in that region. If I decide saving million dollars is more important to me, then I move to Cleveland, maybe don't have the same scene as SF, but am able to save more, my choice.