Let me tell you a story: there's this programmer -- let's call him Gary -- who architected a system for a startup company and wrote some of the foundational code. Six years later, the company calls up Gary and says "We're doing $100M a year in transactions on the system and, without significant alteration of your initial architecture, can handle somewhere in excess of 10,000 simultaneous users. We're interested in 'taking things to the next level' and are looking for someone to help us architect it and write some of the foundational code."
So Gary, who is generally thankful that he can get by making a modest living as an independent contractor, thinks "gee, here's a situation where I am justified in charging an 'elite' consulting rate. Whatever I charge these guys, they will have every reason in the world to pay it." So let's say that X equals the rate that Gary charged these guys six years ago. What's your guess as to the rate at which the company walked away from negotiating a 5-month contact with Gary?
That doesn't really have anything to do with what I was talking about. Pricing yourself out of a market is a language and productivity independent thing - I've seen Cobol developers do it. If you get too greedy, sure - you lose a job, and the company ends up with the short end of the stick. On the other hand, the system built by the 10 commodity guys is not going to be less dependent on their knowledge of the code - I've seen companies completely shaft themselves by firing a consulting company, only to learn that no one is left who understands the code.
Here's the thing: Smalltalk is simple, and thus easier to pick up. A system built by 2 people probably has fewer areas of oddness than one built by 10. I've walked into many shops, looked at Smalltalk code I've never seen before, and picked up on how it works fairly quickly. Over many years of C programming, I was never really able to do that with C.
The bottom line: it matters who you hire. If you bring in someone who trys to extort money from you, the mistake was made long before the extortion got started.
Update: Larry Responds