You are half right, but utterly delusional for the rest.
An increase in competent available programmers will surely drive down the salaries of developers. Look at game dev's. They're often payed significantly less and work them dry because game companies know there will always be the next great fool to jump into the deep and and work then next set of recruits dry. With greater supply comes less demand, and ultimately that's the start and end to the discussion. There's no need to over-describe your nefarious shitty code problem. If we had more talented people being channeled into our in-demand industry vs. another program that may already be in over-supply, then its a win for all.
From my personal experience in Canada, I'm seeing soo many kids churning through schools from grad programs that are essentially guaranteed to find no jobs at the end. These kids have been deluded or coerced into thinking that if I wanted to be a -whatever-, then that's the career path they take. Currently, about half of them end up in the service industry or other 'underemployed' positions and many will never leave it. Many, if not most could be perfectly employable in fields that are actually in demand (like IT/programming).
My friend is 30 and has jumped around careers. First he entered a chef's program (mostly because he had lousy high school grades and his family was poor) and was a professional cook for lets say 5 years? Then he decided that being the bottom end of a restaurant was not where he wanted to end his time, so he had an opportinuty to travel with some friends, and ended up being an English language teacher in China and Korea for a couple years. This was lousy money, but at least it allowed him to travel to interesting places. When he came home, he realized that cooking or teaching wasn't cutting it, so knowing a lot of nerds (but not really being one) he took non-university level technology development for hardware engineering and software development. It was something that really challenged him intellectually in a positive way, and he ended up getting top marks, finding a job the day he left, and loving a much more satisfying lifestyle than the had previously. Now imagine if my friend had -found- his drive for technology much earlier. His road to success could've been years shorter and it would be a net gain for the economy as a whole.