I've worked with good and bad programmers, both on-shore and off-shore. What seems to determine the quality is the standard you set when hiring. If cheap labor matters more than quality, the result is accordingly (and always ends up costing more in the long run).

I suspect the presumption that off-shore means lower quality comes from past experience working with an off-shore team selected based on their perceived lower cost. I've found that when you set the bar high for off-shore hires, regardless of cost, you end up with high-quality people.