I think the correct way to think about it is not that nobody does anything wrong, it's that if people consistently do things wrong, and it's reasonable clear that they are doing things wrong, then their long run survival rate in a competitive market will be zero, as someone else will outcompete them.

If someone is making a claim that someone is clearly doing something wrong, the burden of proof should -- to some extent -- be on them to explain why despite this, they are continuing to be successful without going out of business (if that is in fact the case).

For example, it feels to me that the way FANG companies hire SDEs and place them on teams is inefficient and weird. Why are 24 year old 1337coders considered fungible to work on any project? It doesn't make sense to me. But it's hard for me to convince myself that my feeling is correct, given that there are billions of dollars on the table for anyone who can come up with a better strategy.

I think this argument fails because “firm-space” is sparse. There are many companies, but there are way more possible companies given all the degrees of freedom. Also, the number of “competition events” is small. Companies don’t have the opportunity to run gradient descent to optimize themselves. A bunch of companies can make the same bad decision for the same bad reason, and they will each succeed or fail because of a bunch of unrelated factors.