Not allowing companies to lay off workers who aren't doing productive work would put them at a competitive disadvantage against foreign competitors or new companies, and then they still lose their jobs when the company goes bust. Not allowing new companies to compete with existing ones would entrench monopolies and accelerate concentration of wealth. Neither of these are desirable results.
How is this any different from the current economy where great companies are frequently going bust because of Wall Street strip mining? One prominent example is a company called Sears which was Amazon before Amazon. Why is General Electric so uncompetitive these days? Why are Dodge and Chrysler now owned by a subsidiary of an Italian company headquartered in Amsterdam?
Also, it is the neoliberal economics of the past 30-40 years that has "entrenched monopolies and accelerated consolidation of wealth". Just look at the FAANG companies, how they turned their CEOs into the first ever trillionaires and how they manipulated the tech labor market in ways that have been long term detrimental to workers.
The current economic system also destroys loyalty and motivation on the part of workers because promotions are earned by getting a new job elsewhere rather than by merit. This means being good at interviewing not good at the job. I think it's beyond obvious how demoralizing that is for morale in the workforce, at least once workers realize that they have no job security and that there's usually no point or reward to working harder than bare minimum. Job security and valuing retention over poaching the shiny object from your competitor means loyal employees whose incentives are aligned with the employer.
It's also bizarre to me how people are unaware that the system I'm describing actually existed during the most prosperous time in American history: the post war boom. Its unraveling boosted short term profits at the expense of the long term. But now we are living in the long term and the bill for decades of neoliberalism is coming due so we can all observe firsthand just how "desirable" its results are in the present catastrophically bad economy.
