You are correct. It doesn't matter, if someone is getting nothing done you can fire them unless their performance is due to a medical issue. I was referring to the people who get very little done.

Other companies would love to hire only Google caliber employees but there isn't enough people to hire. So you end up with a company that may have a few superstars and a lot of average programmers. If a superstar slacked off they would have the same productivity as the average coders. It is hard for a manager to complain to that superstar when his productivity is just as good as many of his peers. At Google the slacker would stand out because his peers are all superstars and get A LOT done.