https://www.fastcompany.com/3056662/the-future-of-work/she-c...
If I wanted great pay and cutthroat competition, why wouldn't I just work in finance? The finance industry isn't stupid. They have developer efficiency teams too.
I think it is more enjoyable to work with people who are competent and performing well, so keeping poor performers around hurts the morale of other employees. Plus, the caliber of people Netflix hires can easily find another job where they'll be a better fit, so showing them "loyalty" by keeping them around probably hurts them as well.
Another example - you were a valuable developer, but got a crippling, chronic disease which makes it harder to concentrate. There is no hope of your productivity ever going back to "reasonable" levels. What is loyalty in this case? Should they still pay you for the years even though you can't contribute?
For your second example, loyalty would be working with the employee to find a more suitable position in the company (or outside of the company) and helping with medical bills and any rehabilitation.
That's completely at odds with Western individualistic culture though hence it's rare here. Netflix is not really an exception - if you are the "weakest link", they will just fire you after your yearly review instead of waiting for a panic fire of bottom 10-20% of staff when stock price plummets (like most other corps do).
[1] http://www.slideshare.net/reed2001/culture-1798664/40-The_Ra...