I prefer that everybody gets the same raise, and that the company pays competitive salaries. To spend so much time justifying your own job for a company that is making a lot of profits makes little sense.
I'm not sure how you square this with promotions (the main driver of performance reviews). No company who hired me five years ago could have kept me with a constant 3% increase, that is significantly less than I achieved through promotions, the rate would no longer be competitive.
This era of CS was probably unique in the history of STEM of having high salary rewards for changing jobs quickly. This never existed in Medicine, Maths or Engineering really (unless you found your own company or such.)
Also, even without boom times top engineers will still make a lot of money because top positions are still insanely hard to fill. I know of several top companies with L8+ positions that have been sitting vacant for over a year, competition for these candidates is fierce.
Most people know when people on their team aren't pulling their weight. If it isn't addressed by management it turns into a demoralizing situation.
Yes, there are meant to be protections so you don't just fire all the minorities and women but "competent engineer" and "masterful bullshit artist" are not protected categories.
If we don't like this (I certainly don't), then we need to stop letting private companies control so much of our lives and the economy.
one side effect though is w/o equity it's easy to feel a lack of motivation to work as hard if you get the same raise as everyone else who might not be doing great work.