No, that's ^ not true ¯\_(ツ)_/¯
> How likely is it that 10 employees come back?
Pretty much nobody is irreplaceable.
> How likely is it that critical institutional knowledge is lost forever?
In the digital age, almost impossible. Documentation, process automation, and knowledge transfer mitigate this risk.
> Does it? Have you ever been through a reorg or restructuring at work? Do things ever get back to just as effective as before any time soon?
Yes, I've been through many re-orgs at AWS. If done right, things get better fairly quickly (3-6 months).
> It's squandering human capital, knowledge, and reduced efficiency both in the short term and long term. It's the most expensive way to reduce your overhead. A far cry from optimization.
Not necessarily. The short-term pain of restructuring can lead to long-term efficiency gains. Organizations that fail to optimize end up bloated and sluggish, which is far more costly in the long run. Smart cuts, when combined with proper reallocation of resources, create a more effective organization.