And this company that didn't hire the most-competent candidate: Would you say that they are now some how measurably worse-off within the market? At the very least, in relation to a potential competitor that did snag up that candidate?
It takes a bold and courageous leader to admit mistakes in the corporate environment. Or a stupid one.
I don't think that is the question. I believe the point being made was that the free market punishes this sort of behavior. You don't rely on the company's officers learning their lesson, or following the spirit of some law - you rely on market forces killing the company that passes over superior candidates.