> But what actually happened was that people who were good at their job, and could find work elsewhere, left. So they would have had all of the top talent leave the company and the remaining employees would be the people who did just enough to get by.

This reminds me quite a bit of a blog post from The Wetware Crisis on what he deemed The Dead Sea Effect ( http://brucefwebster.com/2008/04/11/the-wetware-crisis-the-d... )

While not a forced evaporation which you describe, its the 'the best people can get jobs elsewhere' and 'the less capable people entrench themselves as experts on critical systems to where they can't afford to be let go'.