There are many companies that openly hire for middle of the road developers. It's easy to do, just pay middle of the road salaries.

In my experience at these companies, there is sufficient bureaucracy that high performers hit bottlenecks due to the org structure, reducing everyone down to the lowest common denominator anyway. So even an otherwise talented dev can be replaced by a less talented one.

Why not? Software development is a technical work which can be performed by thousands of people on the job market. All it takes to replace someone at such a job is time and HR effort to find a person with required level of experience and reasonable pay requirements.

The problem is that you're assuming productivity is based on individual merit in these companies.

They're so large that essentially nothing about your personal output has any real effect on your individual productivity. It's equal parts politicking, luck, and self-promotion that garners you kudos, not actually getting anything done.

In a dysfunctional organization, like I daresay yahoo is at this point, you don't lose anything by firing people who are unable to contribute due to organizational problems.

As an example, when I worked at AT&T, individual and project success was decided essentially based on the whim of management.

I don't think we went 3 months with the same remit, organization, management structure or goals.

In that kind of situation, much like I perceive Yahoo to be, there's really no point in attempting to achieve productive work since the targets change before you can actually do anything. It's pathologically better to focus on shifting blame and self-aggrandizement, so that when things inevitably fail you can dump it on a scapegoat. There's a reason I don't work there any more.