I like the evidence of how broken hiring is, but the treatment is worse than the disease, and the analysis is flawed.
The treatment: there's a long failed history of using contractors and hiring the best, which is a recipe for abuse and PTSD.
The wisdom now is that one should prioritize avoiding false positives, but the observed facts are that many people who later do great interviewed poorly.
For false positives, there's the legal risk (hard to fire), but the greater risk is the damage to the organization before they are fired.
The premise is that people are great or not at interview time, and the process just needs to be accurate.
But for both false positive and false negatives, the reality is that how people work out does not vary primarily with their skills (probably because all candidates have enough baseline skills) but is a function of both them and their work+environment - not f(emp) but f(emp, work, others).
For f(*, work, others) there are 2 troubling issues: 1) for underperforming groups, there's a massive incentive to blame someone, and blaming the new hire is the solution that doesn't disturb existing relations; and 2) even effective combinations f(emp, work, others) might not be able to perform as needed, so performance is only a qualified measure of effectiveness.
So the more interesting fact is when low-score hires end up doing well, which is signal for a high-functioning team being able to get the best out of people. And when emp goes on to other contexts successfully, the effect could be persistent (and they could be bringing it transitively to other groups).
Yes, companies need to hire good people. But sometimes it's more important for companies to make good people of those they hire.
I suspect the poster child for selection is Amazon, and for making the best of what you have is Apple. Amazon is great at pursuing new opportunities relentlessly, while Apple is good at managing a very complex supply chain and delivering consistently.
So on the "bundle" theory of companies (from recent discussions about Japanese company diversification), you'd want to optimize hiring to company capabilities and orientation.
If you make "accuracy" at interview time the standard and optimize against false positives, you're almost deliberately hiding from the details that determine what people will grow and contribute the most. (Here's where prior relationships, school networks have a positive effect that pragmatists accept (notwithstanding the social bias).)
Almost any work can be as formative as prior experience and education. I think that depends most on mutual consideration and a growth perspective, and you can interview for that. Like investments, you're looking for growth potential, not past performance.
Ironically, successful teams that make the most of their people don't need to hire so much, so you'll have less signal.
That answers why interviewing can not only be broken but stay broken: you're studying failures and optimizing for anti-failures, but there are a million ways to fail and a billion incentives to do so.
Better to deeply understand and replicate the few successes.