Your last para is my exact point. The recruiters are acting in self interest. Expecting that they do otherwise is a doomed hope. It is up to owners, and transitively up to society at large, to make and if need be enforce policies that encourage the desired behavior.

> I'd love if there was something company owners and operators did to prevent things like this which are local maximums but globally inefficient (as well as unethical and unfair)

Well, continuing your line of thinking: what's the incentive structure for company owners/stakeholders? And how does it stimulate them to seek global efficiency?

In vernacular, "theory" is completely different from the scientific jargon meaning of a "theory", which leads to people saying "Evolution is just a theory".

Similarly, the economic jargon term "efficiency" is not at all the same as the commonplace definition you used. The economic definition barely covers anything beyond profit maximisation and cost minimisation and is precisely the reason we see so many externalised costs. Companies are "efficient" only in monetary terms, but that doesn't preclude waste, missed opportunities, myopia and environmental or societal fallout.