> The thing I don't understand is why so many companies are so inefficient at hiring developers. They'll spend months giving out interviews and take-home tests and disqualifying people for the smallest subjective hangups and then finally hire a friend of an existing employee who talks a big game but can't code their way out of a paper bag.

That kind of sounds like a general organizational dysfunction: someone designs and elaborate and expensive process that doesn't work and rejects 100% of the candidates (which was almost certainly sold a a "process improvement"), then people end up working around it to get things done.