I could be told tomorrow to lay off some or all of the people who report to me if we can't afford to pay them. I'd hate it, I'd cry and feel sick and not be able to sleep all night wishing I could avoid it. I know that from experience. Nobody wants that and even CEOs feel like shit when they implement layoffs.
The alternative to having the 2-sided at-will employment system would need to be a two-way commitment, which seems far worse. Would you want to work under a system where everyone was expected to honor a 3-year employment contract, and to renew it like a New York apartment lease? So that you can't accept a new higher-paying job because you're committed to your company for 2 more years? And if you quit your job "early" you could be sued or be ruled as unemployable by future employers?
I don't see how there is much practical room between "anyone can terminate the relationship at any time and it's not personal" and "2-way long-term commitment and neither party can."
> The alternative to having the 2-sided at-will employment system would need to be a two-way commitment, which seems far worse.
You probably just haven't tried it, or have little knowledge of how it works in practice, because your example is way radical. Learn about the actual conditions under which it works over here in Europe (you don't get locked in to a duration of employment, the notice period in Poland, for example, may be up to 3 months if you worked at one place for three years or more — to give time for knowledge transfer).
When you were sorting your damn spreadsheet where I ranked at the bottom, you cared zilch; you could give my cognitive abilities some credit by not pretending you suddenly got infected with empathy or something.