Anyone with experience in a large org will hate this because it's a stupid, hamhanded way of forcing people to continually beg for the resources to do their jobs. Leaders think it's brilliant because it relieves them of the need to know what's actually going on in their organization, externalizing their responsibilities.
"Unplug it and see who screams" is not effective systems management.
I agree and would add that people aren't machines either. The concept of 'fire everyone and rehire who is essential' seems to lack comprehension of human psychology. It seems analogous to 'cheat on everyone and marry the person who stays' in that you are settling for the people who have the least self-respect and/or the least amount of options outside of their current position.
Organizational inertia can be cut through without causing a tremendous amount of pain and disruption. Stopping things by default is a very lazy way to do it. Doing it this way is a strongman fantasy that inflicts large costs: now your employees aren't doing their jobs, they're going through a round of "justify yourself" (when you should have had the organizational controls in place already).
And there's nothing new about this strategy, either. I read about these tactics decades ago in management self-help books. They were just as crappy and inhuman then as now.
"Unplug it and see who screams" is not effective systems management.
People aren't rockets.