Who is "they"? Spotify executives who assumed the money printer would never run out of ink? The managers who hired and hired to expand their own empire? The software engineers who engaged in "resume driven development" by stacking abstractions on top of abstractions so they could play with cool new tech at work?
Top blame is on middle-management (100+ reports), because they set the rules-in-practice for how the organization actually operates, and second blame goes to top management (C-level), because their job is to keep the middle-management in check.
The line employees are just responding to the incentives that these two groups create, they aren't the ones steering the ship into the ground.
Any significant layoff that doesn't have a disproportionate number of people from those two groups thrown overboard is ass-covering. They are the ones who screwed up.
In what I've seen, this generally comes from top management, the board even in some cases. They set the agenda and approve budgets for everything the company does. Head count is a direct translation of this. In normal scenarios, head count becomes the bottleneck and limits how many things can be taken up for a given year. But during the pandemic, dollars became plenty and execs reached deeper into their wish list and triggered a hiring frenzy. Middle management rarely has a say in these matters. They only need to come up with plans that can ultimately fulfill management's agenda.
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In what I've seen, this generally comes from top management, the board even in some cases. They set the agenda and approve budgets for everything the company does.
They do, but they are often blind, due to fog of war, of what actually happens in their firm.
Middle management controls that - by deciding on what kind of line-work (which they have visibility over) gets rewarded or prioritized. If the line engineers are spinning their wheels, doing architecture-astonaut nonsense for the sake of promotion, that's not because the CTO is rewarding it - it's because their 100-person director (who should at least vaguely know what each of their reports is doing this year) is.
There is a lot of opportunism out there.