Most Netflix employees have worked at other places and can make the comparison for themselves. They don't have to take Netflix' word for it.

Also, since when is telling people they're good at what they do "worker-harming psychological manipulation?"

The employees are making that judgment in an environment that has been tainted by the psychological manipulation itself.

How many people have brains that are going to seriously put up a fight for objective truth when other people talk them up like that? If you tell me my team is full of excellent talent I’m not going to self-sabotage my ego and question it.

It’s negative psychological manipulation when it’s being used as an excuse to fire and replace reasonably productive people.

The employment contract is highly lopsided. An employee is harmed far more when they are fired than a business, and Netflix exploits that advantage with this organizational culture.

My guess would be that it nurtures the imposter sydrome once the "top performer" starts struggeling with something they shouldn't if they truely were a top performer.