The key delta is often that the bare minimum to keep your coworkers from being demotivated by you is a bit higher than the bare minimum to keep your manager from noticing your underperformance.
If the work you are doing falls in this middle range, then your slacking will harm those around you but you probably won't get fired (if it takes longer for a manager to get fed up than the mean time between reorgs, you probably can survive indefinitely)
If the game was fixed and everyone had full information, there isn’t a reason this would happen.
But I agree if the promotion/firing is relative or dynamic in some way, then you’d race down to arbitrarily low effort.
The real problem is correlating work with value in an unbiased way. If you had perfect information on the value of each worker, I can’t see how it would be complicated to do a cost/benefit analysis.
But without reading/predicting the future you can’t usually figure out value because an unfinished product has no current value and a finished/legacy product has fixed value. In either case the worker has no marginal value.
If the work you are doing falls in this middle range, then your slacking will harm those around you but you probably won't get fired (if it takes longer for a manager to get fed up than the mean time between reorgs, you probably can survive indefinitely)