>  But a postdoc at a university is an underpaid training position for the most part.

That's not really true or fair. You're talking about a person who's done likely 4 years of undergraduate and between 4 and 8 (median 5?) years of graduate studies and gained a Ph.D. This person is without a doubt "an expert" in their field. Does that person still need training? Sure. But who doesn't?

You're also talking about someone who is probably in their early to mid 30's. Eventually people want to start having a life. And you're expecting them to make pennies? I'm not joking. Here's a list of CS Post Doc stipends[0]. Go to Berkeley or Stanford and make $66k-$80k? I've gotten more money as a PhD Intern! You're going to get more than double that in industry before we talk about RSUs.

I think this is something we need to take quite seriously here. There aren't really good reasons for people to choose this path, especially considering how disruptive it is to your life (have fun moving again in a few years :). Maybe we can hope that those who go are just really dedicated to research and following their passions. So dedicated that they are willing to put off normal human things like starting a family, maintaining relationships[1], or even just building one's net worth (or paying off student debt). Some people want to become a professor[2] so will do that.

But the big thing I see is that there's nothing to attract the best people. (We can extend this to even just professorships[3]). So who are becoming the postdocs and professors? Who are becoming the people that educate the next wave of people? If you are at the top, you likely aren't going the professor route, you're likely going to industry where you'll likely get 2x-3x the pay AND more freedom in your research. Even if you're pretty mid you can get 2x-3x the pay in industry with an honestly less stressful life (but you may not be doing research or likely have more restriction of what research you can pursue). This, seems pretty disastrous. At best, unstable. There's not a lot of professor spots but I think we need to have some incentive system such that people at the top are encouraged to carry on their research for the public as well as educate future researchers. As a business you want to be greedy and capture top talent, but that's also because you should be thinking much shorter term. At social levels, we have to think generations.

TLDR:

So are we confident we are getting "cream of the crop" (even if shared with industry) in academic positions? Are we sure that's even true at highly prestigious institutions?

I think the answer is "no", we should not be confident in that outcome.

[0] https://vspa.berkeley.edu/faculty-staff/compensation/postdoc...

[1] Good chance you met your partner while doing a PhD and yay now you both need to find post docs but they are competitive and so good luck finding one in the same place? Hope you like long distance relationships or are willing to let one partner make a bigger sacrifice.

[2] Which weird thing that we train someone to become an expert researcher and then as a professor we give them such high and diverse workloads that they will often have little time for research and instead will more be managers. The research skill degrades with time and only keeping up at a high level is not sufficient.

[3] In CS a post doc is also often a way to elevate your status. Like you got your PhD from a lower tier university and so doing a Post Doc at a much higher tier can make you employable at a more prestigious university. Because prestige still matters a lot, especially since it is tightly coupled with things like equipment access.

[side note]: I think with the competitiveness that it is a bit odd we still have these strong notions of prestige. Just to put things in perspective, if every graduating PhD at the number 1 school, they likely graduate enough people that you could fill all available faculty positions available. Given how prestige matters, it should be clear how high prestige graduates permeate into lower prestige positions. More clear when you start to consider things like how many top universities are in not the greatest living locations. https://drafty.cs.brown.edu/csopenrankings/placement-rank.ht... https://jeffhuang.com/computer-science-open-data/