If you’re getting to the point that you need to list open positions, you’re not going to fill them with the best candidates.

This is mostly true, with at least two important caveats. The first is that people sometimes may lack a local network through no fault or deficiency of their own. I recently moved interstate (in the US), which separated me from my professional contacts and any jobs they could have referred me to. So I picked up a job on a regular ol' career site (not craigslist, but close enough). And yes, I very humbly consider myself one of the best candidates. =) If the world were as cynical as you suggest, I suppose I could leverage my current position to build a network and move up from there, but there’s no indication that I’m at a deficient company.

The second caveat is that many junior engineers obviously won’t have professional networks yet. Some will build one in school through internships, but some will not (e.g. I did research instead of interning). And if you’re promoting juniors appropriately, you should be doing a lot of hiring of junior engineers.

Don’t know how I feel about these statements. All the interviews I got (and the current job I have) were via ads on stack overflow and linkedin. Our company recruits folks by advertising on these locii and hackernews (I think). I think the folks I work with are very, very good. I would not quite so strongly advise someone that they simply can’t get people who will be competent and get the job done by advertising for positions. I think it can be done. I’ve seen it being done repeatedly as we expand and I meet our new colleagues.

Applying directly to ,companies, and responding to the various job boards is a great way to get initial experience. The above comments were directed primarily to experienced engineers. I had success posting on job boards like dice.com and linkedin earlier in my career as well.