There is no workplace where people work their full number of hours with no breaks. And even chatting and such can overall be a good thing for teamwork and productivity. It's all about the balance. I expect my employees to take two 15 minute breaks plus an hour lunch in their shift, and if there is some chatting etc, or they are slower on a hot day etc no worries. There are times they get a bit off track and need some redirection though.
But it is very hard to see if that balance is good as a manager if you have no eyes on the individual/group.
It's also the case that some people can get work done more quickly, and if they are being paid for piece work that's great for them. But consider that the corollary of paying someone for 7 hours, and being happy if they what you expect done in 5 and then do their own thing, is that a slower but diligent worker who doesn't get it all done in 7 would be expected to finish the allotted tasks without extra pay. It's the same logic.
If your quick talented employee gets paid for 7 hours, why would they not owe the employer two more hours of productivity? That are being paid for their time in the vast majority of jobs. Now if the manager doesn't give it to them, that is on the manager. But if the manager can't see what's going on, how do they know?
The complaint that the manager doesn't trust his team - there are plenty of workers who are not trustworthy, it's just a fact.