The situation you're describing reminds me of the situation in research science. In both areas, there are too many people competing for too few resources, and the results are predictable.

One result is that the people who make decisions start looking at the wrong things or make errors in how to best judge a large number of competing people. As a result, people respond erratically and game the system. Then you get an arms race. This is to be expected given the stakes: when resources are scarce, people start to move toward extremes in order to be able to compete.

IMO, each system creates its own problems. Schools mismanage their money and then complain about being broke. Universities over-hire, work new faculty to the bone, and then toss them aside if they can't get grants. Funding bodies get too many applications, fund 10% or less of them, and then articles like this one and this one appear. And yet people wonder why it happens. The former (making up results) is human nature but IMO is also driven by science's current focus on shiny dazzling positive results, and the latter (breast cancer) is driven IMO by focusing again on the wrong thing and desire for shiny results over the long and complicated slog toward real answers.

Okay, this is a bit oversimplified here, but I have to get back to my long and complicated slog toward real answers now.