I think many in government knew this was going on, and becoming an increasing issue/epidemic in recent years, but until the public becomes outraged and is willing to support a big shift in policy and budget, what they can do is limited. It might be some of the people in government that we should feel most sorry for - they've been witnessing it for years and voicing concern, but few in the public will listen or do anything about it.
Perhaps I'm being too generous, but I see government and big institutions as behaving very much like computers, with much less intelligence and autonomy than the general public might think.