1) A PhD prepares you for academia. However, due to the market being flooded with PhD's, industry won't accept you for a research position without one, even if you don't need it. In a perfect world, a Master's should suffice if it gave you any lab experience at all (at least in science). If industry does accept you despite not having a PhD, your salary will be lower, your career will be capped, and you won't move as quickly through the ranks.
2) The incentives are in all the wrong places. Schools want funding. They get funding by writing grants, which requires research. They want to do the research as cheaply as possible so as to maximize how far each dollar goes. So, they have a very strong incentive to keep grad students in limbo as long as possible, delaying graduation. Since grad students often have major loans left over from undergrad, and the additional degree keeps them from having to make payments, they'd rather be stuck in grad limbo for years than be stuck without a job. This is especially true since student loans (both public and private) in the U.S. are inescapable (you cannot bankrupt your way out of a student loan).
3) Even afterwards, really badly paid postdoc positions keep you in academia for 3-4 more years before you can do anything with your education. It's almost indentured servitude with the "promise" of a better future (by the time you're 35). Unlike MD's who actually have a good salary in sight after they graduate, PhD's (after several postdocs) can only hope to make up to $120-130k after all is said and done (unless they climb corporate ranks in industry).
4) Research is fraught with politics. Instead of trying to actually contribute to the human knowledge pool, you compete with other labs for funding, for research (to be the first one that discovers something), and for spots in the best journals. When you discover a neat paper, it's a game of "what can I do bouncing off of this research that will get me published in an awesome journal" instead of "let's collaborate with this lab, leveraging our strengths to contribute to human progress". Quite often, several labs are running the same experiments just because they want to be the first to make a critical breakthrough. Competition can be great, but it can also result in wasted effort and bitterness at life.