His argument was the following: In many fields such as laboratory science, research is expensive; one has to apply for grants and then spend the money, and these departments have large budgets, and this all looks good to deans. If a department is going through a lot of money, then it must be prestigious, important, and doing good work.
I heard a joke once that mathematicians are the second-cheapest academics to hire because all we require is a pencil, paper, and a wastebasket. But, in fact, we require online access to all these journals, for which we have to spend a ton of money. Spending all this money makes us look good to our deans, and lends prestige and the look of importance to our department, and allows us to compete with other departments for resources.
I think it's a bunch of BS, frankly, but it's the one time I heard the existing system defended, so perhaps it's worth bringing up.