I have no experience of the 'world' you worked in but let me assure you it sounds very very familiar to mine and it's the reason that this country has very little in the way of large software companies. Whatever competence there is at the technical end, it's completely let down at the second management level and up.
There is somehow no way for awful people to be weeded out and it's something to do with the way that idiots express no doubt about anything (especially any stupid plan of their superiors) and other people admire certainty.
It's the same in other places too e.g. big Finnish phone companies that have paid the price now very publicly. In the States, I think there have been so many big companies, so many startups etc that eventually some people have learned and become ok. Some deserving people are in the positions they should be and have hired other good people.
I don't know how a government is supposed to achieve the same effect though.