You are correct about how the current system is the result of a draw down of past heavy funding. The timing of the draw down was different in different fields.

You are correct about how the current system is the result of a draw down of past heavy funding. The timing of the draw down was different in different fields. An NSF official explained to me in 1990 that, in the 1960's, 90% of grant applications were funded. By 1990, 90% were rejected. The same is true for hiring: in 1945-1970, with the G.I. bill and the explosion of new universities (e.g., in California), almost everyone with a Ph.D. was hired for a tenure track position, and many tenure track positions were held by professors without Ph.D.'s. As you say, faculty only very slowly learns that the systems they came up in are gone, and so they over-prepare young people for a world that is gone. The future may be a combination of the older tradition that professors start with inherited wealth and a new pattern that an academic career begins with 10 years building wealth in business.