This is probably one of the more observant posts I've read. I'm reluctant to accept the idea that things can't be fixed, but when framed with "because they were designed to operate within their current failure mode," I'm compelled to agree at least partially.

It does seem like most meaningful change comes at the failure of a system or when a new clean slate emerges. E.g. the fall of Rome leading to modern Europe or new land (from the euro perspective) leading to the United States of America.

As I'm writing this I'm now realizing that defining the U.S. as a clean slate example is inaccurate because the indigenous system was destroyed in the process.

With that said, meaningful change is possible without collapse, but I'm wondering if this sort of change requires special circumstances that I can't currently describe. The civil rights movement is an example of this.

System dysfunction is when local agents act rationally and in aggregate destroy the system that hosts them.

I would phrase this local optimization as parasitic optimization. The most famous example of this was after the Romans defeated Carthage. The rich acquired an enormous number of Carthaginian slaves and manned their latifundia estates with them. The returning veterans found their abandoned farms destroyed and became homeless. This led to the conflict between the Optimates (the wealthy) vs the Populares (the poor). The Gracchi brothers, Marius, and Caesar championed the Populares.