All bureaucracies evolve towards this state, be they governmental or otherwise. The stuff that can be automated has been. (In past times, it was automated in the sense of having clerks performing basic repetitive tasks by hand). But no complex system can be fully automated without breaking down frequently. The bureaucrats are no longer hired to carry out the basic tasks, but to fix the system when it breaks down. (In the past, they helped the clerks, or signed off on a manual override of a process).

Because the automation is invisible, all that the naive observer sees is the stuff breaking down and being fixed by hand, which looks like utter chaos. And they're always drawn to wonder if the system would work better if the people were replaced by automation. No, because new people will need to be hired to keep the new system working.

Like the average observer who says the current conditions are really just the old conditions born anew, you are conveniently ignoring rate of change and its destabilizing effects.