Dr. Laurence J. Peter is long gone now, and citing him might qualify as a sign of age. But in his time, around the late 60's or so, he had a very popular book called "The Peter Principle". He was the guy who claimed that people rise in an organization to their "level of incompetence" - until they reach a job they are not qualified to do. Over time, every job is filled this way, and that's why things go down the tubes.
Dr. Peter's original inspiration was from his days as a teacher in Canada. He was frustrated with the incompetence in his local district, so he sent a bundle of application materials to apply for a position with another district. Then they were sent back to him - they could not be accepted because he had not insured them. But if he would send them again, with insurance... It was then that he decided that incompetence was not localized.
Now Instapundit points to Colby Cosh here. Just read it - I can't do it justice.
Of course it's not just the Canucks. The state of IL once refused to license an electric car because it hadn't passed an emissions test. Read about that and more here.