It's not pathological. Most universities have flirted with hiring non phds to teach. It can work, but there's a reason they prefer traditional candidates: thebfaikure rate is way lower.
the competition is often between people with phds. i am not 100% sure that a university teacher needs to have a phd, but it seems that even keeping that requirement, the present system is pathological. most people with phds do not make the cut for researcher, which leads to the university being short on teachers.