Agreed. "Shortsightedness" is another adjective for what's happening.
It's not quite the same thing as "stupidity", because (in cases like this) the "suits" are specifically optimizing for a desired goal (lower cost and higher sales, NOW), and are ignoring the longer-term costs (returns, failures, loss of sales). In a sense, it's a very rational behavior pattern. If you don't plan on working for the same company for at least 5-10 years, then it can make good sense to focus only on your own short-term position.
To some extent, this "flows downhill" from the current Wall Street financial system, in which companies' values depend very highly on their short-term results (e.g. quarterly). In this environment, "long-term" thinking means "next year" if you're lucky. Since project managers and VPs tend to receive financial incentives for achieving short-term deliverable results, meeting tight schedules, and cutting costs, there's a serious risk of a company "eating its seed corn".
I once had the displeasure of working for a company vice president who gloried in this sort of short-term focus... "get the current product out the door" was Job 1, and there really wasn't a Job 2. Bug-fixing, work on product infrastructure, and any design and development work which wasn't directly tied to a new feature was almost entirely de-funded. He felt that the best way to achieve product goals was to "hire a hundred code monkeys", throw it together, kick it out the door, and then start over again.
Two or three years of this, and the product quality had taken a really serious downturn, customers were unhappy, engineers were miserable, and it was becoming very difficult to do any new development because the existing product technology was buggy, brittle, and full of short-term hacks.
The company developed one hell of an "engineering debt" during this VP's reign, and it took years (and a lot of money) to recover after the VP suddenly took a higher-status job at a competing company. I felt more than a bit sorry for the competitor!
As we walked out of the meeting where we were informed that this particular VP had suddenly resigned, one of my coworkers remarked "I don't know about you, but I'm hearing an angelic choir singing right now." I knew just how he felt!
There are a few things engineers stuck in this sort of "clueless suit" situation can do: make your concerns known to higher management (in writing if possible) in a professional and responsible manner, keep a good "Pearl Harbor" file (a record of all such orders and conversations), and keep your powder dry (look for other companies which don't have quite such a corporate death-wish).