I agree that it is not logical. However, it does seem to be working. Drive around Lakewood and tell me if you see the average family starving and begging for food. On the surface, it appears that there is plenty of money floating around and somehow people are making it in “business”. Until I a reduction in the following I will assume that your assessment is wrong
Very comfortable houses that are remodeled and more expensive than the average American house
Peasch hotel programs or families vacationing in Orlando
High-end clothing stores in frum neighborhoods that charge 2-3 times the price of similar items in the non-Jewish world
Travel/ Sleepaway camps that charge exorbitant prices
A high demand for non-essential food items with prices reflective of the “because we can get away with it” inflated price
Lavish simchas
Late-model automobiles (compare the parking lot in BMG with 30 years ago)
Etc.
It looks to me like the majority of the frum world is “living it up” while a vocal minority “have not” kvetches make a stink about in coffee room discussions