I’ve come up with a term for it. “Torah Incorporated.”
Running a yeshiva IS big business, plus no one asks questions when you employ familiy just because they are related.
Unfortunately, I have to agree. The Rebbe and the Principal care more about their own jobs. If the rich person’s child is disciplined and the school goes under, who does that help? No one. Hurt? Everyone.
I believe the chosen response helps the most people.
(That’s not to say the child won’t grow up with issues because he was babied. He will, but that is long term).