...a bit of it:
It happens because institutions lie. And today, our major institutions lie because of a culture in which loyalty to "the company," and protection of "the brand" — that noxious business-school shibboleth that turns employees into brainlocked elements of sales and marketing campaigns — trumps conventional morality, traditional ethics, civil liberties, and even adherence to the rule of law. It is better to protect "the brand" than it is to protect free speech, the right to privacy, or even to protect children.
If Mike McQueary had seen a child being raped in a boardroom or a storeroom, he wouldn't have been any more likely to have stopped it, or to have called the cops, than he was as a graduate assistant football coach at Penn State. With unemployment edging toward double digits, and only about 10 percent of the workforce unionized, every American who works for a major company knows the penalty for exercising his personal freedom, or his personal morality, at the expense of "the company." Independent thought is discouraged. Independent action is usually crushed. Nobody wants to damage the brand. Your supervisor might find out, and his primary loyalty is to the company. Which is why he got promoted to be your supervisor in the first place.
It is not a failure of our institutions so much as it is a window into what they have become — soulless, profit-driven monsters, Darwinian predators with precious little humanity left in them. Penn State is only the most recent example. Too much of this country is too big to fail.