The bubble brought a brief respite in that there was enough money for schools and companies to attract higher qualified individuals. The burst of the bubble brought the curve back to normal, or SNAFU, if you will.
I will grant a lot of truth to that, although I was focusing more on the rise of the "English Factory" mentality.
Regarding Hakkengaisha: My first point of concern is that, if they are being used to circumvent the laws for benefits, it would imply that the benefits laws need to be revised to provide better protection for hakkengaisha employees. The laws existed for a reason before, and being able to do an end-run around them is not an admirable trait; it is merely exploiting a loophole -- and teachers -- to marginally improve the profit margin.
Having said that, I have to add that there are a lot of well-meaning and dedicated teachers also. But, filling a lot of the hourly positions that don't provide enough total income for a dog to live on, cannot be filled with the cream of the crop. So employers have to make do with what they can get to stay in business. After all, the purpose of busness, no matter how undispicabe some people might find it, is to make a profit.
Just my two yen worth.
And here you give a nice summation of the problem: The school does not want to pay enough to hire real teachers, so they hire every kid who steps off the plane, and in doing so shoot themselves in the foot. Unless your business is rooking your customers, it is difficult to create a satisfactory product with staff that is disloyal, unskilled, and uneducated. The schools end up killing the goose.
Of course, what is being run now by most schools is not a business, but a con that takes advantage of the fact that few people know what real teaching is, or what a difference a skilled teacher can make in your ability to learn. This is doubly true in Japan, where the average Japanese teacher's ideas of English language pedagogy are limited to haranguing a huge class for an hour in Japanese. Perhaps the English teacher unions should do more to educate the customers about education.