I think that’s too extreme as a blanket statement but it’s definitely true that when there are major wealth or position differences communication becomes difficult and all kinds of perverse incentives come into play.

If you wonder how, for example, George Bush II thought it really was “mission accomplished” in Iraq or Vladimir Putin thought they’d conquer Ukraine in a few weeks, the mechanism you describe is the answer.

“Yes sir. Everything is great sir.” Nobody wants to contradict or bear bad news.

The larger the power/wealth differential and the larger and older the organization the worse it gets. Older matters because it means there has been lots of time for these perverse incentives to take root. Large matters because the organization is too big for most people to really know one another.

This is probably a major mechanism of civilization decline. Eventually you end up with layers of leadership that become increasingly detached from reality as you go up.

It’s pretty incredible that primate social behaviors evolved for small hunting bands and tribes can scale this big at all, but they certainly don’t do so very well. The inefficiency and error rate is incredible.