What has gone wrong here? Why has it become not only acceptable but admirable to some people to live off the?

Capitalism's incentives are turned on their head. If you allow capital to reap the only rewards of economic activity rather than labor the system self-destructs from its internal contradictions. Politicians and businesses have never learned that you have to PAY LABOR to motivate it to work and that high labor incomes keep an economy moving without having to rely on debt. Since our economy did it all wrong, mive amounts of debt have been needed to keep our economy afloat, jobs have moved overseas, and the welfare problem snow.