How long have you worked in software and which companies have you worked at? I'm asking because these PMs tend to come from smaller companies whose main job isn't IT related. In a lot of these places, the "IT Director" is the CEO's friend or family member, and the IT department is simply a holding area to keep them out of trouble.
I've worked in software for roughly 14 years, and I've worked almost exclusively for startups during this time. I understand the concept of nepotism, so I get your point - I guess my question is not really "how do these people keep their jobs" so much as it is "how do these people even exist?" The notion that a conscious human being could behave in the manner described is unfathomable.
It's probably because you've been in startups all this time. Try working in manufacturing instead and you will no longer have trouble believing that these "cucumber" people walk among us... and work in management.