The thing that I can't understand is the number of fairly large investors who must know that their stake is being devalued and really don't seem to care.

I think it's a slumlord problem, eg in a run-down city every individual landlord sees it in their interest to do the bare minimum and simply extract value while waiting for everybody else to revitalize the town into a place that people want to live. The original vision of Steem assumed that "investors" would be incentivized to improve the value of the ecosystem as a whole as a way of improving the value of their stake. But in practice most "investment" has been a combination of speculation and rent-seeking -- why put in more effort, you already did the chain a favor by tying up your wealth in the coin, now it's the chain's turn to do nice things for you.