The top elites of a society should be contributing their talents in the private sector. They should become the managers or leaders, so that they can make best use of their initiative and creativity under liberal environment. They can try new technology, methods and management process to generate profits and to improve the society. They should not be trapped in bureaucracy, under which their initiative is curbed by the complex structure.
If all the talented elites become civil servants, all creativity and initiative are restrained by bureaucracy: a system with low mobility, encouraging evasion of errors by doing less, and everyone becomes a mediocre. Those who are not will find themselves unable to make use of their talents. Civil service requires someone who wishes to live a constant life. These guys are reliable as they are responsible for their own responsibilities. Those good in examinations are often such kind of people.
Talented elites may not be talented in examinations. Many prominent entrepreneurs do not have good academic performance. What they have are the ability and the courage to make decisions, they are not rule followers. Bureaucracy, however, needs rule followers. Civil service does not need talented decision makers; it needs someone who will not do someone they should not, or too greedy to earn money other than his salary. In return, the government often guarantees their retirement life, as these people will not have much extra saving upon retirement.
Enterprises exist for growth and profits. Governments exist for safety and perpetuity. Enterprises need creativity. Governments need safety. Two concepts should not be mixed up.
Civil service is a costly system with low efficiency, and conservative. This means that it incurs burden on the society rather than generating profits. That is why the seats in civil service are limited. If everyone is a civil servant, the economy will collapse.
Using examination as a way to turn submissive bookworms into civil servants is not wrong. What is problematic is a society in which the youngsters have no career and no hope without becoming a civil servant. It is a distorted and abnormal development for a society when the ambitious youngsters are unable to achieve their aspirations, and are prematurely trapped in a rigid bureaucracy by sacrificing their freedom and personal development.
Stagnation of a society is not the result of lack of elites as civil servants. It is because of the lack of opportunities of development for them in the private sector.