You've got to be kidding me. Nearly every instructor I've ever had offers different stories about the FAA.
So because a bunch of flight instructors don't like dealing with the FAA the organization isn't effective at ensuring airline safety? You can tell stories about stupid things that happen in ANY organization and the FAA is no different. Yeah, not everything the FAA does is perfect - news at 11. Of course the aviation industry has achieved a ridiculously impressive safety record and the FAA has been a huge part of that. Coincidence? Not remotely. Just because an organization does some silly stuff doesn't negate their actual accomplishments.
Hasn't anyone noticed the steady decline [airfactsjournal.com] in the number [haywardairportnoise.org] of licensed pilots over the last decade?
For general aviation sure. It's expensive, time consuming, and causes your insurance rates to go through the roof if you are a general aviation pilot. Owning and maintaining a plane is not a cheap hobby.
If you are a pro the pay for a newbie pilot is ridiculously low and that has nothing at all to do with the FAA. That's simply due to the fact that there is an excess supply of pilot so wages get pushed down. I have a cousin who became a airline pilot. Spent a ton of money getting trained and was making all of about $30K/year in salary to drive the bus in the sky. Gee, wonder why people wouldn't want to become a pilot if the wages are shit and the hours are long.
However, if you piss off the wrong FAA guy and he decides to ride you like a pony, you will go broke and enter bankruptcy trying to comply with the specific and individual demands he makes in the name of safety regarding your plane, or you will stop participating in aviation altogether.
So don't piss him off.
When they raise the standards for safety so high that pilots and airlines go broke as super expensive FAA certified mechanics throw away perfectly good parts from their planes, the FAA is clearly failing again.
Just because a part is functional and not yet broken does not mean it is inappropriate to take it out of service. I'm sure you can find examples of something silly done by some FAA employee but the fact remains that without them the safety record of the aviation industry would not be anywhere close to what it is today.
Oh and the airlines industry right now is reporting record profits. Airlines going broke? Only the badly run ones. They've finally figured out that having excess capacity is economically stupid and they've started charging ticket and other fees that are high enough to actually generate a profit. What a concept...