Why did the elites of Germany so consistently underestimate Hitler? Possibly because they weren’t actually wrong in their assessment of his competency—they just failed to realise that this wasn’t enough to stand in the way of his ambition.
His government was constantly in chaos, with officials having no idea what he wanted them to do, and nobody was entirely clear who was actually in charge of what. He procrastinated wildly when asked to make difficult decisions, and would often end up relying on gut feeling, leaving even close allies in the dark about his plans. His “unreliability had those who worked with him pulling out their hair,” as his confidant Ernst Hanfstaengl later wrote in his memoir Zwischen Weißem und Braunem Haus. This meant that rather than carrying out the duties of state, they spent most of their time in-fighting and back-stabbing each other in an attempt to either win his approval or avoid his attention altogether, depending on what mood he was in that day.
There’s a bit of an argument among historians about whether this was a deliberate ploy on Hitler’s part to get his own way, or whether he was just really, really bad at being in charge of stuff. Dietrich himself came down on the side of it being a cunning tactic to sow division and chaos—and it’s undeniable that he was very effective at that. But when you look at Hitler’s personal habits, it’s hard to shake the feeling that it was just a natural result of putting a workshy narcissist in charge of a country.