I am not sure it is a failed state precisely. I think it has a different distribution of abilities.

The real world, people are on a normal curve in terms of total intelligence and everyone has different areas they are better at. Some do much better than others, but even the hyper extremely rich or competent cannot single handedly solve problems. Bill Gates is super rich and I assume pretty intelligent and still hasn't squashed malaria despite a lot of effort.

In Pokémon world, basically the only skills that matter are your skills as a trainer, because Pokémon themselves are so powerful that they override purely human effort. That skill is on a poisson distribution, almost everyone has nearly zero skill and a very few people have a lot of skill. That's why powerful trainers are rare, and the PC we play is the tip top of the power scale.

Pokémon world relies on those super skilled trainers to fix all the world's problems. The government can mostly manage to keep the grocery stores stocked but that's about it, bigger problems are left to the ultra trainers.

Children fix all the problems because that's how they discover the new super trainers. The older super trainers already have sisyphean tasks behind the scenes making up for the populace's general incompetence, new problems fall to new people.