The diaspora program of the rabbinic regime made sense so long as the world was ruled by a strong power, like Rome or, even earlier, Egypt or Mesopotamia or Assyria or Babylon or Persia, or, as was the case later, Russia or England or America.
Where the diasporic rabbinic regime falls apart is when the world is under weak rule. Then the exilic situation of the Jews is susceptible to turning untenable and unsustainable. The collapse of world rule from the beginning of the 20th century until after WWII is what set the conditions for exterminationist Germany to invent and implement the Final Solution.
It's not that the rabbinic regime was wrong, it's that it was designed under circumstances that, nearly two thousand years later, had altered profoundly and the rabbinic leaders weren't clear enough about what they needed to do to make the necessary adjustments.