I agree it's a problem, but I think you have to fix the incentives to make meaningful change. When people are thrown into a cut-throat competitive environment, with tenure clocks, multiple junior professors per tenure slot, requirement to bring in grants to fund your research or you get shut down, etc., it doesn't encourage people to be altruistic and sharing.

I think the problem is fundamentally one of economics. Research is good, but you have to decide how much money to allocate to it. In order to decide, you need a metric for performance. Really, only scientists are qualified to judge whether the results of other scientists are worth anything, so currently the only metric we really have is publishing in peer-reviewed journals. Ultimately, therefore, that's where the incentives end up.

When a more appropriate way of quantifying research output and its benefits is found, hopefully a beneficial change in culture will trickle down into the academic trenches.

How about trying to fix the current system by making somebody else using your software count as a "super citation"? (It could even arguably count as much as co-authorship.)

I think this is an excellent idea. If published software could be tagged via a unique identifier (like the DOI of a paper), then it could be cited by that tag just like a paper. Well written software might even get cited more than the paper it was published in.

It's not his fault that the system is set up in a such a way that some random bureaucrat that's not close to the project can make a department unemployed with a wave of his hand. Aiming for the next grant is how you survive - it's not trivial for academics (or anyone) to move cities every year or so to follow where grants might land.

Until there is that job security, knowing that as long as you keep working you're not going to be randomly turfed out, this phenomenon will be a fundamental part of the academic career.