"Given that you think active investment is driven by rampaging emotions (rather than rational analysis) and results in bad investment decisions, wouldn’t we want to completely eliminate active management?"

Active management is a negative-sum game -- a third outperforms while two thirds underperform, partially thanks to transaction costs. The outperforming guys (who perform rational analysis) definitely do NOT wish the active game to go away because they've been profiting from the underperforming guys (the so-called rampaging emotional crowds).

So no (ironically), nobody wants to eliminate active management because the rational winners are enjoying it while the emotional losers still think they can win.