Do you know what happens to the DPE when the person that just got the CFI from them screws up? Thats a bunch of responsibility I would not want to share.

The unfortunate truth is that DPE's income is greatly affected by how "laid back" they are on the checkrides, flight schools just refuse to give them business if they get too tough. God knows that there are CFI's on the market who would not carry any certificate at all, if they had to take these checks with the FAA.

I don't see a perverse incentive for DPE's, they just spend anywhere between 6-10 hours with an applicant and 500-600 dollars for that doesn't sound like they are milking the system. The FAA comes free for the applicant but the burden is with the poor taxpayer. FAA Inspectors don't work for 20K a year either.