The question "Why is so much time and effort wasted developing desktops?" caught my attention. I'm not 100% sure what you even mean by "developing desktops". I assume you mean the effort in developing the software. But maybe you meant the effort we users spend choosing them and tweaking them.
Looking at the "View Active Topics" view of the Debian User Forum, I see that most of the topics have between a handful and a few hundred views. Two topics stand out: The topic "What Does Your Desktop Look Like?" has 2.2 million hits. The topic "What does your non-Debian Desktop Look Like?" has 585 K hits. There appears to be a big demand for the perfect desktop - whatever that means.
Without much effort, I can think of about a dozen Linux "desktops", i.e., Gnome, KDE, i3, Openbox, XFCE, etc. A few are pretty stable and don't receive that much attention (e.g., Openbox), while others are very active (e.g., Gnome). Overall, I would agree there is a pretty big amount of effort directed to this segment of software development. If I was king, I would temporarily redirect 75% of that effort to improving Wine until it could support the handful of applications (e.g., Quickbooks) that I still run inside a VM running Windows. (Running Win 7 in a VM on my Linux box works fine, so I am thankful for that. IMHO, KVM and VirtualBox are amazing. But it bugs me I need to do this. I would prefer to be free of Windows.)