Some peeps are inclined to guide their investments and to (sic move them at) a tip of the hat.
To the huge majority that are not so inclined for whatever reason, 401k's may be the difference between eating burger or Alpo at the end of life.
Whether they were originally intended as a retirement vehicle or a tax shelter doesn't really matter. They are both. For literally millions of people who otherwise would have zip in the bank they are the buffer. They are "safer" investment choices than many others and safer almost always means less ROI. Thing is, when you view a 401k from the prism of your investment folio you ignore a laundry list of benefits. Some of them come not from your 401k but from the other guys 401k.
That guy is not going to be as reliant on you for his needs as he declines as the guy without. That guy may very well have financed houses and college educations with loans he took from himself during his productive years insuring some solvency for his dependants when he passes, he may have made Daytona or Sturgis every year due to the tax savings he realized during years of contribution. Those trips make him a happy boy and less likely to riot in the street.
Young guys, read that most riders, are invincible and don't see the margin in squirreling away beer money for the rocking chair. A 401k does away with the mechanics. Cash gone before you see it is easier to stomach than cash you have to push into the corner.
401k's are societal game changers and from where I sit since monkeys have opposable thumbs and attitude, the only real dif between us and them is 401k's.
I don't think this is as simple as "401K or not". The OP expressed concern that his 401K is performing SO VERY POORLY as compared to other investments. He speculates (accurately) that the investment houses are making the profits on his 401K dollars (and he is likely VERY correct there as well). So the point is really... how do I make what I make "more effective". The bottom line is that you TAKE CONTROL of those $'s rather than leaving them to languish in a 401K that is being essentially "sucked dry" from excessive fees.
The government is now recognizing that these investment firms are performing "predatory" practices on many 401K and other "forced" investment models and are (very slowly) trying to take steps to ensure that the individual investors have a fair number of low-expense options available to them in their 401Ks but many still don't.
It's sad for an astute investor like myself to see a 401K with around a 3 or 4% ROI when all my other investments are able to make WAY more in the market during the EXACT SAME period. Unfortunately for the OP as well as myself, moving the investment around to different categories available continues to yield... essentially nothing simply due to the portfolio managers taking huge "management" FEES (some as much as 6%!!!).
I use to run the calcs once a year Pensions, 401Ks, IRA, Annuities, Real Estate, Options, Commodities, etc. EVERY year the 401Ks basically performed at or close to the bottom which is really sad when you realize that many annuities only generate around a 4% return and some 401K positions can't even achieve that! Truth is that they may have made 8% but the admin "fees" sucked the other 4% out before you even see the wet ink on the page.