Because when I admit a student to my lab, I'm talking about spending five years helping someone grow as a future colleague, and, in the process, advance the science produced in my lab.

"Cheap labor churning out publications" doesn't support those goals.

I also was a graduate student once, and am endowed with basic human empathy.

Because they care about their students, but can't pay them any more than the university allows.

I think you are overly cynical. To me it looks like many professors view their grad students more like a protege than a minion. As such while the greater system is perverse, and the professor looks out for themselves, many professors would still have their students interests in mind.

The university pays for the graduate student salary, not the faculty.

Edit: My knowledge of funding comes from a sample size of 1 (wife's cousin doing genetic engineering out of St Louis) so it's possible I've made a mistake extrapolating too widely.

Huh, I'm not getting that impression from Brown's professors at all. We're working toward unionization as well.