Security, public trust, etc requires controls and audit to deliver. You don’t want a startup “fake it till you make it” mentality in government or banking.
It’s simply good practice not to use your work machine for anything personal at all ever. Because depending where in the world you are, anything stored or viewed on a work machine gives your employer de facto access to it, legally speaking.
And there are perfectly valid reasons for companies to monitor traffic: data exfiltration, accidental or malicious, is a significant concern for companies that hold and process PII and for the people who have their PII held/processed by those companies. It is not as black & white as “monitoring and surveillance bad” unless you only care about your personal privacy.
The organization also exposes itself to greater liability. E.g., a rogue employee could use the trusted MiM CA cert for their own MiM e.g., capturing banking credentials of co-workers or accessing user/employee PII they would otherwise not have access to.
Yes, monitoring traffic by MiM https to external sites can alert you to / possibly prevent accidental exfiltration, but it doesn't prevent intentional exfiltration. It is, however, very effective at monitoring employees. The thing it is best at, might be its true purpose in an organization.
It can prevent accidental exfiltration, or deliberate exfiltration by a relative incompetent, which are the majority of such problems.
You are right in that they will not stop deliberate actions by a competent disgruntled or a competent external attacker who has access (but you have a much wider set of problems in this latter case).
Maybe I'm old-fashioned (I am definitely a “working in an office, living at home” person which seems to mark me out as a dinosaur in the coming remote-work age!) but I don't think it is my employer's responsibility to provide me with unfettered unfiltered internet access to do personal stuff with. Work stuff on employer provided Internet which they can monitor all they like, personal stuff on my own devices & connections which they can keep the hell out of.
Palo Alto appliance should be configured with both Forward Trust and Forward Untrust CA certificates, and the issue you described will not exist. If some people misconfigure - thats their fault for not following instructions.
Secondly, rogue employee doesnt have access to CA key that is stored in Palo Alto appliance. Only your firewall admin will have it, but if your main firewall admin went rogue, capturing colleagues’s data is the least of your concerns. Insider threat of that calibre is equally applicable to rogue CEO or CFO stealing all money from the bank. Or your ActiveDirectory admin getting CFO’s credentials and corporate bank credentials.