Learn. Or learn not. There is no fail.
In the USA, there's just a general pushing through of all kids to the next step regardless of whether or not they actually learned anything, which is simply broken, too. It's missing any notion of failure.
However, what we shouldn't do is effectively discard failing kids from ever succeeding, dumping them to the wayside. They just need different types of help than was offered by the bulk instruction, either in content or style.
No, it doesn't, any more than any other expectations do. (The expectations that are being discussed are the assumptions of ability that set content and instructional approaches. How you respond to differing acheivement is a nearly orthogonal question, and that's the domain that flunking is in.)
> Many school systems find that flunking folks requires a disproportionate amount of effort.
Which is why they don't flunk students, even when they fail to succeed with the low expectations that underlie their instructional approach.
Many school systems find that flunking folks requires a disproportionate amount of effort. There are ways to work through that, but in the end there has to be a public will to do it. At least in the US, there is a very large thread of public discourse that thinks the goal in the education system is to minimize the cost of educating other people's kids, not to maximize what they learn.