To your first point, you may be interested to read Bryan Caplan’s “The Case Against Education.” He makes a very strong, quantitative case that education is primarily a signaling device.
For instance the difference between 3.5 years without graduating and 4 years + graduation is immense, whereas in a non-signaling model, they should have very similar outcomes.
There is a huge selection bias in these groups. 3.5 years without graduating is likely to be students who are doing poorly since if you were a top tier student you aren't going to quit 0.5 years off from a degree under most circumstances. People quitting university after 3.5 years most often have a number of failed courses and aren't 0.5 years from a degree.
Another example then: college students forget a lot they learn inside of a few years. The only thing they hold for a significant amount of time is the prerequisite knowledge they needed to learn everything else they were taught. This applies especially to subjects largely unrelated to their degree / interests.
I think are two different stages we're conflating here.
Education, in the resume / HR sense is absolutely a signal.
Education, in maintaining and excelling in your profession is knowledge.
It's lamentable that degrees are used as filters, but I wouldn't trust someone to do an electrical engineering job who didn't have a related degree. There's simply too much to learn. (Yes, exceptions do exist, but they're not common)
I'd argue the more pointed questions to colleges should be: if you're not equipping your graduates with the latter knowledge, then what are they buying? And why should they continue to pay you?
Doesn't that book have a whole chapter espousing hyper-libertarian points about why child labour is good?
Secondly, you seem to imply that no improvement in the education level has happened because of the normalization of high-school education. I disagree with this also. I have no numbers to back this up, but by looking at the world around us, at all the inventions and the added complexity and our increasing ability to handle complex systems, I think we have become smarter.
Thirdly, maybe social mobility was hijacked by some rhetoric or became a symbol for this or that group. But at its core, social mobility means allowing people to rise to their potential and not stifling them. How can we be "sacrificing our schools on the alter of social mobility" when social mobility is supposed to be _more_ meritocratic, not less?