It's because schools want to retain a measure of control over who they let in. A true merit based admissions system (say min SAT score + lottery after that) is uncheatable and therefore schools have _zero_ control on who they have to accept.

The only reason why Harvard has kept its mythos of being the incubator of the next ruling class is because, well, they accept the children of the current one. Those are most likely to become part of the next ruling class by virtue of having been born into it. It's an old boys club. There's no intrinsic property of Harvard that turns them into this incubator.

And from the other side you have the brain dead equity idiots who are also against true merit systems, for equally twisted, but different reasons.