The result is grade inflation and it has been well documented:
http://economix.blogs.nytimes.com/2011/07/14/the-history-of-...
They then attribute the rapid rise in grade inflation in the last couple of decades to a more “consumer-based approach” to education, which they say “has created both external and internal incentives for the faculty to grade more generously.” More generous grading can produce better instructor reviews, for example, and can help students be more competitive candidates for graduate schools and the job market.
Let me give you an example. I teach programming privately. People pay me $100/hr. Some of them found jobs thanks to my lessons. Some of them realized it's not for them and they didn't waste tons of money and time. And I've been doing this long enough to say there's a demand for my services and people generally like it. I don't grade them, I give them useful feedback on what should they improve and if they should continue. My primary goal is their success, not some stupid grade. Market works great if you apply it right.
The teaching many of them enjoy is their departmental or faculty seminars. And as a senior undergrad, those were the sessions I enjoyed attending the most. No surprises there. They were talking about the subjects they enjoyed the most.
Now - I'd argue that a professor should be bringing in revenue - either by teaching a popular set of courses that are relevant for students - or by bringing in research dollars. But then that's somewhat missing the point - universities should be exploring areas that industry doesn't yet understand and therefore doesn't want to fund... it's a quandary for sure!
Market mechanisms are excellent at solving many problems, but they're not magic. They don't work well to provide public goods like high education standards or social mobility, and they generally have a hard time with intangible goods like knowledge.
The problem? Young people are terrible at self-reflection. I know that there were many points in my youth when I said to myself, "I know all there is to know about life now." This leads to a kind of privileged arrogance that really can't be fully appreciated until one sees how lucky we are to be able to have the opportunity to learn in such safe, structured environment.
No. Some people, not just young, are terrible at it. And some are good at it. Universities don't change that because they continue to be nannies. If you want people to be able to assess themselves and know what they want in life, you better start asking them to do it earlier, not later.
We need a more thought-out solution than "the magic of markets".
Why not, indeed? I do think that a portfolio approach is much, much more effective in evaluating people's capacities to do stuff.
It's also costly. That's why we keep grade-based systems: those numbers are cheap to compose, cheap to evaluate, and provide just enough pseudo-objectivity to make bureaucrats feel all right about basing decisions on them without having to do any deeper thinking.
>When graduates are hired, why don't you look at their actual skills and knowledge?
Well they should!
>Teacher's job should be to teach and give feedback, so that students can correct themselves. It is employer's job to assess them.
Slight disagreement, here. You should not be allowed to gum up the works in Calculus 2 if you can't pass Calculus 1 to some set standard. Just saying.
http://www.academia.edu/973542/A_Political_Economy_Critique_...
What you currently have is a system in which professors feel superior for some reason. And they are not punished financially if some students fail. So the best way to incentivize this system in which professors actually serve their students is to apply market mechanisms to teaching.