The issue with grade inflation can be compared directly to the issue with inflation monetarily. If everyone in the U.S. were to be given more dollar bills, would the whole U.S. become richer. The answer to this question is relatively easy to find if one has studied the pre-WWII economy of Germany instead of dozing off in history class. The value of money is not based on its physical worth but is rather associated with the trust in the economy of that country. Therefore, by simply increasing the amount amount of paper money out there, the value (currency) of the paper money goes down as the trust in the economy has remained unchanged.
The same is true for grades, especially the high school diploma. The difficulty of acquiring a good grade has been severely diminished. In turn this means there is a higher abundance of good grades and good students. Except the second part is not true... or at least not in a significant fashion. Is it true that students nowadays probably have a better opportunity to obtain an education, yes? Hopefully? But even if this is true, it is insignificantly true at large and this is why. When a college or employer looks at the credentials of an individual, the question is not whether the candidate has credentials (hopefully he/she does) but what those credentials signify. Back when a high school diploma was more difficult to obtain (the abundance of paper money), having a high school diploma said more about that individual (currency). Now, high school diplomas are handed out to inadequate "graduates" and since there is a larger abundance with (this is the assumption) a worse on average education, the meaning of a high school diploma has gone down.
Ironically, the school system devalues itself through the incentives given to award students a diploma. A high school, school district, state and country as a whole want to have the best education system possible so that they can, in the future, strengthen their economy. Essentially, current society invests in future society in order to get return later in the form of i.e. tax. If more students are getting a higher quality education, then the educational investment is legitimate and should theoretically payoff. However, the education system is flawed in a manner which simply lowers the standards of graduation and thereby deceptively posts "improving" statistics. However, what these "improving" statistics really mean is that credentials such as a high school diploma or a bachelor's degree have less meaning and that people who have legitimately earned these degrees are more difficult to distinguish from the crowd. Basically, new demographics are required to determine expertise which is a pain-in-the-butt for everybody involved.
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