My two cents on this: I think that Robert Book may have hit is when he said that employers may have other attributes they are looking for that are more easily identifiable in an interview. While academic positions (as a faculty of student) are usually the ones that call for good test scores (usually along with grades), it seems that non-academic jobs, usually look at experience and your interview first then to your degree at what school, and maybe finally to grades. This could (and in my observation does) mean that non-academics jobs are looking for other characteristics that are hard to test for- good "people skills" and "leadership ability". These are better seen in an interview, from activities one participates in, and maybe even from the school you attended (the different cultures at different schools helping to predict how one will fit with the company's culture- this is in evidence at the many non-academic, and even academic, institutions that hire many employees from the same school).
So while grade inflation may cause a loss of information, this loss in not particularly valueable to the places many graduates go- non-academics jobs. Where the information would be valueable- academic jobs and grad school, there are tests to equalize the applicants. Jason
