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On the other hand, GPAs remain about as predictive of later criteria as standardized scores. In some studies they're even slightly more predictive.
Each have their issues. Even with grade inflation, GPA is reflective of a long-term process that unfolds over years. ACT is an afternoon when who knows what can be going on.
Fair enough. I misread your post initially but as a professor I can say it's definitely not always like that.
One issue is that evaluation of teaching is often heavily based on student ratings, so there's a huge incentive to avoid conflict and resentful feelings. There is in fact good reason for weighing ratings, because they are predictive of objective learning outcomes, but my sense is the pendulum of emphasis on them has swung a bit too far. I'm old enough to have had a glimpse of an different era and zeitgeist, and have seen what happens when you have instructors who teach poorly, are out of touch, and then blame it on lazy students, but I now I think sometimes basing so much on student feelings is a bit too much.
I also have colleagues at well-known private institutions who have told me very, very clearly and directly that they not infrequently have pressure from administration to give students better grades. They have multiple stories of the college getting calls from a parent who is a significant donor, complaining about their child's grade, and asking the professor if there's "any way the student can make up some of the grade" or something like that. It's never a direct order, and there's never a request to just change the grade outright, but you can tell that there's an implicit message that if they were to ignore them repeatedly, they would make things difficult.
Really like a lot of things in higher education, grade inflation involves a lot of things other than the process of assigning a grade per se, and the interaction between the student and the instructor. There's a lot of cultural and sociofinancial variables involved, many of which are difficult to quantify and might not really be in people's conscious awareness all the time.
Then again, where I've been at there were deliberate but reasonable efforts to rein in grade inflation, and I've never really felt like I was being overly generous for its own sake or to avoid trouble later. In my experience, if you are very very clear about expectations and your grading criteria, and they are reasonable, students don't complain.
Another issue I rarely see brought up in this is that I think increasingly students are counseled by college advising to drop courses if they are struggling. In fact, as I think about it, they track this very very very closely, and have a systematic screening process to flag students who might not do well, with check-ins all the way up through midterm. Some of this is due to new conditions of federal higher educational loans, but some of it is just due to changed advising practices to be more proactive. If you have a bunch of students who might have otherwise failed dropping the course in the second week, where there's no record of a grade in their record, it will look like grade inflation when it's really a type of selection bias.