1) 'Merit-based' grades seem to be a lot more merit-based than 'merit-based' wealth. All the students these professors encounter in their classrooms have the basic tools necessary to succeed in the class (textbooks, etc) and must perform the same basic tasks in order to get an A.
Not in my experience as a teacher! Lots of students arrive poorly prepared. And whether or not they have the "basic tools" depends on their past experience, which has a strong element of luck and family resources.
As a rule, people think that success in the fields they understand depends on merit, whereas success in the fields they don't understand depends on luck. People who listen to rap think Eminem is amazingly talented; people who don't think he's lucky. I've been in school my whole life, and still see a strong element of luck - especially in college courses where two exams determine your grade.
2) Income and wealth are a lot more important to people's lives than grades. Getting a C is a lot less stressful than being unable to buy food or basic health care.
A Typical Blog notes my counter-argument that income has a relatively small effect on happiness compared to e.g. job satisfaction. At least in developed countries, redistribution is not saving the poor from starvation.
3) Unlike with income, redistributing grades largely destroys their value! As Caplan himself acknowledges, "If employers, other schools, and parents knew that pity grading went on, it would make all grades less informative." So grades open up the doors you want to walk through now, but in the world of redistributed grades they wouldn't open jack.
Not quite. Complete equalization of grades and income destroys the value of both. But moderate redistribution destroys the value of neither. The U.S. income tax has not turned America into Haiti, and basing 5% of our grades on pity rather than merit would not wreck our educational system.
But like I said, I still refuse to raise students' grades because they need them. And my challenge to pro-redistribution professors stands: Give me a good reason why you grade as meritocratically as I do.