I mean, is the goal of an elite college to educate? Or is the benefit to sift through the population and pluck out its masters?

I don't really care that UC has a lower "reputation" than Harvard or Stanford. The fact is, the UC system has produced more fundamental research and more actual value for the population and the world at large than Harvard or Stanford. Even if a UC degree is not quite the "golden ticket" that an Stanford degree is.

Concentrating individuals into a smaller and smaller elite benefits them and only them. The U.S. has done this with capital allocation in its economy and it has and will continue to be a century long arc bending toward utter disaster.

What do we actually care about here? Education?