We all know that grade inflation is widespread at law schools, but I had never heard of a school's doing what Loyola of Los Angeles has now done: it retroactively changed grades, by adding half a step (actually .333) to all grades awarded in the last few years. So every B- became a B, every B+ an A-, and so on.
Apart from being a little tough on anyone who got an A+ (I presume that grade isn't being changed), such grade inflation is bad because it amounts to deception. The goal of grade inflation (apparently expressly stated) "is to make its students look more attractive in a competitive job market." That is, the goal is to play on people's perceptions of what the traditional grades of A, B, and C mean, while giving grades that have different meanings.
Employers might fight back by ignoring the grades and relying on class rank instead. That would work -- you could call the grades A, B, and C or you could call them Apple, Fire Engine, and Giraffe, and it wouldn't matter as long as you had class rank -- but schools can thwart that tactic by abolishing class rank. That's what GW did when we raised our grading curve a few years ago.
I voted against the change to our grading curve because I thought it involved deception. And I didn't think that the fact that everyone else is involved in the same deception could justify it, any more than a student would be excused for cheating on the plea that everyone else was cheating too.
Over time, my view has evolved somewhat. As the proponents of the change argued at the time, grades have meaning only as a result of social understanding. There was supposedly a time when "C" meant "average," but certainly today a student who got all Cs would not be regarded as an average student. (I wonder if C was ever really the average grade actually given, or whether we have always lived in Lake Woebegone, where all the students are above average.) There is something to be said for the view that we have to give grades that match the current understanding. If all the other schools are now operating on a B+ average and we give grades on a B average, we are disadvantaging our students, and not necessarily achieving the goal of honesty.
Still, the whole thing leaves a bad taste in one's mouth. As today's NY Times piece observes, grade inflation is a never-ending arms race. Everyone uses the excuse that the social meaning of grades has changed to justify changing their own grades. And there's no point always being the last to catch up to the general trend -- in fact, every school has an incentive to be the leading edge of the trend. That, of course, just makes grade inflation go faster and faster.
It's a classic collective action problem. The problem could be addressed if there were some authority that had the power to impose national standards, but there isn't, and whatever the generally accepted view of the meaning of grades is, everyone has an incentive to cheat a little and have somewhat higher grades than that. There's no good solution, and I'll be torn when it next becomes our turn to raise our grades again.