>having taught at small elite
>institutions it's clear to me that a college degree from the likes of these
>places surely is nothing more than a badge and says nothing about ability.
As a product of one, I can say that they also encourage a confidence and sense of entitlement that serve one well in the real world. They do this in at least two ways - one, the constant reminders of the institution's history, prestige, and connections, which really inculcate a belief that the world is yours for the taking, and two, because you're surrounded by lots of smart, verbal, and competitive people, life in and out of class trains you for the competitive rituals of grownuphood. I saw a big difference when I went from Yale to graduate school at the University of Virginia; at Yale, people (students and faculty) were almost always "on"; at UVa (and this may be a function of its being in the south, too), discourse was a lot less intense.
If you include habitus and kult kap as part of "ability," then there's more than a badge involved.
Doug