The big problem with grades is that they conflate course difficulty and student performance.
IMO, there's also another glaring flaw in Johnson's premise that students gave better student evaluations of teachers who graded more leniently. There is a HUGE assumption there that the various teachers running the same classes were all equal in their quality of teaching. Why is it so difficult to believe that some teacher was able to reach and educate more of his students than someone else?
Statistically, I understand there should be some sort of even distribution, but the sample size (in number of teachers per course) is not large enough to be of statistical value.
Johnson said, “As you might expect, the effect of either expected course grade or received course grade is very powerful in student evaluations of teaching. If a student was getting a C in a course, he or she was very unlikely to rate the instructor highly. If they were getting an A in the course, they’re more likely to rate the instructor highly. I think this provides quantitative evidence for something most instructors know: If they grade easier, they will tend to get better course evaluations.”
One year, I had an art history teacher whose class was at 7:30am, in a dark lecture room, with a dim projector on the whole time, and spoke through an ancient 3" amplified speaker with an voice that was already monotone and droned on and on and on. I got a D-. The next year, I did more research on the available teachers, and found the one that engaged the most and who had more people getting higher grades. He was fun, taught in a well lit class in mid-day, involved us in projects to learn (ex.create an interactive presentation of some artist with a group of other students for homework, as opposed to filling in the blanks on a test in a dim room with projected images), and I got an A+, go figure.
I'll admit his tests were slightly easier (fewer exact date type questions (what year was this created, versus during what time period), multiple choice on name questions, rather than having to fill it in spelled perfectly, etc), but I also learned a LOT more, and neither graded on a curve.
I also take some offense to applying various curves or rankings etc to students. Given a class of 30 people, it's almost guaranteed that you'll have some years where half the class are "A" students, and some years where there's hardly a one, and that's assuming that the teaching and material are equal.
Overall, I'd agree that there is grade inflation. Jacking with the grades isn't going to fix all the underlying problems, and it will create other problems. He notes that one of the most likely reasons are student evaluations - so untie those from teacher review (instead, to review a teacher, do so as one should for reviewing any employee... go watch them while they're actually working, and only use the reported figures to identify people that should be reviewed first or may need help).