failing students drop classes

This is a small bore point, but important, I think. The endless debate about grade inflation is almost silent on the fact that part of grade inflation, and I'd wager a big part, is that students who are failing drop their courses, and those Ws don't affect their GPAs or the overall GPAs of the school, professor, or department in question. At most universities, students can withdraw from a class without it appearing on their transcript through the first couple weeks of classes, withdraw and have a W appear on their transcript within the first half or so of the course, and in some places, withdraw with a W with the permission of the instructor, chairperson, and dean. Typically, Ws don't factor into a student's GPA.

Now, perhaps you feel that the academy is too generous with how late it allows students to withdraw from courses, and you might make a compelling argument. But you're arguing something very different from arguing against grade inflation. While a W doesn't hurt a student's GPA, meanwhile, it means that the student hasn't earned those credits, and more than a few Ws is typically seen as very damaging for a grad school application.

If a professor has made his or her grading criteria clear, then students should have a pretty good handle on whether or not they are going to pass the class. It's very common for the worst performing students to drop rather than take the F. This artificially inflates GPAs, but doesn't reflect on lower standards for a professor, university, or the academy as a whole. Quite the opposite. To not discuss this facet of the issue is distorting and frankly irresponsible.

I know two things about grade inflation: one, it isn't mathematically significant when it comes to separating student performance. It's just not. The second thing I know is that everyone believes in grade inflation, but nobody believes that their own grades were inflated. That should tell you something.