Universities at least apply some meritocratic standards. If we bypass universities, there will be some other gatekeeper, it will be worse: mostly an "old boys network" and corrupt, pay-to-play advancement.
also, this grind is barely meritocratic. all these extracurricular activities show is you had a solid family supporting you. it's literally impossible for a poor kid to participate in this. they can pick up a book, OTOH. yes, it'll be harder, it'll take longer, and they won't do as well as the rich kids with test prep, but they are given the opportunity to try.
When was that? Harvard was founded in 1636.
It seems very possible to me that the managers of said system are far better than ever before and still fail to produce spectacular results.