Seriously though, outside of an interview environment or training, why are we trying to assess people's capabilities anyway?
This kind of penis-measuring contest is so prevalent in our industry; it makes people incredibly afraid of actually putting themselves out there and helping to create. Judging other people is a bad trait. Simple as that.
I have had various interviews in the last couple of years. One I got offered the job without so much as any technical test, based on my CV. I almost felt a bit cheated there, as I wanted to prove I was good. I interviewed for a startup with non technical founders. They had pulled a Python test from the internet which seemed 90% about lambdas in Python (I can use them, but in most cases list comprehensions provide a more readable syntax).
I actually like being able to explain my thought process in an interview. Even if I don't get it right, then they may see that I am "almost there". Likewise if I don't know something, I can tell them.
I have a fair idea about my colleges work, not from their code, but by the way they talk about it, and seeing the tools they use. (The "best" in my office of 4 chooses Java for most of his stuff for some reason - not what I would expect from someone good. The worst code was written by someone who ranted about how I should be choosing Python over Perl.)
When assigning work, I need to know if one programmer is likely better than another at a given task. If Dave tends to work more efficiently with C++ than Gupta does, I'm going to give the C++ work to Dave. If Gupta tends to work more efficiently with Visual Basic than Dave does, then I'm going to have Gupta maintain the old Visual Basic apps.
This is business. We're here to allocate our resources, be they money or people, as best as we can in order to get the greatest return. Professional programmers will set aside their emotions in order to achieve this goal, and will accept being judged as part of the resource allocation process. They realize that this isn't some fantasy where everybody is happy all of the time, and nobody's feelings get hurt.
The phrase "resource allocation" should have tipped us off to how fast and hard this becomes Machiavellian. If one programmer kisses up much better, went to the right school, or is of a preferred race or political party, or successfully claims the work of the other, etc. - the boss will mysteriously find that this one is more competent.
Since the rationale that we decide everything by merit is unassailable and taken for granted, we bias merit judgments to suit our goals. Any objection can be met by accusing the objector of being emotional and wanting to compromise the merit-based system. In reality merit is determined by a political process.
Every single HN poster will, by amazing chance, turn out to be a shining exception to this rule, completely unbiased by personal opinion or politics.