I know this one will light some fires...
I think Narayan is right:The market works
1. If so, then upper-level management in that company get what they deserve for hiring a fool. Seriously, I doubt it unless an idiot gives away some crucial bit of data.
2.Quality demands innovation
3.Market forces are always good in that they make people innovate, constantly. Market forces make the truth apparent.
4.As a recent engineering graduate, and viewing the varying quality my recent peers-and lack of a gung-ho attitude-overseas gung-ho-ness is higher. Conversely, my friend who graduated with a 4.0, has great people skills, auto mechanic skills, a great wife and is an all-around great person has a great job. I think as Americans, we are getting fat, dumb and lazy, and the market reflects that.
5. Russians excel at theory, and innovate beyond us often in some basic engineering research.
6. I think this has to do with culture. If a culture prizes and esteems eductation, that behavior is reinforced. If a culture prizes football quarterbacks, then that behavior is reinforced. Also, when US citizens cannot get hired as engineers, they go to grad school...so maybe your estimate is too low if taken recently...