The institution of education has really sold its soul to the market. That's why you rightly observe degree inflation. Really, coming out to intern with various companies often make me think 'how the hell did my colleagues earn a degree'?
You're right, people get degree for purposes entirely outside of learning. My proposal is to separate education from jobs. I've always been polemical about several 'useless' schools in colleges all over the world: especially engineering and business schools. And many of my friends in the school of business often complain how everything they learn there is bullshit.
Until our economy changes its demand for worthless degrees, colleges will continue to operate under this guise. We really need to distinguish 'education' from 'work' properly.