Scholarship is scholarship; knowledge is knowledge; no justification needed.
The emphasis on narrow scholarship also encourages an educational system that has become a process of cloning. Faculty members cultivate those students whose futures they envision as identical to their own pasts, even though their tenures will stand in the way of these students having futures as full professors.
Faculty appointments? People going into the humanities (for example) love what they're doing and are not job- or money-driven. Show me an MFA student who expects a job writing literary fiction; most don't even know if they'll ever get a book published. This doesn't bother them; they want to write.
In other words, young people enroll in graduate programs, work hard for subsistence pay and assume huge debt burdens, all because of the illusory promise of faculty appointments. But their economical presence, coupled with the intransigence of tenure, ensures that there will always be too many candidates for too few openings.
The problem with the economics of higher education is that state governments have pulled the rug out from under the public higher education system. The result has been massive student debt, but the government backs these debts fully understanding that many won't be able to pay the loans back. If the government won't support higher education, then people should just default on their loans. Education, like scholarship, needs no justification or "real-world" use.
Interesting ideas in the article, but: it's better when large organizations do not change too quickly.