I do think he's a bit alarmist about the horrors of 12 years of graduate school and no job. I held no lofty illusions in graduate school: my personal goal in my PhD program was to get a job when I got out. That was it. That meant focusing on resume-building. I graduated knowing very little but got four job offers. I used the next 10 years to build my experience and knowledge before anyone noticed that I really didn't know what I was doing. Funny thing is I then moved from a university to a national center focusing on practice instead of theory, and now I'm moving into the private sector. The experience I've picked up in the past 3 years removed from academia have made me so much more qualified for the job I've left that I would now rank as a highly-desirable candidate should I decide to return to academia. So is the PhD overrated? Absolutely. Private-sector experience can be much more valuable, especially when seeking jobs further down the road. The PhD does opens doors and can serve as a stand-in for experience early in a career. I think you can judge the quality of a professor by how highly he or she regards his or her academic credentials... and it's an inverse relationship.
I agree with this sentiment. The PhD indicates such a wide variation of ability and achievement. It might be useful if academia wouldn't accept faculty that hadn't spent time in the private sector. It would probably be more valuable than postdoctoral research.
I do think that we could drop most specialist degree labels. These labels are often uninformative (cognitive neuroscience, physiological psychology, cognitive psychology, neuropsychology, etc.). Just finished Krugman's piece. I need to return to the other two.