Failure is the best opportunity for learning.
The most successful people in the world would not be so if it weren't for the string of failures in their past.
History is full of success born out of failure.
It is a bad precedent to remove (or trivialize, even) the experience of failure from children. As youths, this is the best time to experience failure, as the stakes are generally very low compared to the adult "real" world. I can't believe this trend continues. People often need to fail to find out how to get what they want. Success doesn't fall into your lap.
Rewarding mediocrity reinforces mediocrity—not to mention a sense of entitlement. In university you get:
"I need an A to get into law school. Will you bump my grade up?"
"Uh, your paper was barely worth a B."
"But I need to get into law school. I'm paying to be here. My parents help pay your salary."
"Yeah, but I'm tenured. Enjoy your B."
Yeah..."B" for brat.