I see your point, but if the schools just grouped students by ability, they would save a lot of money and there wouldn't be any need for all this mania.
I'd also like to see ability grouping, but here is a theory of why it's not happening.
I live in an affluent suburb of Boston. We have Good Schools. Most of our graduates go to college. Parents think they have secured a good education for their children by moving here. They don't need to worry about how much their child is learning in elementary school, because everyone is promoted to the next grade.
Suppose there were ability grouping starting from 1st grade. If there were three groups per grade, there would be 1/3 of the children in the "bottom" group. Many of those parents would be unhappy. I would be unhappy if my children were not in the top group in each subject. Ability grouping should be flexible, so that children can move up or down at least once a year, based on their performance. But then parents like me would "encourage" our children to perform well enough to stay in the top group and afterschool them if necessary to do so. Now, with ability grouping, there are clear demarcations from grade 1. Just buying a house in a town with Good Schools is not enough to think your child is doing well. I think schools avoid ability grouping until high school in part to mollify parents and avoid the mania you refer to.
