I think the question was what happens to the students who are not labeled as 'bright'? How does their being cast off to a "lower" school affect society in the long run.
I can think of a few reasons why we shouldn't optimize purely for the academic achievements of our most talented students:
-Less excellent students tend to benefit from having more excellent students in their classes
-Even if their academic outlooks are improved, the excellent students are segregated from having to learn how to deal with a wide range of intellectual levels and abilities
-I'm not convinced it's really the most efficient way to allocate our educational resources, especially as there's pretty clear evidence that "excellence" in students is correlated to affluence, so we might really just be segregating by class anyway.
It reduces social mobility. Charles Murray talks about how there is a trade-off between social mobility and meritocracy due to the heredity of IQ.
In a meritocratic society, the smartest kids go to the best schools, then to the best colleges, then the most elite companies, then likely marry someone from school or work, and then have the smartest kids.
Socioeconomic classes become set due the stability of cognitive function across generations.
Is it ideal to have a cognitively and economically stratified america with a cognitive elite and cognitive under-class?
Is it ideal that this cognitive elite has little to no interaction with the rest of America, and little understanding of how the rest of the country lives?
Cognitive elite or financial elite. The rich get to send their kids to private schools. Smart poor kids get locked into mediocre public schools with reducing standards. Rich parents pass on their wealth at a lower tax rate.
Being smart is not a guarantee of success so we should make it harder so the less intelligent do not suffer any disadvantage.
How other schools will suffer? Endowments from rich parents? Being rich does not mean your kid is smart and these gifted schools should be very selective to whom they admit.
But it does mean you can pay to get them tutored to jump through hoops, and generally push them harder. There's a very strong relationship between wealth and elite college admission for example. Which is down to culture and opportunity as much as gifts and talents.
If being selective means controlling for socioeconomic background when assessing potential - then I'd be more of a cheerleader for it.
To be fair, the TAG Magnet did have race-based quotas until very recently. Let's just say that the school is now ... less diverse. Although, the 1% "other", which encompassed all East and West Asian, has now makes up roughly one-third of the enrollment. The former court ordered 33/33/33/1 resulted in rejecting some of the most meritorious students.
In the US, much of a school's extracurricular program is funded via PTA, fund-raising, or simply charging extra fees. In this system, the well-to-do parents/families subsidize the others (poor students granted waivers to the various fees, or don't contribute to the PTA monetarily).
Given the strong correlation between academic aptitude and economic success, removing the smart students also remove the wealthy students. The funding model falls apart, and the students who remain get even less extracurricular enrichment.
Granted, we could design programs that mostly avoid the problem. In my county, the gifted high school (Thomas Jefferson High School for Science and Technology) only takes absolutely brilliant students. Many of whom truly fit the "too smart to fit in" stereotype. Across a large county, that still leaves plenty of gifted/wealthy students in the normal schools, which offer a broad selection of AP/IB/dual-enrollment options.
The question is whether it's good for society as other schools may suffer