The purpose of school is to prepare students to pass whatever selection filter top colleges and universities employ. Schools dropping literature means higher education institutions aren't admitting students on the basis of literature knowledge. No point in wasting time studying something if it's not going to help students pass tests.
That could be offset if we moved away from standardized tests. I think I would prefer verbal exams and vibe checks.
Of course, there's a reason we don't do this anymore. It's a weird trade off between "incentivizing studying for test" and "probability of discrimination". And the big point of the last century was decreasing the latter.
We'll never escape standardized testing. We have mass education involving hundreds of students per class as a matter of public policy. Tests are the only efficient way to assess students. Failing grades and general lack of performance can actually turn into political problems.
The best education is mastery education provided via long term one-on-one mentoring. Essentially the opposite of the current model. Only the rich can afford such services.