There have been many wonderful ideas and concepts for education systems over the centuries. They have/had different, sometimes contradictory philosophies. Most fall short of their values and ambitions, regardless of what these are.

IMO, the pressures leading to degradation are all somehow linked to universalization:

(a) Resource constraints. Student/teacher ratios. The availability of good teachers, at scale. A great teacher is the ultimate lever. But great teachers in every class, with enough time and energy to invest in every student... very hard to achieve at national scale.

(b) Voluntary, self-motivated students who want to learn vs checked-out teenagers that just want to pass the exam with minimum effort... it's a massive difference. It's the difference between a world class gymnastics club and the PE class from an 80s teen movie. Even if half the class is highly motivated, it can't be like the gymnastics club when half the class is there involuntarily.

The visionary, optimistic concepts are usually focused on what students can achieve when motivated and willing. Universal, mandatory education rarely achieves this attitude.

(c) The bureaucracy required for scale. Decisions about teaching methods, standardized testing and whatnot... these can be performing terribly for years and decades before getting dropped. A department starts judging schools or teachers by standardized tests... and then a whole generation falls into a stale "teaching to the test" paradigm that disillusions both teacher and student.

"Why are we doing this" - because we have to.

Mandatory education is still probably better than the alternative but it does seem to create a constant tension: the system has to serve students who want very different things from it

It is naive to think that gradeschool is all about education when it serves so many other social functions. Firstly, it is free daily child care, a concept that allows parents to be more productive workers. A school is the point where various government agencies have contact with children. Vacinations, nutrition and the general welfare of kids is daily inspected. If a kid is in trouble, a teacher is the most likely government employee to notice. But perhaps most importantly, school is a testing ground. Our society doesnt have the resources to turn everyone into doctors and astronauts. School is where we start sorting out who will be granted access to future education and who will not. It isnt about actually learning anything.

Having grown up in Germany I have firsthand experience how Humboldt's ideals fall short. I don't think I fully agree your explanation.

a) Teachers themselves went through this system, so if it's so great, it should produce plenty of great teachers

b) Now we are blaming the kids for the failure of the system?

c) Yes, absolutely, but is the bureaucracy really inevitable, or is it even contradictory to the original idea?

Anyhow, Humboldt's humanism was ideology from the start. It was a way to change as little as possible from christian values. Instead of God making humans all great now it is the great human mind and civilization.

By now, most of German academia is a bubble for humanistic fundamentalists, that have long lost their connection to reality.