1. It creates perverse incentives for students and schools.
Students memorize the necessary material for the test, or at least confine their abilities to fit the specific format of the test instead of gaining a real, in depth understanding of the material. Schools and teachers begin to teach to the test, because the school will itself be marked according to the marks attained by its students.
2. It is bad for the mental health of students.
The anxiety/stress/pressure creates a non-learning environment where school is made miserable. Kids are already self conscious enough at this age, so to put them through a factory of this kind is not conducive of their well being, and therefore, not conductive of their growth and success.
3. The data is bad.
Although testing may have it place to an extent, telling kids to sit at a desk with a packet of papers and find the answers to pre determined questions as fast as they can without being allowed to work in groups is not how the real world works at all. The data does not indicate greater capabilities because it is coming from an exercise that is divorced from the real world- an exercise that largely kills creativity.
Do we need people with the specific skill sets and minds that lend well to testing? Yes, of course we do. Are those the only minds we need? No, and we need to stop sending that message.