There is no room for kids to grow ideas and pull ahead of their peers in school. From 1st grade kids are forced into a drone mentality. 
As a business owner I notice this lack of simple creative thinking constantly.  Most young employees struggle  with simple life skills.  Forget about trying to get them to lead or problem solve.  
Usually employees  who come from alternate (I.e. Homeschooled or private school) educational backgrounds are more focused and creative.
I don't think making it "tougher" in school is the answer.  - Although I completely agree that participation metals are useless and  kids should only be rewarded for the amount of effort they put into something.
Instead we need a more creative educational experience for our kids. We need less focus on daycare and social engineering and more on building simple learning tools to help with with  life.