> Granted, these are obviously exaggerated and hypothetical stereotypes, which I don't really want to contribute to perpetuating, but they illustrate a point. You don't exactly have to be some kind of bleeding heart social justice activist to see how unfair it is to Z to be "objectively graded" as lacking "performance" when compared to X.

I don't think that it follows from this that it's unfair for Y/Z to have a lower grade. They did worse. The grade can reflect that. That doesn't mean they're a worse person / student. It means they demonstrated worse performance in the class. How you interpret that later on is a different question, and interpreting Y's lower performance in the context of the environment that caused it is fair.

Trying to change the scale leads to the measurement being meaningless, and worse, can lead to bringing back biases that were tried to be balanced for: in evaluating a student for a job who looked like Y and another who looked like X and got the same GPA, which one is the better student? If you believe that the grades were more lenient toward Y, picking applicant X as an employer just makes sense.

In another context: we report the times of runners running the 100m dash in seconds and hundredths of seconds, regardless of if they're in the 100M final of the Olympics or at a local high school track meet. Is 10.8 seconds a good time? In the Olympic 100m mens final? no. In the US collegiate championships for women? definitely.