I give your argument a B-. Not for any particular reason. I just felt like it. Was that a good use of your time?

Many different groups have mutually conflicting expectations about what grades are supposed to be for. But one thing I think students, teachers, and prospective employers would agree on is that they should be rooted in some measure of performance or ability. Otherwise they serve no socially beneficial purpose at all. What is the point in taking a calculus exam if you'll just get 0/100 because the professor doesn't like your handwriting?

This way you will produce students that act even more capriciously and arbitrarily toward others.

Yeah, no reason to instill a sense of fairness in students, eh? :P