While there are countless flawed elements of schooling, I do not think that every school’s goal is to sort, rank, and eventually eliminate the “unfit.” Schooling’s purpose is not to turn children into “servants.” A person who graduates high school is a person better enabled and equipped for the demands of a meritocratic society. In America, where it is increasingly necessary to have high level degrees in order to reach a position of success, schooling is a threshold that people must cross in order to have access to that opportunity, not to become subservient.
In a vacuum, a meritocracy is a fair system that can be accessible to everyone, but this is obviously not the case. Gatto ignores in his argument the political and social conditions that prevent people from even reaching, or staying at the high school level in the first place. For example, the quality of public education being largely dependent on income-levels in that district. This factor, as one example, shows that the problem with education-based meritocracy is not solely that it ranks and sorts people, but that some people are prematurely and unfairly set up to be ranked and sorted lower.
Gatto’s argument does not apply to the Williams education. Yes, there are political and financial obstacles for many people already at Williams, but that does not prove Gatto’s point that schooling equals submitting to an unfair system of ranking. To reiterate: an education at Williams, as a piece of the meritocratic system, would make sense and be fair if not for political and social factors outside of education that predetermine people’s ability to reach success.
Gatto’s argument was that meritocracy is an instrument of the elite to cull and train individuals to join their ranks and more effectively perpetuate class rule. In essence, training the next group of bureaucrats and administrators who would dominate the masses while consigning the rest to the role of the subservient. Indeed as you point out, the education system as an extension of this apparatus provides the means through which to “succeed” in this form of social organization, but this success is only allowed in so far as it perpetuates the system of which it is a part. Thus, consideration of socio-political factors that predetermine “people’s ability to reach success” in meritocracy do not confound Gatto’s argument, as you seem to imply, as much as prevent the full implementation of the system.