Cutting away everything else, the important symptom given in the paper is I. F. If you're not doing experiments that replicate, then you aren't finding out anything. All the other symptoms are basically irrelevant, or consequences of I. F. And the central cause of I. F seems to be given down in III. B. Apparently the only standard for psychological research is that you can mathematically torture at least one correlation of p < .05 out of the data.
Well, if you've got enough factors that you're measuring, and are willing to go enough orders of analysis, you can almost certainly find a correlation that is "significant". And finding it won't actually teach you anything.
So, assuming the paper is correct on those points, the problem with psychology-as-a-science is that it collects random noise and assigns meaning to it, and teaches its students to do the same.
Came across this article, published in 1991 but hardly dated:
David T. Lykken, What's Wrong With Psychology, Anyway? (PDF, 39 pages)
Anyone who's interested in psychology as a science might, I think, find it fascinating. Lots of stuff there about rationality-related failures of academic psychology. Several wonderful anecdotes, of which I'll quote one in full that had me laughing out loud --
(I came across the reference to the article in the HN discussion about a project, of independent interest, to try and replicate a sample of articles from three reputable journals in psychology in a given year)