But on the opposite side of the spectrum is saying: "Everyone is so smart because they can read and write, and thousand years ago most people couldn't do this!" (Strawman example, I know.)

Generally I would prefer to have a list (tree, directed acyclic graph...?) of all human knowledge, and give everyone a report saying: "This person understands these parts." But over time, the list/tree is growing. Of course it is OK to know a smaller part of total human knowledge, because the population is growing; but still, you need to know more than your ancestors (if your computer skills are the same as your grandma's, then she is a hero and you are a loser); on the other hand some knowledge becomes obsolete.

I think a percentile across the whole country would be a good measure for comparing individual students or schools. And it would be nice to also calculate long-term changes to know whether the country as a whole is improving.