Moreover, universities have a strong incentive to not be corrupt in their grading - if they let people slip through without learning the work, employers will start to notice and discount qualifications from that institution This assumes that employers are using a college degree primarily as a signal for education, outweighing conformity, conscientiousness, class, deference to authority, low time preferences, habitual credentialism, or anything else a degree might signal. We note that most employers want to know that you have a degree but not, say, "must have at least a B+ in Intermediate Microeconomics," so the entire degree might as well be pass/fail apart from the few hiring at the top of the graduating class. And no employer is going to detect or care whether you legitimately passed something not relevant to work. I had an undergraduate course in Magical and Occult Philosophy, and I have yet to be quizzed on Plotinus and Hermes Trismegistus during a job interview.

The fact that few employers request transcripts and fewer distinguish between "barely passing" and "summa cum laude" (maybe apart from recent graduates?) seems like pretty strong evidence about caring about grading corruption. You really need to corrupt your school's degree award process (like a diploma mill) before anyone will care about it.

Also, as Old_Gold suggests, if you count grade inflation as corruption of grading, empirically this incentive wasn't strong enough. We also note that across-the-board corruption of this type undermines incentives. If someone comes up with a better signal, the entire institution of universities would collapse, but most people have seemed to accept rampant grade inflation with a shrug rather than mostly ignoring degrees. It may eventually collapse, but on a time scale where it seems difficult to believe "this was due to grade inflation starting 50 years ago."

I feel I should point out that corrupt grading is easily detectable - one can often see it by looking at a corruptly graded paper,

Except who sees a paper except the grader and the student who wrote it?

Moreover, universities have a strong incentive to not be corrupt in their grading - if they let people slip through without learning the work, employers will start to notice and discount qualifications from that institution,

Empirically this incentive wasn't strong enough.

It's not immediate

That sounds like a hell of an understatement to me.