Not only that, but if you turn really smart people away, it's entirely possible that they'll get jobs teaching in other countries. Next thing you know, you'll end up with much more competitive universities in China, India, etc. Once that happens (and it's already underway), you're looking at the possibility of entire sectors of the economy being underpriced by equivalents overseas. Compared to that prospect, the short-term career needs of a few native grad students and postdocs look a lot less important to me.