Letters are unreliable (they vary too much in their measurements). They draw attention to the wrong things (people judge the status of the letter writer). They rarely focus on the few items that do predict performance (like explicit comparison). They have low correlations with performance and they used codes that bias against women.
A letter without explicit comparisons is, by my lights, close to worthless.
ADDENDUM: A philosopher at a leading PhD program writes: "I’d say the same is true for grad school letters, if the undergraduate/MA granting institution has a history of sending people to PhD programs." I agree with that.
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