Again, without grades, there is no incentive to learn, there is no drive to learn.

But, when they apply for a job, or when they try to enter college, how could the employer or the college informer know how smart or motivated you are, also, life is stressful, students should get use to this at a young age, and not get thrown into the real world without this kind of experience.

Exactly, without grades, the student has no motivation, no felling of accomplishment when they do anything

No, grades are a solid way to motivate students, who need a milestone type system to know who well they are doing, also, it gives colleges and employers a way to estimate the intelligence or work ethic of a potential alumni or employee.