Personally, I think too many schools are essentially diploma mills. I waiting for good Ivy League Internet school that has low tuition, or free. I believe it will come one day? I understand a student wanting a Master's, but the little extra knowledge gained with a Phd seems pointless?

Personally, if I was hiring a candidate and he told me he stuck around the university 2-3 extra years working on a non-original thesis; I would hire the guy with the masters.

I wish the U.S. Government did away with all degree requirements in hiring for federal jobs, unless the job requires a license(medicine, engineering, law, etc.) and only hired applicants on test scores.

I sometimes feel if a person can pass a series of tests designed to test whether a person can do a job; they shouldn't be penalized for not going to college? (The tests would have to be of high caliper like the California Bar exam.)

I think you might be a misinformed. A Ph.D. does not give you "a little extra knowledge" over a Master's. It allows you to deeply specialize in a small part of a given field. By the time you get your Ph.D., you're one of the world's foremost experts on that narrow topic. The value of that might be arguable based on what you studied (e.g. linguistic history of languages in Tanzania might be too obscure), but a Ph.D. is far more knowledgeable than someone with Master's.

The primary difference between a Master's and a Ph.D. is that the former is industry-oriented whereas the latter is research-oriented. That the latter is a continuation of the former is a a common misconception.