> how do I know they didn't cheat in previous classes
You can safely assume many did, because every time teachers check for cheating and plagiarism, they find a lot, and they rarely look for it.
> Who wants to get a degree from a university that knowingly and willingly passes students who cheat
Anyone who considers it a necessary step in life, and doesn't care about the consequences.
It's totally shitty, and it's the consequence of letting so many people in, while at the same time incentivizing schools for throughput and making life hard for the staff. Then you get at a point where nobody cares anymore, and everything gets smothered under a layer of understanding.
The article demonstrates it. The author of the article is also making the right noises: "I learn more from my students than they learn from me", and similar bullshit. He also doesn't teach a hard course: it seems to be a cogsci intro. Yet he's under pressure not to flunk everyone, and offers some of the easiest ways out: writing a single multiple choice question. And since that didn't make them pass either, they had to rewrite some blathering statement about academic integrity. It's really about letting them pass, under the guise of caring for students, and teaching.