He's not wrong. This has always been a major problem with education and something I think Japan handles really poorly (along with similar countries). It is a complex issue with no perfect solution. Kids are thrust classes and given academic opportunities based on their perceived intelligence, but 1) the primary goal of education is development (academics are largely worthless until you get into higher education and have a clear understanding of your career path) and 2) these are arbitrary distinctions that are based on a specific form of intelligence that isn't always applicable.
I'll say I honestly enjoyed being placed into AP and gifted courses because the work was more challenging and it encouraged me to learn how to think and not just breeze through stuff. It did create definitive social barriers between me and my peers and limited my interactions and social development to an extent. I really can't say whether that's a purely good or purely bad system because while what I learned wasn't important how I learned it was (I was went insane in any non AP classes for how much I had to slow down and just the style of teaching did nothing to make me want to learn how to think through problems).
I think the much more clear issue that comes in is when we start throwing in labels. I HATED being called smart by other students for much the same reason (and kinda the opposite). I didn't study and had a lot of academic short comings. I was just good at memorization and test taking and retaining information from class. Certain subjects like math came easily too me and I did well in class and that was it. For the most part I just enjoyed challenging classes. I didn't always love the work but I did enjoy the discussions we would have and being placed in class with other students who were passionate with learning. I think it fostered a better environment for me that wouldn't suit everyone.
you tack on a label to someone you're also in a way taking away from that person and generalizing them. Even as a compliment when you call someone smart, you're making assumptions and applying social attributes to that person they may not ascribe to. This really doesn't happen and isn't an issue when it's said as a passing comment or adjective or literally just a compliment to their personality, but it is an issue when that's all you see of a person and all you can describe about them. I acknowledge its a pretty common human trait but I'm not a fan of how much we break down and generalize people into categories (though I'm sure I'm guilty of it myself).
The big issue with Japan and similar countries is that they further turn an already messed up education system into a competition between peers and use students as examples to shame what higher-ups see as lesser humans. It's dehumanizing to both parties and is directly counter to the development of minors in education. This is why I personally made a point of never sharing grades in public school. It's no one else's business and it doesn't freaking matter. Literally no one is ever going to ask someone after they graduate how they did on a single test. After you get into college you're told NEVER to mention your high school grades or extracurriculars (generally) ever again. Even once you graduate university your GPA doesn't matter that much compared to the fact you got a diploma. Putting students into a psychological competition against each other over an education system where value is arbitrarily defined is ridiculous and a detriment to what education is supposed to be about. The purpose of academia is to develop the individual or the society as a whole. Nothing's getting developed by posting everyone's grade on a board and shaming anyone who didn't do the best.