A lot has been written about recruiter incentives in these comments, but the market is still clearing even with extremely high fees. The reason bad recruiters can still get paid really well is because there's zero transparency and therefore almost no accountability. I think most of the problems with recruiters could be solved just by addressing this issue.
When you're looking for a good restaurant you can go on Yelp to find one, and you can tell from the reviews what to expect. The same goes if you have a bad restaurant experience -- you can write a review on Yelp and warn others about the crappy food / service / etc. Nothing really exists like this in the recruiting space, despite people really loving to write about how much recruiters suck. And a lot of them do, but what real accountability is there? If a recruiter gets in touch about a job, how do I know he's not super shady? If I'm an employer and need to hire rapidly, how can I find good recruiters other than word of mouth?
There should be a Yelp for recruiters. If you're slimy, the world should know about it, and you should have a hard time finding new business and new candidates. If you're a great recruiter who's adding real value, that should be obvious, too, so that others will want to work with you.
Some friends and I have been working on making this a reality. Check it out. Leave a review of your worst recruiting experience (worst one we'll feature on the main page). Or your best one. Or both. And if you're interested in helping us with this project, get in touch.