I don't think either extremes are accurate - nobody is near what CA has. That doesn't mean our system is complete dogshit, and we're not sprinting into the abyss either. There's also out of state kids swelling the CA system ranks. Last I saw the percentage was in the high teens. Texas is single digits. You could both argue that the system is so attractive that it garners more interest, but also at a cost to in-state kids that are bumped.
That's why there is a "can't get into UT" thread about Surly kids. They've made it so GD hard to get into now that your options are limited save for Rice, SMU, or the 3 private Presbyterian schools. As stated, TX is at the same capacity it was back in the late 80's, so they just tightened the admission requirements like a mother, and they physically can grow - but at 50K+ kids, how big would they want to get?
I'd argue this is the same for everyone. I've hired so many people, I don't even look at the education part of the resume anymore. They've been in the workforce long enough to let their experience speak for itself. Right out of college, sure, but now it's as it should be: your personal relationships and network that you cultivate are all that matter. If you want a "big" name, go back to grad school (esp true with MBAs).