Intrinsic v. Extrinsic

Recently in class we had to read a piece by Barry Schwartz called The Debasing of Education: Turning Play Into Work.  Schwartz explains that as children, we just do things and don't consider them work, but once a reward of any sort is implemented, then it suddenly becomes work and competition.  He states that extrinsic things are rewards and punishments, and that intrinsic is benefitting one without the reward.  He also goes on to say that cheating appears to be more common among gifted people than more average people simply because of the pressure to continue to excel.
I agree with Schwartz, but only to an extent.  I believe he is absolutely right about cheating because it's as if smarter people are afraid of failure and/or want to be accepted into the school of their choice.  As far as the intrinsic and extrinsic things go, I have to disagree.  Yes, intrinsic would be very ideal if everyone just did their work without expecting a reward, except maybe the reward of accomplishment, but there is so much competion in our lives that extrinsic is just more realistic.  Stakes are higher when a reward is involved for anything, grades and careers being two examples.  People do work for grades to see how well they know the material and those grades provide feedback and motivation to do better next time if the grade was unsatisfactory.  Maybe we don't need motivation for every single class, but we will all eventually have to take a class that we just don't like and grades help motivate us to do well because good grades add to a gpa, which other people look at to determine if one is "worthy," so of course we want to do well.  Also, it shouldn't always have to come down to money, but most college students are broke, so grades are motivating to not fail and pay for the course again.  And if we get good grades then we have a better chance of getting a good job, which can be tough because of the competition.  That is why I believe extrinsic incentives are more realistic than intrinsic, even if it doesn't seem like the best way to go about things.