IMO, encouraging confidential letters goes against:
1. Taking responsibility for what you say. Standing behind your word. Openness. (Hiding doesn't look good. It looks shady and sneaky. And weak.)
2. Diplomacy versus secrecy. I think diplomacy should win - and should be valued by the leaders of our profession.
3. Due process. Giving someone a chance to respond to what's said about them.
4. Transparency, a quality of a business that operates out in the open, rather than behind closed doors. The later is usually associated with "being up to no good."
5. Diversity. Secrecy allows discrimination to take place without being questioned or caught.
Confidential letters set a bad example. Everyone learns from example and from their leaders.
I think that all of these arguments are poor.
To provide counter-arguments, I would go back to the reason for the letter of recommendation. The purpose of an institution requesting a letter of recommendation is to obtain the ability to evaluate an objective analysis of a candidate's character, skills, abilities, etc.
Removing the confidentiality of the letter completely removes the sacred objectivity of the letter. Allowing the student to review and weigh in on the contents of the letter (or even withhold the letter, in light of its contents) completely defeats the purpose of the letter.
1. The letter writer's responsibility is to the institutions to whom he or she writes, not the student who requests the letter. The irresponsible thing to do would be to write lies to an institution to appease a student who requests a letter. Most letter writers have the humanity to tell a student they will not write a good letter if they are not capable of honestly producing a good letter. I think that action is sufficient in "taking responsibility" for what you say.
2. Not sure how diplomacy is ever relevant here. It is certainly not the opposite of secrecy.
3. This would only be true if letters of recommendation were the end all criterion by which candidates are judged. Since the letters are only part of the application process, due process is certainly given to all candidates (not that the applicants are accused of wrong-doing and due process is even relevant).
4. To say that transparency is usually good is to imply that privacy is usually bad. I am certain that is not the case. I think we can learn a lot from someone who cannot find 3 people they trust to write a few honest paragraphs about them without triggering some sort of alarm.
5. This is obviously a reach. I don't think discrimination can readily be hidden until a student is ready to request a letter of recommendation, then concentrated into one letter. The one person who i thought discriminated against me when I was an undergraduate was not asked to write me a letter of recommendation.
Just my 2 cents.