"And academics have no incentive to teach well and, in most cases, no incentive to make sure that their university has a reputation for good teaching."
Indeed, if anything, being involved in excellent teaching is viewed as the "kiss of death" for one's tenure at many American research universities. And, as Neuroskeptic points out, the nomadic lives of young researchers prevents strong ties to a particular university:
"Until you get to the level of tenured professor, if ever, you cannot assume that you'll be working in the same place for very long. Many academics will go to one university for their undergraduate degrees, another for their masters, another for their doctorate, and then another two or three as junior faculty member before they "settle down" - and the majority don't make it that far."
Perhaps the solution is to tenure faculty more often and earlier. Imagine young, energetic, passionate academics, unafraid to teach with excellence and filled with a sense of place in their institution. Maybe this is what we need for excellent undergraduate education.