The Downside of Praise

To some extent our education system is built to undermine intrinsic motivation by creating an environment where extrinsic motivation reigns. As the article mentions, as early as kindergarten kids are only allowed into certain schools if they have a high enough IQ. Combine this with grades, other evaluative measures, and parents telling their children they are smart creates a competitive environment that is more controlling than informational. The goal becomes being the smartest(as measured by grades) rather than enjoying the learning process. Controlling environments also tend to be less failure-tolerant, as the article mentions by ignoring failure and substituting it with reassurance (you will do better next time because you are smart) people miss out on an important opportunity to learn from failure. Parents are basically advocating an entity theorist perspective that people are born with a set intelligence. Endorsing such a perspective is associated with an increase in choosing performance-avoidance goals (avoiding failure/looking bad by choosing easier tasks).
Thus, they might start avoiding situations where there competence need can be fulfilled (optimal challenge). This is because failure in an optimal challenge situation is just as likely as success, so the child might avoid such challenges for fear of failure. Atkinson's model might explain how this process works. When the tendency to approach success is higher than the tendency to avoid failure, the person will take on the challenge, but if the opposite is true they will not. Since in an optimal challenge situation, the probability of success (Ps) and probability of failure(Pf) are about the same, this makes incentive values(If, Is) the same as well so it comes down to the motivation to succeed(Ms) and the motivation to avoid failure(Maf).
Since the motivation to avoid failure is likely higher with kids who (partly as a result of their parents non-specific praise) endorse an entity perspective have not been taught that failure constitutes just as great of a learning experience as success (rather it means you are dumb). Since failure is something to be avoided, anything that requires persistence (continuing despite negative feedback) is seen as an example of low ability. And since mastery usually includes significant effort, students taught an entity perspective will be less likely to adopt mastery goals (optimal challenge or higher, intrinsic motivation) and sustained, quality learning.
Its hard to identify a cure-all remedy for the current state we find our educational system in. Our culture is generally more focused on results(ends) than on how they are achieved(means). Considering this utilitarian ethos, its easy for parents to give generalized praise to their children(focus on the ends-"good job") because specific performance is their desired outcome. Focusing more on effort rather than inherent ability seems to be a positive step, but this leaves the grading system up for scrutiny. Perhaps rather than grading, providing specific feedback (positive and negative)as they mention would be a step in the right direction. This could relate to the part of the article that talks about intermittent (variable) reinforcement. As students progress, rewarding progression should be done so that the behavior is increased(reinforced) by the reward (e.g., praise) rather than being contingent upon it. When a reward is unexpected, a dopamine boost and associated pleasurable feeling is likely to follow which further reinforces the behavior by focusing attention on receiving more of the reward.