McMoo, you're right, sort of. I meant "PhD _level_", not actually "possessing a PhD". But if you have a PhD then as Fibula says, you _have_ to have contributed to the field, which makes it a good yardstick. Such ppl who acquire recognition independently of having any qualifications often get honorary degrees to recognise this. Unfortunately this is now tarnished by giving honorary degrees to anyone who (a) is famous for other things (for publicity) or (b) pays lots of money to the university.
As far as not being competent after getting your degree - all it means is that at the time you got it, you knew enough to be competent. PhD ppl may not be competent now, but at the time they did contribute something to the field (which is how they got their PhD). And that illustrates another point - academic success requires _continuous_ work - you can't just stop and say, "I'm successful now, so I don't have to produce anything else", or you'll get superseded and/or forgotten. To really be successful requires continuous contribution.