The issue is not so much white boarding as that is a broad term like others have mentioned. Using a whiteboard is a common part of many jobs. But it is not often that we have to write 100% correct code that compiles on whiteboards quickly.
What whiteboards should be testing for is problem solving, and whether a candidate can use a whiteboard to illustrate, communicate and collaborate towards solving a problem.
So if the question becomes whether or not problem solving should be evaluated, i think the answer is obviously yes, and algorithms have a place here. However, algorithms should not be the ONLY way to evaluate this attribute.
What whiteboards should be testing for is problem solving, and whether a candidate can use a whiteboard to illustrate, communicate and collaborate towards solving a problem.
So if the question becomes whether or not problem solving should be evaluated, i think the answer is obviously yes, and algorithms have a place here. However, algorithms should not be the ONLY way to evaluate this attribute.