Who has their code work the first time?

Anyway, it *is* a good skill to be able to trace through your program as if you were the Python interpreter. Mentally set watchpoints (places where you check a variable's value), run through iterations of a for loop, mentally test edge cases based on the function you're implementing as well as your implementation. In other words, on exams you still go through an abbreviated testing and debugging cycle, using your brain as the computer. Also, being able to do that will help loads in technical interviews.

Do they give you scratch paper for exams or are they asseholes?

if you're not allowed to search online and use an IDE i wouldn't take this too seriously, unless it is just a fizzbuzz kind task.
if you want to work as a programmer you mostly just need a portfolio of some cool things you made.
it seems most people who finish CS can't code shit so companies don't care too much about courses and certificates.