That's the political situation. As for the educational one, at the Silicon Valley start-up tabloid TechCrunch, Gregory Ferenstein opinies that the SJSU experiment "will end college as we know it" because "lower-division courses ... could have easily been automated." Yet it remains unclear why the "faceless lecture halls," of these courses are any worse -- or even just any different -- from faceless web-browsers and robot graders, save for the fact that Andreessen Horowitz and Goldman Sachs might cash out their potential value for a handful of already-wealthy beneficiaries.
To summarize: the answer to underfunded, lower effectiveness primary and secondary education requires subsidizing a private, VC-funded bet made on a roulette wheel fashioned from the already precarious prospects of a disadvantaged population.
Partnerships between technology startups and local governments may entail a contradiction. Silicon Valley culture embraces two conflicting notions of public property. On the one hand, we find the legacy of hacker culture, which embraces the principle that "information wants to be free," and which creates common property under the rubric of open source materials all parties are free to use or adapt. On the other hand, we find the equally common seizure of public property and the public interest in the name of commercialization, a practice that might suggest another aphorism, "free information wants to be sold." There is perhaps no better example of this Janus logic than Google, which advocates a philosophy of openness while simultaneously hoarding information to profit from its access.
Udacity's government-endorsed apprehension of a clear public need for private benefit highlights the most troubling aspect of MOOCs: Rhetorically, they assume "information is power," purporting to tear down the walls to knowledge by making it broadly available, even if in a very particular format. But pragmatically, they admit, if only behind closed doors, that actually power is power, and controlling the networks for services offers a good deal of it at limited investment.
"Information" was never enough. Information is only intelligible given the proper knowledge, context, and opportunity. Likewise, knowledge is produced and shared within a complex infrastructure supported by a web of different agencies and organizations. Even if made cheap or free for consumers, that knowledge still requires other, more foundational knowledge, community affiliation, and economic freedom to convert into meaningful use. And from the perspective of public investment, cheap or free education is only possible given the purchase afforded by aggregation. Handing over that benefit to private interests may offer convenience, but that convenience comes at the price of control. Need a more familiar example? Just think of your own relationship with Google or Facebook.