The obsolescence of universities?

The older I get the more I find myself wondering whether universities are not yet another service industry that is obsolete and would no longer exist -- since far better and more effective alternatives would presumably already have been found -- if it weren't for the fact that universities are kept alive by massive infusion of coercively collected government funding. But I just thought it was the humanities that were in trouble.

But now here is a frightening post by Frank Tipler in which he says some things about the teaching of physics in American universities that I can hardly believe are true. Can it really be this bad? I mean, even I, a classics major whose formal education in physics consists of Physics for Poets, know how important the General Theory and the Standard Model are. It's not really possible that most American universities allow you to earn a Ph.D. in physics without having studied either of them, is it? I just can hardly bring myself to believe that that's true. Is this guy just a crank of some sort when it comes to this subject? Can somebody knowledgeable on the subject give me a second opinion?

But if this is really true, then, um, why exactly are we pouring all of this federal money into these institutions, again?

HT: I don't remember. Maybe Instapundit?