You have a point, but you are also missing the point. Quite a few people who could benefit from a formal Master's program in CS which is also from a competitive University, may not have the time due to career and family to attend classes full time. But this way they can still get their education
University of Illinois at Urbana Champaign had an online Master's in CS as far back as 2001, I believe
you had to drive down to campus for tests, though
Why do you assume that those intelligent people would not engage in some other little value add activity that can make them a lot of money. How much value add do most web social startups provide? The main feature of capitalist economy is that it allows people to work on whatever they want and not on something that some higher authority deems to be "useful"