Higher education within the USA is increasingly perceived to be in a state of crisis. This crisis exposes the USA and its citizens to risks that spell out disaster whether it is from a loss of national global competitiveness, a reduction in the standard of living and/or deep challenges to social cohesion. The suggested remedy to this condition is to transform current educational practices and institutions to better produce ‘knowledge workers’ who in turn may harness the limitless potentials of a ‘global knowledge economy’. While this vision of education seems compelling we argue that the transition to a ‘knowledge economy’ is more fiction than fact. Instead we suggest that the ‘knowledge economy’ is better understood as part of risk society where education does not reduce the anxiety associated with developed post‐industrial economies, but serves to exasperate it.