What you do in this situation all depends on what your goals are. For example, you might have the following goals (listed in no particular order):
1. You want to use the economic forces you wield in order to improve society (i.e. choosing to purchase a high quality education instead of a low quality education)
2. You want to learn.
3. You want the right to put letters after your name so you can get better jobs.
Now in light of these goals, consider what actions you should take in the situation of a grossly incompetent teacher:
1. Our society (in the U.S. anyway) currently does not use economic forces to improve education. Rather, we use an aristocracy. The accrediting agencies judge the "quality" of a school almost exclusively according to how many letters follow the names of the staff members, and people get letters after their names by attending accredited schools. Liberal arts is almost pure aristocracy, sciences aren't nearly as bad but there is some of it. But what this means is that if you refuse to do the job that the incompetent teacher is paid to do, in order to "make a point", you are alone. This is because so few people want to use economic forces to improve educational quality. Therefore you have sacrificed your own well-being in a profound way to have pretty much no effect on educational quality.
2. Ideally, a teacher's primary job is actually not to teach, anyway, but to inspire. If a teacher is stealing wages, ignore that fact and feel sorry for him and the society that put him there. There are many ways to remain inspired, to teach yourself with what little help you do get from the mostly incompetent teacher, and to feel good about your immunity to mediocrity.
3. To get those letters after your name, you've got to laugh at the sorry state of our society and the sorry excuse for a teacher, and sit through his classes. Bring tools to spend your time well, like a laptop. If he asks what you are doing, tell him you are typing notes.