Adventures in TV Land

Back from CNBC, where I went this afternoon to talk about 529 college savings plans. The whole process is pretty strange. You arrive, get sent to makeup, sit in the green room, and are then ushered into a completely dark room with a chair and a fake library-type backdrop. You’ve got a hidden earpiece on so you can hear the host, and there’s a monitor in front of you to watch. But the hosts are somewhere else (New York?), the other guy is somewhere else, and there’s a two-second delay between what you say and what you see on the monitor. It’s tricky to watch yourself on TV live-minus-two-seconds, listen, and speak at the same time. My first thought as the segment began was “I look tired and sullen! I need to open my eyes wider and smile more!” Here’s the clip:

I guess it went OK. It’s the first time I’ve done TV in the CNBC “everyone talking at once” format. Yesterday the producer gave me this advice: “When talking on cable television, there’s no such thing as too much, too loud, or too fast.” For my more detailed (and cogent) thoughts on 529 plans, see this column from the Chronicle earlier this year.

My main point is that it’s a bad idea to let college costs increase by 7 percent a year, through a combination of stinginess and neglect, and then think you’ve solved the problem by inducing families to gamble their savings in the stock market with the hope of earning 7 percent a year, because inevitably the stock market will crash and those families that happen through random bad luck to have children in college will be totally screwed.

The response to this was “People need to be more careful managing their investments. If they lose their shirts (because “equities have been a disappointment,” which has got to be a strong contender for the understatement of the decade award) it’s their own fault.” First, it’s just crazy to think that the best way to keep college affordable is for millions upon millions of families to divert hours of time away from work, leisure, child-rearing, etc., in order to track the financial markets. Instead, how about we just have a rational tax system and use the proceeds to adequately fund individual and institutional subsidies for higher education? That seems a lot more straightforward. Second, where exactly are all these families supposed to get the information they need to make their 529 investment decisions? CNBC? Putting aside the obvious self-serving element, I’m pretty sure that if you go back 12 months or so, nobody on CNBC was saying “Look out, the stock market is about to collapse! Move all your 529 savings into money-market funds and CDs!” Instead, it was the standard “the stock market is awesome!” boosterism. Because that’s the way they roll, and if even if they didn’t, nobody knows when the stock market is going to crash. But crash it did, just as it has before and will again. Which is why depending on the stock market to keep our ever-more-expensive higher-education system afloat is a bad idea.