The following is an abridged version of Mr Stossel's speech
delivered on February 20, 2001, in Fort Myers, Florida, at a Hillsdale College
seminar.
JOHN STOSSEL joined the ABC newsmagazine 2020 in 1981, and began his
critically acclaimed series of one-hour prime-time specials in 1994. He has
received 19 Emmy Awards and has been honored five times for excellence in
consumer reporting by the National Press Club. Among his other awards are the
George Polk Award for Outstanding Local Reporting and the George Foster Peabody
Award. Mr. Stossel is a 1969 graduate of Princeton University with a B.A. in psychology.
When I started 30 years ago as a consumer reporter, I took the approach that
most young reporters take today. My attitude was that capitalism is essentially
cruel and unfair, and that the job of government, with the help of lawyers and
the press, is to protect people from it. For years I did stories along those
lines - stories about Coffee Association ads claiming that coffee "picks
you up while it calms you down," or Libby-Owens-Ford Glass Company ads
touting the clarity of its product by showing cars with their windows rolled
down. I and other consumer activists said, "We've got to have regulation.
We've got to police these ads. We've got to have a Federal Trade
Commission." And I'm embarrassed at how long it took me to realize that
these regulations make things worse, not better, for ordinary people.
The damage done by regulation is so vast, it's often hard to see. The
money wasted consists not only of the taxes taken directly from us to pay for
bureaucrats, but also of the indirect cost of all the lost energy that goes
into filling out the forms. Then there's the distraction of creative power.
Listen to Jack Faris, president of the National Federation of Independent
Business: "If you're a small businessman, you have to get involved in
government or government will wreck your business." And that's what
happens. You have all this energy going into lobbying the politicians, forming
the trade associations and PACs, and trying to manipulate the leviathan that's
grown up in Washington, D.C. and the state capitals. You have many of the
smartest people in the country today going into law, rather than into
engineering or science. This doesn't create a richer, freer society. Nor do
regulations only depress the economy. They depress the spirit. Visitors to
Moscow before the fall of communism noticed a dead-eyed look in the people.
What was that about? I don't think it was about fear of the KGB. Most Muscovites
didn't have intervention by the secret police in their daily lives. I think it
was the look that people get when they live in an all-bureaucratic state. If
you go to Washington, to the Environmental Protection Agency, I think you'll
see the same thing.
One thing I noticed that started me toward seeing the folly of
regulation was that it didn't even punish the obvious crooks. The people
selling the breast-enlargers and the burn-fat-while-you-sleep pills got away
with it. The Attorney General would come at them after five years, they would
hire lawyers to gain another five, and. then they would change the name of
their product or move to a different state. But regulation did punish
legitimate businesses.
When I started reporting, all the aspirin companies were saying they
were the best, when in fact aspirin is simply aspirin. So the FTC sued and
demanded corrective advertising. Corrective ads would have been something like,
"Contrary to our prior ads. Excedrin does not relieve twice as much pain.”
Of course these ads never ran. Instead, nine years of costly litigation finally
led to a consent order. The aspirin companies said, "We don't admit doing
anything wrong but we won't do it again," So who won? Unquestionably the
lawyers did. But did the public? Aspirin ads are more honest now. They say
things like, "Nothing works better than Bayer" – which, if you think
about it, simply means, “We’re all the
same." But I came to see that the same thing would have happened without a
decade of litigation, because markets police themselves. I can't say for
certain how it would have happened. I think it's a fatal conceit to predict how
markets will work. Maybe Better Business Bureaus would have gotten involved.
Maybe the aspirin companies would have sued each other. Maybe the press would
have embarrassed them. But the truth would have gotten out. The more I watched
the market, the more impressed I was by how flexible and reasonable it is
compared to government imposed solutions.
Market forces protect us even where we tend most to think we need
government. Consider the greedy, profit-driven companies that have employed me.
CBS, NBC, and ABC make their money from advertisers, and they've paid me for 20
years to bite the hand that feeds them. Bristol-Myers sued CBS and me for $23
million when I did the story on aspirin. You'd think CBS would have said,
"Stossel ain't worth that." But thev didn't. Sometimes advertisers
would pull their accounts, but still I wasn't fired. Ralph Nader once said that
this would never happen except on public television. In fact the opposite is
true: Unlike PBS, almost every local TV station has a consumer reporter. The
reason is capitalism: More people watch stations that give honest information
about then, sponsors’ products. So although a station might lose some
advertisers, it can charge the others more. Markets protect us in unexpected
ways.
Alternatives to the Nanny State
People often say to me, “That’s okay for advertising. But when it comes
to health and safety, we’ve got to have OSHA, the FDA, the CPCS” and the whole
alphabet soup of regulatory agencies that have been created over the past
several decades. At first glance this might seem to make sense. But by
interfering with free markets, regulations almost invariably have nasty side effects.
Take the FDA, which saved us from thalidomide – the drug to prevent morning
sickness in pregnant women that was discovered to cause birth defects. To be
accurate, it wasn’t so much that the FDA saved us, and that it was so slow in
studying thalidomide that by the end of the approval process, the drug’s awful
affects were being seen in Europe. I'm glad for this. But since the thalidomide
scare, the FDA has grown ten-fold in size, and I believe it now does more harm
than good. If you want to get a new drug approved today, it costs about $500
million and takes about ten years. This means that there are drugs currently in
existence that would improve or even save lives, but that are being withheld
from us because of a tiny chance they contain carcinogens. Some years ago, the
FDA held a press conference to announce its long-awaited approval of a new
beta-blocker, and predicted it would save 14,000 American lives per year. Why
didn't anybody stand up at the time and say, "Excuse me, doesn't that mean
you killed 14,000 people last year by not approving it?" The answer is,
reporters don't think that way.
Why, in a free society do we allow government to perform this kind of
nanny-state function? A reasonable alternative would be for government to serve
as an information agency. Drug companies wanting to submit their products to a
ten-year process could do so. Those of us who choose to be cautious could take
only FDA-approved drugs. But others, including people with terminal illnesses,
could try non-approved drugs without sneaking Off to Mexico or breaking the
law. As an added benefit, all of us would learn something valuable by their
doing so. I'd argue further that we don't need the FDA to perform this
research. As a rule, government agencies are inefficient. If we abolished the
FDA, private groups like the publisher of Consumer Reports would step in and do
the job better, cheaper, and faster. In any case, wouldn't that be more
compatible with what America is about? Patrick Henry never said, "Give me
absolute safety or give me death!"
Lawyers and Liability
IF WE embrace the idea of free markets, we have to accept the fact that
that lawyers have a place. Private lawsuits could he seen is a supplement to
Adam Smith's invisible hand the invisible fist. In theory they should deter bad
behavior. But because of flow our laws have evolved, this process has gone
horribly wrong. It takes years for victims to get their money, and most of the
money goes to lawyers. Additionally, the wrong people get sued. A Harvard study
of medical malpractice suits found that most of those getting money don't
deserve it, and that most people injured by negligence don't sue. The system is
a mess Even the cases the trial lawyers are most proud of don't really make us
safer. They brag about their lawsuit over football helmets, which were thin
enough that some kids were getting head injuries. But now the helmets are so
thick that kids are butting each other and getting other kinds of injuries,
Worst of all, they cost over $100 each. School districts on the margin can't
afford them, and as a result some are dropping their football programs. Are the
kids from these schools safer playing on the streets? No.
An even clearer example concerns vaccines. Trial lawyers sued over the
Diphtheria-Pertussis-Tetanus Vaccine, claiming that it wasn't as safe as it
might have been. Although I suspect this case rested on junk science, I don't
know what the truth is. But assuming these lawyers were right, and that they've
made the DPT vaccine a little safer, are we safer? When they sued, there were
twenty companies in America researching and making vaccines. Now there are
four. Many got out of the business because they said, "We don't make that
much on vaccines. Who needs this huge liability?" Is America better off
with four vaccine makers instead of twenty? No way.
These lawsuits also disrupt the flow of information that helps free
people protect themselves. For example, we ought to read labels. We should read
the label on tetracycline, which says that it won't work if taken with milk.
But who reads labels anymore? I sure don't. There are 21 warning labels on
stepladders -"Don't dance on stepladders wearing wet shoes," etc. -
because of the threat of liability. Drug labels are even crazier. If anyone
were actually to read the two pages of fine print that come with birth control
pills, they wouldn't need to take the drug. My point is that government and
lawyers don't make us safer. Freedom makes us safer. it allows us to protect
ourselves. Some say, "That's fine for us. We're educated. But the poor and
the ignorant need government regulations to protect them." Not so. I sure
don't know what makes one car run better or safer than another. Few of us are
automotive engineers. But it's hard to get totally ripped off buying a car in
America. The worst car you can find here is safer than the best cars produced
in planned economies. In a free society, not everyone has to be an expert in
order for markets to protect us. In the case of cars, we just need a few car
buffs who read car magazines. Information gets around through word-of-mouth.
Good companies thrive and bad ones atrophy. Freedom protects the ignorant, too.
Admittedly there are exceptions to this argument. I think we need some
environmental regulation, because now and then we lack a market incentive to
behave well in that area. Where is the incentive for me to keep my
waste-treatment plant from contaminating your drinking water? So we need some
rules, and some have done a lot of good. our air and water are cleaner thanks
to catalytic converters. But how much regulation is enough? President Clinton
set a record as he left office, adding 500,000 new pages to the Federal
Register - a whole new spiderweb of little rules for us to obey. How big should
government be? For most of America's history, when we grew the fastest,
government accounted for five percent or less of GDP. The figure is now 40
percent. This is still less than Europe. But shouldn't we at least have an
intelligent debate about how much government should do? The problem is that to
have such a debate, we need an informed public. And here I'm embarrassed,
because people in my business are not helping that cause.
Fear-Mongering: A Risky Business
A TURNING point came in my
career when a producer came into my office excited because he had been given a
story by a trial lawyer - the
lazy reporter's best friend - about
Bic lighters spontaneously catching fire in people's pockets. These lighters,
he told me, had killed four Americans in four years. By this time I'd done some
homework, so I said, "Fine, I'll do the exploding lighter story after I do
stories on plastic bags, which kill 40 Americans every four years, and
five-gallon buckets, which kill 200 Americans (mostly children) every four
years." This is a big country, with 280 million people. Bad things happen
to some of them. But if we frighten all the rest about ant-sized dangers, they
won't be prepared when an elephant comes along. The producer stalked off angrily and got Bob Brown
to do the story. But several years later, when ABC gave me three hour-long
specials a year in order to keep me, I insisted the first one be called,
"Are We Scaring Ourselves to Death?" In it, I ranked some of these
risks and made fun of the press for its silliness in reporting them.
Risk specialists compare risks not according to how many people they
kill, but according to how many days they reduce the average life. The press
goes nuts over airplane crashes, but airplane crashes have caused fewer than
200 deaths per year over the past 20 years. That's less than one day off the
average life. There is no proof that toxic-waste sites like Love Canal or Times
Beach have hurt anybody at all, despite widely reported claims that they cause
1,000 cases of cancer a year. (Even assuming they do, and assuming further that
all these cancer victims die, that would still be less than four days off the
average life.) House fires account for about 4,500 American deaths per year -
18 days off the average life. And murder, which leads the news in most towns,
takes about 100 days off the average life. But to bring these risks into proper
perspective, we need to compare them to far greater risks like driving, which
knocks 182 days off the average life. I am often asked to do scare stories
about flying "The Ten Most Dangerous Airports" or "The Three
Most Dangerous Airlines" - and I refuse because it's morally
irresponsible. When we scare people about flying, more people drive to
Grandma's house, and more are killed as a result. This is statistical murder,
perpetuated by regulators and the media.
Even more dramatic is the fact that Americans below the poverty line
live seven to ten fewer years than the rest of us. Some of this difference is
self-induced: poor people smoke and drink more. But most of it results from the
fact that they can't afford some of the good things that keep the rest of us
alive. They drive older cars with older tires; they can't afford the same
medical care; and so on. This means that when
bureaucrats get obsessed about flying or toxic-waste sites, and create new
regulations and drive up the cost of living in order to reduce these risks,
they shorten people's lives by making them poorer. Bangladesh has floods
that kill 100,000 people. America has comparable floods and no one dies. The
difference is wealth. Here we have TVs and radios to hear about floods, and
cars to drive off in. Wealthier is healthier, and regulations make the country
poorer. Maybe the motto of OSHA should be:
"To save four, kill ten."
LARGELY DUE to the prevalence of misleading scare stories in the press,
we see in society an increasing fear of innovation. Natural gas in the home
kills 200 Americans a year, but we accept it because it's old. It happened
before we got crazy. We accept coal, which is awful stuff, but we're terrified
of nuclear power, which is probably cleaner and safer. Swimming pools kill over
1,000 Americans every year, and I think it's safe to say that the government
wouldn't allow them today if they didn't already exist. What about vehicles that
weigh a ton and are driven within inches of pedestrians by 16-year-olds, all
while spewing noxious exhaust? Cars, I fear, would never make it off the
drawing board in 2001.
What's happened to America? Why do we
allow government to make decisions for us as if we were children? In a free
society we should be allowed to take risks, and to learn from them. The
press carps and whines about our exposure to dangerous new things - invisible
chemicals, food additives, radiation, etc. But what's the result? We're living
longer than ever. A century ago, most people my age were already dead. If we
were better informed, we'd realize that what's behind this longevity is the
spirit of enterprise, and that what gives us this spirit - what makes America thrive isn't regulation. It's
freedom.
IMPRIMIS a monthly publication of Hillsdale College * www.hillsdale.edu