May 24, 2006 | By Nathaniel Ward

How the media supports big government

The following is the May 1 keynote address from The Heritage Foundation’s spring 2006 President’s Club meeting, held at the Ronald Reagan International Trade Center in Washington, DC.

Ed Feulner:  What a privilege it is for us to have John Stossel with us today.

At his first ever Heritage Foundation event, to introduce John, I am pleased to have with us Darryle Owens from New York. Darryle worked for 15 years in sales and marketing in the healthcare industry. Then he left corporate America to focus his efforts on a faith-based community development center in Harlem. He currently runs that organization’s after-school program and helps them fundraise. Darryle lives with his wife, Dawn, in New York City and the only thing I hold against him is that he is a New York Yankees fan, being from the South side of Chicago—gotcha Darryle. Darryle is a graduate of Grove City College, passionate about conservative policy, and has been a Heritage member for a number of years. Darryle, come on up and welcome our next featured speaker.

Darryle Owens:  Thank you.

I’m trying to imagine what it must take to be John Stossel. I mean, it takes guts to take on the liberal media from the outside, like Rush Limbaugh or Sean Hannity, but to attack it from the inside--from right in the middle of one of the major liberal networks--that takes things to a whole new level. Think about it! John Stossel attacks liberal complacency from a position of co-anchor of ABC’s 20/20. That’s like taking the mic at Boston’s Fenway Park and announcing to an opening day crowd that the New York Yankees will always be the best team in baseball, and then turning out to be right!

After all, John Stossel has been with 20/20 for a quarter century. In that time, and from that position, instead of ingratiating himself ideologically with his bosses and colleagues, he has become the scourge of the liberal media. Day in and day out he does such an excellent job of truth-telling that he forces the very liberals he works with to pay him their grudging respect. If John Stossel’s brand of energy and ideology were prevalent and or even present on Capitol Hill, the days of big government would be numbered if not completely over.

John started with the major T.V. networks as a consumer editor for Good Morning America. I would imagine that there are those of his colleagues who wish they could have seen into the future, because they probably would have shut him down long ago, as an exercise in ideological damage control. Fortunately, that didn’t happen, so with groundbreaking and usually hilariously revealing reports, John leaves the liberals speechless with no way to respond. He’s just plain right, no pun intended. John’s work is so unimpeachable that the guilty must admit their mistakes and turn themselves in or disappear over the horizon, never to be heard from again. John’s superiors are probably lamenting, “Hey, we’d get rid of this guy except he has such a strong following”. Of course, it’s never occurred to them it’s because he’s telling the truth, and that’s what people really want.

John’s new book, which comes out in a few days, as you’ve heard, is called Myths, Lies, And Down Right Stupidity, Get Out The Shovel: Why Everything You Know Is Wrong. Somehow, I think whoever he’s talking about will get the message. So, here he is ladies and gentlemen, the winner of 19 Emmy Awards, the man who broadcasts direct from the belly of the liberal beast, the incomparable, John Stossel.

ABC News host John Stossel speaks to the President's Club meeting on May 1.

John Stossel:  “They admit they’re guilty and they disappear”? I wish! Seems like they’re gaining on us.

So, it’s good to be here. This is what my friends and colleagues in New York call the “Axis of Evil”: being among you. Someone came up to me on the street some time ago and said, “Are you John Stossel”?  I said, “Yes.  [He said] “I hope you die soon.” 

I’m trying to understand what that hatred is about, directed toward me. As Darryle mentioned, on my last book the subtitle was Scourge of the Liberal Media. Part of it is that liberals don’t like people criticizing them. But I think more of it is the fact that I was once a consumer reporter, and I made a career of bashing you guys—many of you, probably—for running misleading advertising, over-charging— This is how young reporters think: “Capitalism is okay, it brings us some stuff, but it’s by-and-large cruel and unfair and we need a lot of regulation to protect us from you”. And that was the nature of my reporting for a long time. I won 19 Emmys doing that! I haven’t won a single one since I changed my point of view.

In trying to get a hold of that hatred, I think it’s about hatred of business. It’s not just envy of wealth. You think that in England people didn’t hate the nobility--the dukes and the earls—as much as they hated the bourgeois, that terrible word. The people who sold them the very stuff they needed to live were despised. This same attitude helps explain the persecution of Jews in Eastern Europe, of Pakistanis and Africans now, and some Koreans in some black ghettos.

There is a hatred of people in business and I don’t get what it’s about. It’s because, perhaps, people see it as a zero sum game. I see why politicians think of it that way. If one doesn’t get elected, if one more gets elected, that means there’s one less spot. There are only 500 seats.

But business makes the pie bigger. People don’t get that. If Bill Gates has $30 billion it doesn’t mean we have $30 billion less. He created something.

Business can only work that way because it’s voluntary. We forget to divide the world as I do, into two ways of doing things. It’s either forced or voluntary and voluntary is better. Government is force. But business transactions don’t happen unless both parties win. Because it’s voluntary, you have this odd moment when you buy something, that “thank you/thank you” moment. You know, you give the clerk your money, she gives you the milk, and you say, “Thank you.” “Thank you.” Now, what’s that about? It’s because you wanted the milk more than you wanted the buck and she wanted your buck more than she wanted the milk.

Business makes the pie bigger, but Americans don’t get that. People hate their employers who pay them, but they love the government which takes a third of our money and squanders it.

Recently I did a show on education. We called it “Stupid in America.” Because I’m in a competitive business, I knew no one would watch a show on education, but they did watch “Stupid”.

We showed that while the government school monopoly is lying to the parents about how well the students are doing, the international tests show that the—actually, in the fourth grade Americans do pretty well, but the longer they are in the American school system the more they fall behind, and by twelfth grade they are way behind. We gave the same piece of an international test to students in Brussels and students in New Jersey. We didn’t cherry pick. This was an above-average school in New Jersey, which is an above-average state, and the Belgium kids just cleaned their clock.

From this I went on to point out that everybody says, “They need more money, there’s not enough money for the public schools.” People buy into this, but nobody bothers to do the math. We’re now spending more than $10,000 per student. Think about that. A class of 25 kids, $250,000 per classroom. Think what you could do with that money. And this is not capital expenditures, this is just for education. They squander money.

In this show we said, “Of course they do, it’s a government monopoly and we should have learned from the fall of the Soviet Union, that government monopolies fail their customers.” Now why vouchers as an alternative is a dirty word in America, I don’t know. The opponents of freedom have managed to sell that to people.

The reason these other countries, most of them, beat us on these international tests [is that they’re] spending much less per student than we do. Most of them offer two things: They offer autonomy for the individual school so they can run it pretty much any way they want. And the money—most importantly—the money is attached to the kid. In Belgium, the student could take—it’s not $10,000, as in America—could take whatever the money is to a Catholic school, a Muslim school, or one of the government schools. Even the head of the government school we interviewed said, “You know, this focuses our minds, we can’t afford to have 10 out of 100 teachers who really aren’t pulling it, because the parents will get mad and they’ll send their kids elsewhere, and I’ll go out of business. So, we try harder.” And they do.

Now, my tiny brain can’t imagine what experiments might blossom if we had a market in education, because markets work without central planners trying to picket. But even now, as experiments begin, you see what we’re missing. The Kip Schools, the charter schools, where every kid is in school till 5 o’clock and every other Saturday, and every teacher gets a cell phone and has to be available to students to 9 o’clock to answer questions. The teachers say they call all the time.

I mean, what might blossom in education is unimaginable. Now the teacher’s union says education is too important to be left to the vagaries of the market. The market has winners and losers. I would argue that education is too important to be left to a government monopoly which we know fails! And they say you’ll send your kid to one of the good schools, but all those negligent parents who aren’t really paying attention, their kids will suffer. Well, first of all, their kids are suffering now.

But the point that they don’t get goes back to this point about the market: we just don’t appreciate the miracles of capitalism. We take it for granted how it works. We don’t think that I can go to a foreign country, stick a piece of plastic in a wall and cash will come out. Or that a total stranger, who doesn’t even speak English, will rent me a car. When I get home, Visa or Master Card will have accounted to the penny. The government can’t even count the votes in Florida, yet when the problems happen, we say we’ve got to have government come and solve this, this is too important.

People say about education, “It will work for us, we’re educated, but what about the poor and ignorant?” But not everybody has to be expert for a market to work. You just need a few people. I mean, take cars as an example, do you understand what makes a car run better than another or more efficiently or makes it safer? I sure don’t, but it’s hard to get really ripped off buying a car in America. Compare the worst that you can buy here with the best, the planned economies could produce.

It’s a Trabant—remember it? The pride of the Eastern Bloc. It disappeared as soon as the wall fell. [A photograph of a Trabant is projected onto the screens behind him.]

Now why was their best unable to compete with our worst? Because not everybody has to be expert for markets to work their miracles. You just need a few people who read the car magazines, or a few car buffs, and through word of mouth the good news spreads. The good companies thrive, the bad ones atrophy. Free markets will protect the ignorant too!

Well, this hasn’t won me many friends in my business.

The other thing that has ticked people off is that after years of consumer reporting, I finally wised up about our “scare reporting.” This is the other half of the press cheering on “big government.” It’s natural to report when there’s a crisis—bad news—and it’s natural for young people to say, “We’ve got to have a law to fix this” and to think that elites in Washington and state capitals by planning can prevent these injuries. I finally got to do a show. We called it: “Are We Scaring You to Death?” I wanted to call it: “We Are Scaring You to Death,” but they wouldn’t let me.

Just before I get to that, let me go back to the basic point, about the size of government. How big should it be? Do we ever ask in terms of “What percentage of GDP?” I mean, as you think about it, and we’re all willing to pay taxes for some government—I assume even this group to some extent—but what percent? When you ask people they say five percent, ten percent.

But do you ever think about how the numbers have developed? America grew fastest during our first 150 years, when government was less than five percent of GDP. I mean, if you look at the graph, it’s astounding how recent the growth has been. It’s since Lyndon Johnson and the “war on poverty” to the forty percent of GDP that it is now. I mean, this was the beginning. This was the Declaration of Independence and the Constitution, it’s this thin. [He holds up a pocket-sized copy of the Constitution and the Declaration of Independence.] Cato gives this out. Sorry to mention Cato here. And you have the Heritage one outside, okay.

Now we have 55,000 pages of tax code in its explanations. President Clinton got huge applause from Republicans and Democrats when he said, “The era of big government is over.” And yet, since then, 70,000 pages are added every year to the Federal Register. It only grows, and it’s grown faster under President Bush than it did under President Clinton. Even the increases outside of the War on Terror are huge—The Education Department, The Energy Department. At what point do you say, as P.J. O’Rourke said, “It’s time to stick a fork in it and say it’s done!”

Part of the distortion that cheers the creators of big government on is the bad reporting from people like me, who do these scare stories all the time. I finally was getting sick of them. I thought, “Let’s rank risks.” And it turns out the best way to rank risks in life are not by how many people they kill. Instead, the risk specialists do it by days off the average life, because something that kills us is less tragic than something that kills kids.

So, let’s look at these risks.

Plane crashes. Clearly, that’s a big story, reporters have to cover that. But even including September 11th, over the past 20 years, fewer than 200 per deaths per year, less than a one-day off an average life.

Now, terrorism. We are turning America upside down, in some ways, to protect ourselves. There might be some new horrible nuclear or small pox weapon, but at the moment, if there were September 11th every three years, still 4 days off an average life.

Compare that to ordinary house fires: 5,000 deaths a year. A $10 smoke detector is wonderful thing.

And murder, which leads the news. [He displays a chart comparing these statistics.]

If these were all the risks, you could say we weren’t doing that bad a job. But what happens when I just add driving to the list? All the other bars have to shrink to almost nothing. This should make us rethink our aircraft coverage, because when the planes crash we go crazy: “We’re here live at the scene, we don’t know anything but we’ll keep telling you what we don’t know for hours.” And when we do that, more people drive to Grandma’s house and that kills people. It’s statistical murder. This should also make you wonder about driving further to get to the organic food store.

Then watch how these bars have to shrink to make room for smoking. The smoker worrying about getting brain cancer from his cell phone, is just—

But the bar that interests me most and shrinks all the others is this last one. It says “Poverty.” It should say “Low Income”. Studies have shown that if you’re below the poverty line in America, or in the lowest quintile of income in other countries, your life is seven to 10 years shorter. Now, some of that is because poor people smoke and drink more. But most of it is because poor people can’t afford some of the good stuff that keeps us alive. Wealthier is healthier. Poor people drive older cars with older tires. They may not be able to buy as much fresh fruit and vegetables.

But this “wealthier is healthier” concept deludes most people. In Bangladesh you have floods that kill a thousand people. In America, except for Katrina, we have floods that are just as bad and no one dies because we have cars to drive away, radios to hear about the flood, dikes to divert the water.

Wealthier is healthier. What this means is that when we obsess about the risks at the top of the chart [plane crashes, terrorism, house fires]—and that’s all we do in the media, 90 percent of the time—we invite government to pass new rules to squeeze the last ounce of benzine out of some manufacturing process. That means that capital can’t flow to its best use. That makes America poorer. If it takes longer to open a shopping center, the headline should be, “New OSHA Rule to Save Four, Kill 12”.

But reporters don’t think that way. Clearly, something is off in the public debate.

I’ll close with this: all you hear from us are the scare stories. It’s true that in the last 50 years humans have been exposed to things we had never been exposed to before— invisible chemicals, radiation, food additives—but what’s the result? We forget that at the turn of the last century most people my age were already dead!

Life spans have increased 30 years because of the innovation that we now fear. And what gave us that increase in life span and quality of life was not government safety regulation. Government is like someone who jumps in front of a parade and claims to be leading it.

OSHA is a good example. Charles Jeffers, who headed it under Clinton, used to bring out a chart that showed how workplace injuries had dropped since OSHA was created. But then Charles Murray went and charted it from before OSHA’s creation and showed the slope of the line was the same. Things get better as we get richer. People expect more safety, people get smarter about it. We don’t need government to do it. I would argue that the Founders fought a war for liberty and we are voluntarily giving it back, bit by bit.

I think American’s heroes are not Ralph Nader and the army of busybodies here in D.C. who are telling us they know best how to run our lives. America’s heroes are free people who are left alone. People like you, pursuing your own self-interests—not just your charity work, which helps, but even your own self interest in business. If Doug Allison is making Fords work a little better or if Herb Morgan can put up an office building a little sooner, for a penny less, he’s making America richer, much more than Ralph Nader ever will. Any of you who creates something that works better, or is a little cheaper, or gets to someone sooner, you are the heroes, not them. And thank you for fighting for that liberty that made America great. Thank you very much.

Thank you. I’m told we have some time for Q & A. There are people with microphones walking around, so whoever has a mic gets to talk. Just grab the people with the mic.

Audience Question:  Mr. Stossel, thanks very much for being here and for your work. You’re in the middle of the mainstream media, and even the mainstream media has acknowledged that it is undergoing a seismic transformation driven by shifts in technology which shift the business model. There are also shifts in social responsibility. They’ve got alternative media nowadays, and they’re not happy about it. What, realistically, do you expect in three to five years? What will the mainstream media look like? Will it be more accountable, more transparent, more interactive?

John Stossel:  Yes, probably.

I think it’s a fatal conceit for me to predict the future, so I won’t really try. Clearly the networks will shrink. But there’s something about media which encourages this liberal attitude. Part of it is that people hire people they’re comfortable with, so the liberal media hires liberals.

But part of it is the kind of people who want to go into journalism. Maybe there was the divide in high school: there were the critical thinkers who analyzed and there were the people who felt your pain. And those people went into law and journalism, and the critical thinkers went into science and business.

That’s not a very good answer but it’s my best attempt at it. The networks say about the success of Fox: “That doesn’t prove there’s an audience for conservative thinking. That just proves there are two million right wing nuts.” But we get thirty million between the three networks.

Audience Question: I’m assuming that your chart on deaths reflects mostly the United States, except when you get down to the poverty and that’s world-wide? There’s no question that wealthier is healthier. But what would that chart look like if you only looked at the poverty in the United States?

John Stossel: Those numbers are from the United States and were based on people below the poverty line in America. It is even more dramatic overseas obviously.

That’s what’s so infuriating about the way the mainstream media sneer at capitalism, vilify capitalism. For most of human history, almost everybody lived short, brutal lives. Nothing has lifted more people out of the mud and misery than capitalism ever and yet 3 billion people are still living on a dollar a day. We know what works, what would help them, and yet this system is vilified.