January 2001

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Pandering to Fear: The Media's Crisis Mentality

by John Stossel

I've been a reporter for 32 years. The first 20 I spent as a consumer reporter, and I approached covering markets the way most young reporters approached the topic, which is with the belief that markets are kind of useful, but are basically unfair and cruel. The job of consumer reporters and governments is to protect people from the unfairness and cruelty that markets generate. There were infinite examples I could cover as a consumer reporter—I did one a night for 20 years.

I'll give a couple examples. A coffee association was running ads saying that coffee is the drink that picks you up while it calms you down. So we called them up and asked: "How can you say this? It's contradictory." They said they had research to back up their claim. I asked, "What research?" "Well," they said, "we surveyed thousands of people. We asked them, what do you get out of your coffee break? Some people said it picked them up and some people said it calmed them down." In another case, a glass company was running ads saying "look how clear our car window glass is!" But they shot the ads with the windows rolled down.

This is why we consumer activists said we must have regulation. You have to police these ads. You have to have an advertising standards council and so on. And I believed this because intuitively we believe that when there's a problem, the elite in governments are the smart people who should solve it for us.

From consumer reporter to free-market advocate

I'm embarrassed to say how many years I believed this. But after watching the regulators work, I now believe that the regulators make us less safe. They not only cost us money but they make our lives less interesting, less free, and less safe. Although regulations do consume vast amounts of money, the least of it is for direct costs that go to paying the bureaucrats here in Toronto or in Ottawa. The bigger costs are the indirect costs. A big, regulatory state stifles the economy and stifles creativity.

What really convinced me about the folly of many regulations was that they didn't have any effect on the obvious crooks—the people selling the breast enlargers or the burn-fat-while-you-sleep pills. They kept getting away with it. After three to five years, the regulators would come after them. Then the crook would hire a sleazy defence lawyer to hold the regulators off for another three years. Then he would just change the name of the product, or move to a different state, or move to Canada. And do it again. The rules would hurt the good companies—the ones that were going to stay in business for 10 or 20 or 200 years. They had to pay their lawyers to jump through the regulatory hoops.

When regulators act

How did things work out when the regulators really did act? When I started reporting, aspirin companies were all lying in their ads. They were all saying they were the best when really, aspirin is aspirin. Excedrin was saying Excedrin relieves twice as much pain. Anacin, which is just aspirin plus caffeine, claimed Anacin is a tension reliever. So the Federal Trade Commission, the US version of the Advertising Standards Council, sued and demanded corrective advertising. That would have been something like having a company say, "contrary to our prior ads, Bufferin will not relieve pain twice as fast." These ads obviously never ran. You would have remembered them.

What happened is what happens usually. After 9 years of litigation, the companies signed a consent order. A consent order is where you don't admit to doing anything wrong, but you agree not to do it any more. So who won from that 9 years of litigation? As usual in the United States, the lawyers won. Did the public win? Well, the ads are cleaner now that they don't lie any more. Now they just say things like "nothing works better than Bayer," which if you think about it, just means we're all the same. But at least they are telling the truth.

But what I've come to realize, watching markets work, is that that would have happened anyway because markets police themselves. I don't know how it would have happened. It's a conceit trying to predict how a market will work. Maybe the Better Business Bureau would have become involved. Maybe the companies would have sued each other. Maybe the press would have gotten on their case. Companies don't like to be embarrassed. So the ads would have been cleaned up anyway.

Markets protect us better than regulations

The more I watch markets work, the more blown away I am at how quick and flexible and reasonable they are compared to the blunt instrument of government. And markets protect us even in places where intuitively we wouldn't think they would protect us. Take, for example, the greedy, profit-driven networks that have employed me. I've worked for all three of the big American networks: ABC, NBC, and CBS. They get all their money from advertisers. Yet what happened? I was allowed to be a consumer reporter. I went on TV and bit the hand that fed my employer. At one point, when I was doing the aspirin story, Bristol Myers sued CBS, where I worked at the time. They sued us for $23 million. You might think that CBS would have said that Stossel isn't worth that. But they didn't. The bigger loss was the advertising loss. Advertisers would get offended and pull their big accounts, and yet the networks still allowed consumer reporting.

Why are we biting the hand that feeds us? Because markets work in surprising ways. Stations started figuring out that yes, they'd lose some money to advertisers who got mad, but they could charge Procter & Gamble more because more people would watch a news program that gave honest information about sponsors' products, too. The market protects people in unexpected ways. It relies on information flow and information exchange, and that allows people to keep themselves safe and solve their own problems.

People say free markets and free speech will solve simple problems, but when it comes to the serious life-and-death stuff, like our health, then we need regulation. We must have federal, municipal, and provincial levels of regulation to protect us. Again, intuitively that makes sense, but now after watching the regulators work, I don't agree. By interfering with the natural forces of the market, the natural wishes of millions of free people, they make life less safe. Let me try to explain this with two thought experiments. Regulators make life less safe because interfering with the market always creates nasty, unexpected side effects.

Drug laws

Let's consider the laws related to drugs, both legal and illegal. Illegal first. I have a 15-year-old daughter. Intuitively, I am glad that marijuana and cocaine are illegal. Because they are, it may deter her from strolling down to the drug store and getting high. Maybe. I don't know that it will. It certainly isn't keeping the stuff unavailable to her. We can't even keep drugs out of prisons; how do we think were going to keep them out of the Americas? It's just silly. When regulators pompously announce a new seizure of the largest amount of heroin ever, it doesn't make a dent in the supply. There is also the "forbidden fruit" effect. Maybe because these drugs are illegal, teenagers are more attracted to them. I don't know what the answer is. Maybe a certain percentage of Americans will abuse intoxicants regardless of what the law is.

But I do know now what the unintended consequences of the law are, because I can see them. First and worst is the crime. Crime isn't caused by drugs. Almost no one gets high on the stuff and goes out and commits crimes. The crime is caused by the black market, by the fact that the buyers have to pay more to get the stuff, and the sellers can't rely on the police to protect them. So the suppliers form gangs and criminal organizations. Nicotine is said to be about as addictive as heroin, yet no one's knocking over 7/11s to get Marlboroughs. It's the law that causes the crime.

Second, we're corrupting police forces. We're asking cops who make $30,000 a year to turn down $30,000 bribes. Not all do. We're telling kids in poor neighbourhoods that hard work and entry-level jobs are for suckers. Why should you work for minimum wage at McDonald's when your little brother can make much more as a drug look-out? And the role models, the coolest people in the neighbourhood, the ones with the best clothes and the best cars, are the drug dealers, the criminals.

Finally, we are creating unbelievably rich criminal gangs. We forget that it was alcohol prohibition that created Al Capone. The gangs we're creating now are even richer. They'll soon be able to buy nuclear weapons. So why are we doing this? To protect us from ourselves. But if that's a good thing to do in free societies, why are tobacco and liquor okay? Maybe we should have exercise police who come into our homes and make us run laps and do push-ups.

Let's turn to legal drugs. If you want to get a drug approved, you go through Health Canada. I don't know how onerous the process is here, but in the United States, it takes about $500,000,000 and about 12 years to get your drug approved by the Health Canada equivalent, the FDA. The FDA grew as large as it is because it protected us from Thalidomide. Thalidomide was an anti-nausea drug that many women took during pregnancy. Subsequently, some of them gave birth to children with birth defects.

The FDA didn't protect us by being smart. It was just so slow that by the time the drug was nearing the end of the approval process, its ill effects were seen elsewhere. But because of that success, the FDA has grown ten-fold. Now they're protecting us from everything. I'm glad that they protected us from Thalidomide, but I have to ask, is it worth it? I don't think so. By protecting us from bad things, they protect us from good stuff too. But we don't usually look at it that way. Right now, in this 12-year pipe line, is a fat substitute that would let you eat all the cookies you want, and not get fat. Now, there's a tiny chance that there is a carcinogen in these fat substitutes, and that's why it's going through the $500,000,000 process. Intuitively, we say, "Well, that's a good thing." But what we don't count in the equation is that about 5,000 people in the United States and Canada die from obesity every year. Some of those people would be saved by the fat substitute, but they don't count when we compare the risks.

Here is an even clearer example. Some years ago the FDA announced it was approving a new beta-blocker. This new heart drug, that is still in the approval process, will save 14,000 American lives a year, the FDA announced at a press conference. How come nobody stood up at the press conference to say, "Ah, excuse me, didn't that mean that you killed 14,000 people last year by not pushing through the drug's approval?" Of course not. But it did mean that. We just don't think of it that way. It's easier to put the Thalidomide baby on the cover of Life magazine, as was done. But you don't know whose lives would be saved by innovative new drugs, or whose lives would be made better by freedom and innovation. What's the alternative to having Health Canada or the FDA protect us?

Why does a police organization in a supposedly free society have the final say about whether you may or may not take new drugs? Why can't an information agency simply give you advice? Those of us who are careful would only take drugs that went through the long approval process and had a Health Canada approval stamp on them. But if you were dying from some terminal disease, you could try something new without having to break your country's laws and sneak into Europe or Mexico to buy an experimental drug. What we would learn from that would save others' lives later. I'd argue further that you don't even need Health Canada or the FDA to act in that role, because government agencies just don't do things very well.

Look at Walkerton. Look at the American elections. In the States, they're using 60 year-old voting machines that can't count. Government agencies can't compete. What would happen if NASDAQ said, "Sorry, 19,000 of your trades didn't go through." Or if Visa said, "We'll have to get back to you on what the balance in your account is." Private groups can't do that, but governments can. If you abolished Health Canada or the FDA, private groups would quickly spring up to do the same job quicker and better—groups like Consumer Reports, or Underwriters Laboratory.

Lawsuits

Let's go on to the other layer of protection that we have more of than Canada, unfortunately, the trial lawyer. Here I'm confused, because as a devotee of free markets, I should like trial lawyers. They're sort of a free market solution. Instead of onerous government regulation, you have the private law suit to supplement Adam Smith's invisible hand. In theory, that should work, but in practice something has gone horribly wrong in the United States. What kind of compensation system takes 5, 10, or 15 years for the victim to get the money? And most of the money doesn't even go to the victim. Most goes to the lawyers. This is nuts.

I would argue that trial lawyers are making life less safe because they are attacking the very people we need most. They sue the vaccine companies claiming the vaccines for dyptheria and measles were not as safe as they could have been. I don't know what the truth is. (I suspect junk science was behind it.) But let's assume the lawsuits cause the vaccine makers to make the vaccine a little safer.

When they were first sued, 20 companies were researching and making vaccines in America. Now there are four. Many got out of the business saying, "Who needs this huge liability risk? We'll stick to our shampoo business or our skin cream business. We don't need to make vaccines; we don't make that much profit off vaccines." Are we safer with 4 vaccine makers instead of 20? No way. It's like Toronto's government taking all the playground equipment out of the city because somebody complained about it being old. Are kids safer with no equipment in the playground? No.

In the United States, the lawyers have even interfered with the information flow that helps us keep ourselves alive. For example, if you read the label on the tetracycline package, it says not to take the drug with milk. It won't work if you do. But who reads labels any more? They're too long. A stepladder has 21 labels, each an attempt to protect the manufacturers from lawsuits: don't dance on it while wearing wet shoes, or some such thing. So we don't read labels. Have you read a birth control pill label lately? I happened to bring one. It has tiny, fine print, on both sides of the page. This doesn't make the pill safer. Even the doctors don't read it. Such detail makes us less safe. If you did read it, you wouldn't need the pill any more.

Self-regulation

Leaving people alone is much more conducive to safety. We'll protect ourselves. But when I say that, people often say, "Well, that's fine for us, we're educated. But what about the poor and the ignorant? We need all this regulation to protect them." But again, markets work in unexpected ways. Freedom protects the ignorant too. For example, take cars. I don't understand what makes one car run better or more safely than another, and I assume most of you don't. But it's hard to get totally ripped off buying a car in the west. Compare the worst car you can get here to the best the planned economies produce. That was the Trebant, the pride of the Eastern bloc. It disappeared as soon as the Berlin Wall fell. Why? Why was their best unable to compete with our worst? Because not everybody has to be an expert for markets to work. You just need a few car buffs, a few people who read the car magazines. And through word of mouth, the good news spreads. The good companies thrive, and the bad ones atrophy. Freedom protects the ignorant too.

There are a couple of exceptions to self-regulation. I'm sure hardcore libertarians would disagree with me, but I would say the environment is an area where the market won't self-police. My smoke may go into your lungs. My sewage may go into your drinking water. You need some central planning here.

But then the issue becomes how much do we need? It's good we've had some. The air and water are both cleaner than they used to be—although you seldom hear that from my business. But how much regulation do we need? In the United States some years ago, the president took thunderous applause from both Republicans and Democrats when he said the era of big government was over. Since then, the federal registrar has only grown by about 50,000 pages of new rules every year. How big should governments be? The United States thrived most during the first 150 years when government was less than 5 percent of GDP. How big should it be? 10 percent? 15 percent? In the United States, government is now approaching 40 percent of GDP. Canada is at 44 percent. Is it time to stick a fork in it, and say it's done? Or shrink it?

The media's coverage of risk

To reduce the size of government, you need an informed public, and here, unfortunately, I think people in my business have done a miserable job. Part of the problem is the market, because we want to get you to watch our TV program, or read our newspaper, and the way we do that is to get you excited about stuff that happens today. But if you think about what's important in life, it's not what happens today; it's the stuff that happens slowly, such as the invention of the birth control pill, or the computer chip, or the women's movement. But these long-term developments are much harder for us to cover. Changes are being made by thousands of free people all over the place. We're not good at covering that.

In terms of risk, we're always talking about dramatic and interesting and mysterious risks, like invisible chemicals. A turning point for me came when a producer came into my office all pumped up and excited because he'd been given a story to cover by a trial lawyer.

Trial lawyers are the lazy reporter's best friend because they do all the work for you. They've got the victim right there; you don't even have to make a phone call. They've subpoenaed all the papers the companies produced and found some dirt. They make you look like a big investigator.

So this guy came in with this lawyer-driven story. "We've got to do a story on Bic lighters," he said. "Bic lighters are exploding in people's pockets, spontaneously catching fire. They've killed 4 people over the past 4 years." By this time I had been getting sick of these stories, and I had a mortality list on my wall, so I said, "Okay, I'll do the Bic lighter story if you first do a story on garage door openers, because they kill 20 people every 4 years, or plastic bags, because they kill about 40 people every 4 years in the United States. Or buckets. In Canada and the US, buckets kill 250 people a year, mostly little children who fall into 5 gallon buckets and drown. If we scare people about every ant, they can't focus on the elephants. This is irresponsible." He called me callous and left my office.

I then went to ABC and said, "Look, let me do a show that puts risks in perspective." You know, something along the lines of The Fraser Institute Safe Enough? book. "We could rank the risks and tell people what to worry about." And ABC said, "Yeah, we'll get back to you." They didn't for two years, but then the market helped; I got another job offer. To keep me, they gave me three specials a year and I insisted that the first one would be a special on risk assessment called "Are We Scaring Ourselves to Death?" I'd like to talk about that now.

Assessing risk

In comparing risks, we don't just look at how many people are killed, because something that kills young people is more socially tragic than something that kills older people. The way the risk specialists compare risks is by figuring out how many days each risk takes off the average life.

A plane crash is obviously a big story that the media has to cover. But on average, over the past 20 years there have been fewer than 200 deaths per year from commercial airline crashes in Canada and the US. That's less than one day off the average life. There is no proof that toxic waste sites like Love Canal in the US have hurt anybody. However, taking the most hysterical estimate I could find from an environmental group that claims that 1,000 people get cancer from these sites every year, and assuming they all die, it's still less than 4 days off the average life. In Canada and the US, house fires cause 5,000 deaths a year. So a $10 smoke detector makes a lot of sense. Murder is less of a problem here than in the US, but in the US, murder takes about 100 days off the average life. If these were all the risks we faced, you could say that the press wasn't doing that bad a job. But that's not the case when you add the real risks, like driving. It starts to make you wonder about the media's air crash coverage; we go bananas about plane crashes. We say, "We're here, live at the scene." We don't know anything, but we're going to be here, live, telling you what we don't know anyway.

My network tries to get me to do stories on the ten most dangerous airports. I refuse to do them. I think it's statistical murder because when we scare people about these plane crashes, more people drive to grandma's house, and that means more people are killed. It also makes you wonder about the person driving farther to get to the organic food store. And then it really gets ridiculous when you look at smoking and the idea of a smoker worrying about getting brain cancer from his cell phone.

To me, the most interesting statistic is about poverty, or low income. Good studies in many countries show that if you are in the lowest quintile of income, your life is 7 to 10 years shorter than average. Some of that is self-induced. Poor people do smoke and drink more; however, much of it is because poor people can't afford some of the good stuff that keeps us alive. They drive older cars with older tires. They can't always afford the same good health care. Sometimes they can't afford fruit, which helps to extend people's lives.

Bangladesh has floods that kill 100,000 people. Here in Canada, you have just as bad a flood and nobody dies. The difference is that here you have cars with which to drive away, radios with which to hear about the flood.

When we obsess about the tiny risks, and pass all kinds of rules to ban asbestos, or delay a project because it doesn't have the required permits, then that makes the country poorer because capital isn't going to its best use. That kills people, too. The headlines should read, "New Government Rule to Save Four Killed Ten." We don't see that headline because the press doesn't think that way, but wealthier is healthier. Nothing saves lives like wealth.

Another downside of our not putting things into perspective is that we have made the public fearful of innovation, fearful of the new things that have made our societies good.

Would swimming pools be approved today if you tried to introduce them? I don't think so. I want to put big tanks of water in people's yards, and as a result, 2,000 people will die annually. If they were approved today, you'd have to have razor wire around them, and armed government guards around every pool.

Would cars be approved? I don't think so. I want to introduce a new form of transportation. It'll pollute, but differently from the old form—more air pollution, less solid waste. But it'll be useful. Trouble is, it'll weigh a ton and people will drive it 50 miles an hour inches away from pedestrians. And we're going to let 16-year-olds drive them. No way would cars be approved.

How about planes? Are we going to put hundreds of people in aluminium tubes and fly them over cities? I don't think so.

Why in supposedly free societies do we meekly sit back and increasingly let government make these decisions for us? Why must government draw these lines? Some people want to take more risks. Some people want to go skydiving. Some people will do it for money. They pay the elephant handler more at the Philadelphia Zoo than other animal caretakers. Through this process of allowing some people to take risks, we learn how to save other lives.

In any case, all we seem to hear from the media are scare stories about the new risks, the new mysterious things we're exposed to: invisible chemicals, radiation, food additives. It's true that over the past 40 years, we've been exposed to things no humans were ever exposed to ever before. But what's the result? We're so sloppy about history we don't remember that at the turn of the century most people my age were already dead. Life spans have increased by 28 years because of this very technology that we now fear so much.

Questions for John Stossel

Laura Jones: Where do we draw the line between responsible consumer reporting and more hysterical journalism in consumer reporting?

John Stossel: Here the market works against us because more of you will watch my program if I say apples will kill you than if I say that they're okay. It's the nature of news to look for the bad and the dramatic. Nobody is out by the back fence gossiping over who is being faithful to their spouse. I hope eventually that the public will get sick of the scare stories and will punish those stations that air them.

LJ: Is the media to the left of the political spectrum? If so, why?

JS: Yes, the news media is leftist. I'm not sure why, but it is consistently true in country after country. I think it's some right brain/left brain kind of thing. The people who analyze and are critical thinkers go into science and business and engineering. Those who emote and feel your pain go into law and journalism and lean left.

LJ: What do you think of the precautionary principle?

JS: The precautionary principle basically says, look before you leap. This is enormously appealing to people. It seems like common sense to say, "Yes, before you approve of anything like genetically modified food, we better make sure it's safe." Ron Bailey wrote a wonderful article that gave the best argument against the precautionary principle. He said, "It's good to look before you leap, but this doesn't mean we need a federal leaping commission." You need free, independent individuals taking leaps.

LJ: Is regulation of tobacco strong enough?

JS: Tobacco is a big killer compared to some other risks, but what else do you want to do to it? It's taxed to the point where if you taxed it any more you'd have a new black market, a new interface between teenagers and criminals. And I don't think we want that. I think people in a free society should have the right to poison themselves. Tobacco is an amazing drug. It doesn't make you high the way other drugs do, and yet it's the only drug that's taken hold everywhere. From African to Inuit cultures, everybody gets something out of it. If people want to shorten their lives that way, I think it should be their right to do that. I don't know what the Canadian rules are, but in California now they have banned smoking in all restaurants and bars. I think that's the totalitarian left at work. I think you should be allowed to have a smoker's bar.

LJ: You recently did a program on organic foods. There was a huge backlash from the environmental movement to your piece. How did you address their concerns?

JS: There's always a huge backlash; people always complain about what I do. In this case, unfortunately, I made a mistake. The story basically said, "Why buy organic food when it costs more, and even industry admits it's not healthier for you?" We interviewed Dennis Avery about how organic food is grown in manure which may have more E-coli in it, and thus be more dangerous. Now I think the food supply is very safe, and that was a little bit of a scare story. At the end of all this, we had one line saying that our tests showed slightly more E-coli in the organic food, and no pesticide residues in it. Well, it turned out our scientists hadn't tested for pesticide residues. A producer had a dyslexic moment and got confused in dealing with the scientists he thought had tested for it. It was a mistake, and I had to issue a very embarrassing apology on 20/20.

LJ: What responsibility does the media have when it panders to the fears of the public on risks?

JS: I think we have a big responsibility. I think we're killing people. It's irresponsible and we just keep doing it.

LJ: How do you foresee a market protecting itself from collusion, price fixing, and monopoly?

JS: I think markets just do it. I used to think you had to have strict antitrust enforcement to stop monopolies, but basically monopolies don't happen any more because if some monopolist tries to charge too much and drive other people out, entrepreneurs sneak in, undercut his price, and take him to the cleaners.

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