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Announcement | Video Video | Transcript Transcript

Why Government Fails—But Free Individuals Succeed
April 19, 2012
John Stossel

David Theroux, President of Independent Institute

Good evening, ladies and gentlemen. My name is David Theroux, and I’m the President of the Independent Institute. I am delighted to welcome you all to our program this wonderful Thursday evening. We regularly host events like this in the Independent Policy Forum that feature excellent speakers in the form of lecturers and debates and seminars and so forth. And our program tonight is certainly a topical one. It’s called “Why Government Fails—But Free Individuals Succeed,” with the esteemed journalist John Stossel, author of the new book No They Can’t. No, they can’t what? I guess he’ll tell us. It’s No They Can’t: Why Government FailsBut Individuals Succeed.

For of those of you new to the Independent Institute, we hope that you got a packet when you registered; you’ll find information about our program. The Institute, in a nutshell, is a non-profit public-policy research organization: we sponsor studies of major economic and social issues. Our ambition is to advance the ideas that can advance peaceful, prosperous, and free societies. We produce many books, this is our quarterly journal, The Independent Review, which you’re probably all subscribing to already, I’m sure, but you’re welcome to subscribe. One of the books I wanted to point out that’s listed in a sheet in your packet called Books on Liberty is a book coming out soon called Priceless. It’s by the economist John Goodman, and the subtitle of the book is Curing the Healthcare Crisis. John is an old friend, and this is certainly a very important issue that our speaker tonight is very well aware of. And of course that book and all of our books make exceptional material for documentaries each and every Thursday night on the Fox Business Channel. I also want to point out, in the packet you’ll find a sheet about the summer seminars that we organize each summer for high school and college students. They’re called the Challenge of Liberty Seminars; they’re one-week programs which provide really an exceptional education for students on the ideas of liberty and to sort of see through the fog of spin in public debate and public policy.

We certainly live in strange times: government spending and power, I think we would generally agree, have reached new heights in almost every aspect of lives. And as governments become ever more insolvent and predatory we hear the clamor for even more spending and power as solutions to the government failures of the past. It’s laughable, and yet it’s truly disturbing. Trillions and trillions and trillions of dollars, wars and more wars, mandates, controls—and corruption and untold other follies are just being heaped one on another. For example, on March 16—and based on President Truman’s executive order, the Defense Production Act of 1950—President Obama issued his executive order National Defenses Resources Preparedness. Some of you may not have heard about this. What this executive order does is it sets forth his claimed authority in the name of National Defense to unilaterally take control of all aspects of the economy including transportation, food production, energy, healthcare, labor, water resources, construction and “all other material services and facilities.”

Meanwhile—and in contrast—we have our speaker tonight. Our speaker is one of the jewels, in my opinion, of popular culture, of understanding public policy and certainly journalism. He has won many Emmy Awards; he’s a Peabody Award winner. His new book No They Can’t, as I mentioned, in it he wants Americans to wake up and look at the facts, discard the idea of government mothering, and live as free people. We’re hence delighted to have John back with us again—we had him here a number of years ago—and he’s here to discuss a few of the challenges that we’re facing. John.

John Stossel, TV Journalist Fox Business Network

Thanks for coming. The title No They Can’t is obviously a response to that frenzy of “yes we can” from the last election, and my concern that people turn to politics for that—that people want to just follow somebody. And it was pretty heavy with Obama; McCain had a lot of it too. I interviewed people where McCain was going to fix the world. Obama was over the top: he even himself at one point said, “Elect me, it will bring us to the moment when the rise of the oceans begins to slow and our planet begins to heal.” And that arrogance is out there.

David talked about the fog and the spin that is out there; it’s also in the theme of this book. It’s instinct—I think it’s instinct—that people say when there’s a problem, “There ought to be a law.” Now normal people do. Maybe you’re different—you’re the minority here who get liberty—but for normal people and I myself (because it took me many years of cheering for regulation; that’s when I won those Emmy Awards David mentioned, I won’t win them now), it’s instinct to say, “There ought to be a law.”

One example: After 9/11 we were scared. I was probably more scared than you, because I live in Manhattan. And when the government said we’ve got to take over airline security, nobody batted an eye. You may remember at the time it was done by private contractors supervised by government, but they were minimum wage; they weren’t great. So we got the TSA. I mean, Tom Daschle said you can’t professionalize if you don’t federalize. You grunt at that, but the Senate voted 100 to 0 then to create the TSA. So how’s that working out for us? You know we don’t know if they’ve made it safer, the underwear bomber, the shoe bomber were not caught by the TSA, they were caught by the passengers. The TSA now spends 10 times what the previous private screeners spent. And in one city there are private contractors, the law allows an airport, a city to say we want to opt out of the TSA, we want to go to private contractors. And San Francisco did—your city of all places—well, almost. So I don’t know what your experience is there, but our producer who went there said he found people who said things like, “Wow these screeners are friendlier, and the line moves more quickly.” Yes? No? Good. And also they’re better at their jobs in terms of safety—because the TSA did its own undercover experiment: they tried to sneak in fake contraband, fake pipe bomb or something, and the screeners in San Francisco were much more likely to find it than screeners in Los Angeles, than the government screeners.

So why is the private screening company better? Well, you know, because his own money’s on the line: if he does a bad job, he can get fired. Nobody ever fires the government; they don’t fire themselves. Also, he can get rich if he gets a good reputation: other cities may hire him. So what does he do? He does things like run contests—March Madness contests for his screeners, he calls it. You can make up to $2,000 if you’re better at unpacking and packing luggage and better at being nice to people and better at identifying people on a test. And these screeners, they’re proud: they get a kick out of their job, unlike the sort of going-through-the-motions government workers; they have an excitement to their job, so they’re better. So now other cities have noticed this, and more than a dozen have asked the TSA if they can opt out, because the law requires them to ask permission.

One is the airport manager at the airport outside Glacier National Park in Montana, where of course in summertime there are many more people there, and in winter it’s kind of dead because who wants to go to Montana in the winter? And the TSA, being a government agency, one size fits all, has the staffing levels the same the whole time. So in the summer there are long lines, and in the winter TSA stands for its initials: Thousands Standing Around. She and all these other airport managers ask to opt out. What does the TSA do? It simply doesn’t respond for a year. And then a couple months ago it finally says, “We reject all these applications.” What’s the reason? One sentence explanation: “We do not think this is advantageous to the federal government.” Wouldn’t McDonalds like to say that to Burger King? Not why won’t they do it, why won’t they say, “Gee these guys are better of course”? Because they’re now a bureaucratic empire, and to let others compete would be to give up power, and nobody much likes to do that, but in government you get to enforce that and so they do.

Central planning appeals to people; this is another thing we fight about. As I say, it’s not just fog and spin; I think it’s instinct. There’s some sense that life’s complex and, you know, I can’t get my brain around how you design a sewage treatment plant myself; so we want the smartest guy in the room—here you go, the one who went to Harvard—to direct the economy; this makes sense to people. Where does this come from? Well I think it comes from our history, our parents: when we were little kids mommy and daddy ran our lives; that made us feel safe. And evolution: For thousands and thousands of years our ancestors lived in little tribes, clans—50, 100, 200 people at the most—and you had to follow the clan leader. If you didn’t, if you harvested the fruit at the wrong time when he said you shouldn’t or something, you might have died and not given birth to you. So we’re programmed to follow the clan leader, and now he’s our clan leader and it makes sense to people.

We’re not wired to see that these impersonal market forces could solve problems; the invisible hand is just not intuitive to people. I like the way Hayek put it: “the spontaneous order.” The way I like to make people think about that is to say, “Imagine a skating rink if you have never heard of a skating rink. You’re the regulators, and I’m a greedy businessman. I want to introduce here in Oakland a new form of recreation: ice on the ground, and people are going to strap sharp blades to their feet and zip around, and old and young are going to go in every.” “No way,” you’d say. “You got to have the skating police or stoplights or something. And yet we know it basically works: it’s a spontaneous order. But if you hadn’t seen it, you might have rejected it. People say government has to—you know, even the people who acknowledge that maybe free markets are okay for the simple stuff (movies, music, computers, cell phones), when it comes to the complicated stuff and where our lives are at stake, you’ve got to have this brilliant central planner—education, healthcare. The New Yorker had an article about healthcare, and the doctors were talking: “These free-market people on the way to the hospital, when you’re having a heart attack, you’re going to start doing research on which hospital or doctors are better at treating a heart attack and who’s cheaper? What a joke: who thinks up this stuff?” Well Adam Smith for one, but they don’t understand that. Education? The parents don’t understand what the curriculum should be or who’s a good teacher. “We need people with education PhD degrees to plan this for people.” And this makes sense, this intuitively makes sense. My way of answering it is to say, no, that you don’t have to be an expert for the market to work its magic; it always is better.

As an example, take cars. Do you understand why one is better than another, why it’s safer, better engineering? I assume most of you are not automotive engineers. I sure don’t. But compare the worst you can buy here in California with the best the planned economies could produce, the expert central planners, the best they could do was this: Some of you younger people may not know, this was the pride of the Soviet bloc, this was the East German car the Trabant. And there were others: the Yugo. They were all bad, but this was made by the East Germans. They were rocket scientists, and yet this car was awful: you had to put the oil and gas in separately and shake the car to mix them together. And when the Berlin wall went down, the Trabant disappeared. So why could their best not compete against our mediocre stuff? Because not everybody has to be an expert for the free markets to work: you just need a few car buffs or a few people who read the car magazines, and through word of mouth and an open society, the good news and the bad news spread, the good companies grow, the bad ones atrophy.

The free market will protect everybody, even the ignorant, but it’s not intuitive; and so government grows. And they have lots of evidence they can point to: “Look how we’ve made your life better.” The head of OSHA under President Clinton was fond of showing this chart. Now OSHA is the Occupational Safety and Health Administration, and they created it after people were getting killed in factories. So they said this is unacceptable, we have to have standards. Now they have a rule book this thick. Nobody really understands what’s in it: the lawyer is going to argue about it for years; but it clearly makes life “safer.” Look how many lives they’ve saved. This doesn’t even account for how many injuries they’ve prevented (thank God for government). Except a researcher checked out what happened before OSHA was created, and that reveals more.

Government is like somebody who gets in front of a parade and pretends he is leading the parade. Things were getting better on their own. Now why does this happen? This happens because in a free society things get better, people get smarter. When someone gets injured, you take a corrective step so they don’t get injured next time. As we get wealthier we care more about safety; wealthier is healthier. And even the selfish company, the greedy company that killed its worker, is reluctant to keep killing workers because it costs money to retrain the new staff. Free market makes it better, too. Government isn’t needed.

We saw this for the War on Poverty. Lyndon Johnson said the Great Society is going to end poverty; and they created the welfare, and the poverty rate went down for the first five years. And then, as you know, it stopped. It’s been going up and down ever since, partly because we taught people to be dependent and we taught women: “Don’t get married, get the guy out of the house, your check will be smaller or you won’t get a check.” But they can at least say, “Hey the poverty rate dropped sharply those first five years. Think how many lives we improved.” Except here, too, somebody went to before welfare was created, and the slope of the line was already dropping. People were lifting themselves out of poverty. Government stopped the progress.

Government constantly stops progress, and yet it grows. Thomas Jefferson said it’s the natural progress of things for government to grow and liberty to yield, and that’s sure what’s happened. Here’s the graph of spending since the beginning of the republic; the big blips are for the World Wars. Here it is averaged over 10 years; so you smooth that out. But for the first 150 years of America, government was less than a few percent of GDP. And we grew fastest then, the most progress was made then. Then came the Great Society and it starts to go up; and Bush and Obama made it much worse and now, as you know, we’re on this unsustainable course, mostly because of Medicare and because of my generation: I’m a baby boomer, I rudely refuse to die.

When FDR started Social Security most people didn’t even live to age 65; now we live on average to 78. And I don’t know what’s going to happen—probably ramped up inflation because they’re not going to stiff us because we vote. (You young people are screwed because you don’t vote as much.) You know, David would know more about what’s likely to happen when this blows up. But they scream at any cut, any proposal for a cut: Paul Ryan’s timid cuts are “Social Darwinism.”

Why is America doing pretty well? I have a charity—and some of you have seen these videos. Teachers would write me and say, “We taped your show on free markets, and kids have never heard of such things. I played it in the classroom, and we had a great discussion.” Or, “I wish I taped it. Can I buy it from ABC?” And they wouldn’t sell it, so I started a charity where we give it to teachers free. And one of the more popular ones is one where I ask the kids, “Why is America prosperous?” Ask high school students, and they have no clue. But eventually somebody says, “Oh, it’s because America’s a democracy, and we’re a relatively new country, and we have natural resources.” And I say, “India’s a democracy, India has natural resources, but their poor. They say India’s overpopulated. I can answer: well, actually the population density of India is the same as that of New Jersey; New Jersey’s doing okay. (We’re not depending on your perspective here in California.) And what about Hong Kong?

“This is Milton Friedman’s insight, that Hong Kong has no natural resources: it’s just a rock, and no democracy. It had the British rulers and now the communist Chinese. And yet Hong Kong went from poverty to wealth in just 50 years. Third World to First World. Why? Because they had the ingredients that make a country prosperous: economic freedom and rule of law. Now you know rule of law is important: that means that your personal property, your personal self is protected. The worst places to live are the places that don’t have rule of law, they have a corrupt judiciary and nobody wants to build a factory because the dictator may take the whole factory, or your neighbor may just steal whatever you make. So you need rule of law, and Hong Kong had that, the British rulers enforced that, they kept people from robbing each other or taking each other’s stuff, and then they sat around and drank tea. Denying neglect, that’s the road to prosperity. Hong Kong: Free people then made themselves rich.  So we know what works. We could have it for the world, and yet 7 billion people on Earth, 2 billion live on a buck or two a day, only less than 1 million live anywhere near to our level of wealth because they don’t understand this process of capitalism. And yet capitalism is vilified in every university I visited and every newsroom I’ve been in.

People just don’t like business. So what’s that about? I mean somebody came up to me on the street in New York and said, “Are you John Stossel?” Yes. “I hope you die soon.” And I’m trying to figure out why they’re so angry at me. And at first I thought it’s because they consider me a conservative, because I’m the different one and where I live that’s like being a child molester. But I’m not a conservative, I’m a libertarian. I think homosexuality is just fine, I think drugs should be legal, I think sex or prostitution should be legal, I think adults should be able to do anything that’s peaceful. I’m a libertarian and yet they hate me. I would think the liberals would be okay with that, but they still hate me because I’m a consumer reporter defending business and they hate business. So why do they hate business? I’m thinking, well, maybe it’s because they go to schools where their university professors were furious that they’re slightly stupider roommates went into business and now make more than they do and their envious.

The wealth disparity in America is big, and that makes people uncomfortable. It’s a by-product of freedom: if you’re free, some people will be much richer than others; but that makes some people envious, some people hate. So I thought that was the reason people hate business, but then I thought about old Europe and the kings and queens. They were a million times richer than the average person, yet they weren’t hated, they were revered. But people hated the bourgeoisie, gave them that nasty name. They hated the very people they needed to sell them stuff to make their lives better, what’s that about. And I’ve come to think it goes back to this intuition.

Here’s what intuition tells you, here’s what reality has taught me. Intuition says that business is a zero-sum game, that if Bill Gates makes 50 billion, we have 50 billion less. And it’s like it’s this pie: he takes this big piece—we always hear about what’s your share of the pie—well he got a big piece, we must have less. But business doesn’t work that way because business is voluntary. There’s only two ways to do things in life, right? Voluntary or force. Most of life is voluntary, the best of life, but government is force, legal force, and we need some government, as I said. But the best of life is the voluntary part and that includes business, so that mean it’s not like there’s this pie and Gates takes a big hunk. He had to bake thousands of new pies to get rich. The way you get rich in a free market is to serve your customers well.

You see it in every transaction: the transaction doesn’t happen unless you both think you win. You see it in the weird double thank-you moment when you buy a cup of coffee. I mean you give her the buck, she gives you the coffee; you say thank you, thank you. Why do you both say thank you? Because you both win, I wanted the coffee more than I wanted the buck; she wanted the buck more than she wanted the coffee, otherwise it wouldn’t have gone down. That’s why free markets create wealth: we all have to win or it doesn’t happen. It’s not a perfect system: there will always be cheating, there will be Enrons and Bernie Madoffs. But in a 15 to 16 trillion dollar economy, it’s pretty impressive how rare that it. It’s rare because you win by serving your customers well. But people don’t get that. Economic freedom creates prosperity. Now economists focus on the prosperous part of that statement, but the freedom part is just as important.

My objections to bloated government are not just because it makes us poor, it’s a moral objection. When government takes away our choices, takes away our control over our own lives, it makes us less. Government crowds out good things, it cuts the tendrils of civil society, sucks the life out of people. That’s why when politicians say, “yes we can,” I want people to go to state capitals and hold up this sign. That’s my dream: the new Tea Party will be doing that.

Now Friedrich Hayek said that a curious task of economics is to teach men how little they know about what they imagine they can design. I’m still looking forward to saying that to Bill O’Reilly. My job here is to teach you how little you know about what you imagine you can design. I will do that someday. Still, saying that government can’t solve problems is not saying we can’t. We as individuals and groups of individuals accomplish all kinds of miracles, yet we don’t really pay attention to it, but clubs, community groups, groups like this like the Independent Institute, families working towards common goals do wonderful things, greedy profit-seeking businesses do it, too. I mean they’ve given us Lipitor, robotic limbs, hip replacements, computers, iPhones, flush toilets, air conditioning. We don’t even think about it, we just use it, we don’t think where we got it. Poor people now have access to food, entertainment, shelter, travel, information, life spans that exceed what kings had a century ago, but we don’t think about where it came from. We just go to the supermarket and take it for granted that they have 30,000 on average products on the shelves, and they’re unbelievable cheap, and they’re open all the time, and the aisles are nice and well lit and pleasant, and they rarely poison us.

At the beginning of the Obamacare discussion the Detroit Medical Center proudly announced, “We’re going to use barcodes to keep track of patient records, we’re the first big medical center in the country, yeah aren’t we great.” And it was good that they did, but supermarkets did it for Coke and candy 30 years ago. Why so late for healthcare? Because governments poisoned healthcare with tax deductions for employer-paid health insurance and stuff like that.

We take it for granted that we can go to a foreign country, stick a piece of plastic in the wall and cash will come out, and then we can give the same piece of plastic to a total stranger and he’ll rent you a car for a week, and when you get home to California they’ll have the accounting (Visa or MasterCard) correct to the penny, and if they don’t, you get mad and complain. Government can’t even count the votes accurately, and yet they want government to run healthcare. Government fails, but individuals succeed. Thank you for fighting for that freedom that made America possible. Thanks very much.

David Theroux

Thank you, John. And we have time for questions. Do you just want to field the questions yourself?

John Stossel

Sure.

David Theroux

Okay, great.

John Stossel

Questions or criticisms or pushback or suggestions? Yes ma’am, and why don’t you say who you are so your neighbors can get to know you.

Getie

My name is Getie, and I live in Nevada. I would like to ask you if you would change your Libertarian status to Republican and run with Romney, Mitt Romney, as Vice President?

John Stossel

No.

Larry

My name is Larry. I’m from Danville, and I just brought my wife home from getting a hip replacement today, and you reminded me of what happened to us. We asked a lot of people, where’s the best hip surgeon in the world? And they said in Fremont. We went there and had a fabulous experience. On the way out we saw that a national survey had given this orthopedic surgeon number one status for three years in a row. So people find the best on their own.

John Stossel

People figure it out, yeah you wouldn’t have to do it on the way to the hospital, just reputation determines that. Why don’t you just give the mike to whoever you want to give the mike to who has a hand up, there’s a guy in the back there.

Joel

I’m Joel from San Francisco. John, a personal question if I might? A member of my family is a speech pathologist and they wanted me to ask you how you overcame your stuttering.

John Stossel

I am a stutterer. Obviously I’ve largely overcome it. I still have trouble sometimes. After failed attempts, I found a place called the Provision Fluency Shaping [Program] in Hollins, Virginia. It’s really boring: you have to be really motivated to do it. Over three weeks they slow us down and re-teach us how to make each sound, so they slow us down to two seconds per syllable. That was a half second per syllable; two seconds is really long. But I was motivated because I was on television, and I was going to give up my job because I was blocking and scared every morning. So I was very thankful that I found help there. This really worked for me, I was going to put this on TV and tell all the stutterers you’re being ripped off if you do something else. And I did refer lots of people to this place, and some were not helped; so we’re all different. Now David just gave me some printed questions, what they’re streaming? How does this work?

David Theroux

The streaming questions come in.

John Stossel

How do they come in?

David Theroux

They’re watching on TV.

John Stossel

They’re watching on TV, and they type, and they send this, and you print it. Wow, isn’t that cool? Jenna of Manhattan. Oh, they’re in Manhattan, too, I guess they have TV there. “What tools can we use in order to officially promote the message of liberty?” I think there’s one thing that’s now the best way to do that, of all the things I can think of, and that’s to buy everyone you know a copy of No They Can’t. And if we get it in the bestseller list with Rachel Maddow’s book, they discounted more people than will hear the ideas.

Participant

John, there are many things that all of us would like to see, but many of those things can’t be done or won’t be done. If you add to list your top few things you’d like to see happen that could happen or would happen soon, what would you recommend?

John Stossel

Eliminate a bunch of cabinet agencies like the ones that the Texas Governor couldn’t remember. I mean he said the EPA; I think we need a limited EPA. But Commerce? Commerce happens without a department. Interior—we don’t need that. Labor—people work without a Labor Department. Education—that’s a local responsibility, and so on. Legalize drugs and stop adding new rules. Just stop all regulation, or before you pass a new one you have to repeal ten old ones. Those would be my first steps.

David Theroux

“Mr. Stossel, I like your example of the car. We all have perfect information; we can buy the right car based on the information. But don’t we need government to make sure that people are accurately reporting their information, like the FCC, to make sure that people routinely and uniformly produce the right financial statements so we know who to invest in” Who’s going to incentivize people to do that?”

John Stossel

The market. The FCC, I would argue, makes it worse because the FCC gives you the illusion of protection. You think you’re safe, and then some people give all their money to Bernie Madoff. Remember, after Enron we got Sarbanes-Oxley—that was going to make us all safe. And now we have Dodd-Frank, and that’s supposed to make us all safe. But all it does is enrich lawyers, and now all these companies have compliance departments. I’ve never heard this word until the last few years— compliance—that’s just disgusting. That means they’re not creating anything, they’re just trying to game the system or understand the system. The free market would take care of that. And we should assume there will be cheaters, and you protect yourself. Or if you weren’t relying on government, there would be private groups who issue stock advisories, and we would trust this one or not that one, far better than just assuming the government protects us.

While the mike goes to someone I’ll do another from the magic of the Internet. I don’t like that one. “To understand the argument one must understand the opponent.” This is from Chris of Belmont, West Virginia: “Why are we living in a society that believes that government is the answer?” Well, I mean I’m waiting for a counterargument, but I think for normal people, not you—this is just intuitive, people have lives, they don’t pay attention, they want a mommy leader to guide them and they really thought they had one here. Some still think they have one there. Whoever has the mike?

Participant

A few minutes ago earlier in your talk you spoke about how young people don’t seem to vote, and of course from my take a lot of young people seem to be turning on to the ideas of liberty through Ron Paul. I’ve seen numbers at his rallies that don’t even seem to come close to what the Republican frontrunner is running, and yet it doesn’t seem to translate into poll numbers. So I think like there’s an opening there for an investigative journalist like yourself to maybe get some more answers, because I’m not honestly figuring it out and just saying that they don’t vote, there’s some disconnect here that I’m just not understanding, and I was wondering if you could explore that a little more just briefly.

John Stossel

Well I love it that Ron Paul is getting 12 percent in the polls and in the vote, and he’s really introducing people to the idea of liberty. And he’s had, he told me 7,000 people showing up here in California at some rally I think at UCLA. But maybe they’re intensely passionate, but the majority of people are voting for somebody else. And when I say young people don’t vote, I’m just looking at the statistics of lower percentage of young people vote. More older people vote, and frankly I’m okay with that because most young people are clueless and don’t know anything, I don’t want them to vote. I’m just pointing out that we Medicare recipients are taking all your money.

Participant

John, I know that your brother is a physician and he’s been worked under Medicare since the beginning, when it first came out, through now. And I’m sure you’ve had discussions with him about government-run healthcare. What does he think the best way to do— and what does he thinks going to happen if Obamacare is overturned?

John Stossel

My brother is a physician. He’s my smarter older brother. He’s actually more of a scientist. He didn’t get interested in politics until recently. I think I radicalized him a bit. It’s funny: his son is a lefty and the editor of The Atlantic, Scott Stossel. But Tom Stossel, my brother, is now reading Adam Smith—in the bathroom. He’s newly radicalized. But being a Harvard scientist he is so narrowly focused. He’s not a retail physician—he barely knows what Obamacare is. He’s obsessed with all the rules now that say researchers are not supposed to cooperate with industry, and he alone among scientists is the one pushing back all these conflict-of-interest rules. And he talks about it to the point that even I, the libertarian, get sick of hearing him complain about these things. But it is a real problem. He’s looking for allies in this. He’s started an institute to fight all the compliance nonsense that’s slowing progress in research. So if you want to help him, contact him. Tom Stossel.

David Theroux

Here’s a question from next door.

John Stossel

A question from next door? Oh, the overflow room. “You jokingly said supermarkets rarely poison us. But seriously most of the cheap foods out there are loaded with toxic pesticides and GMOs (genetically modified organisms). Most people are unaware of this, and the free market does not seem to be doing anything. How many millions have to die first?”

Well, I’m glad you’re in the other room. Let’s break down these points one by one. All right, most of the cheap foods out there are loaded with pesticides and GMOs. GMOs first. That’s genetically modified organisms. What do you think cross-breeding is, except a slower version of genetic modification. Do you think a French poodle is natural? Pesticides, he says, “toxic pesticides.” Well, they’re toxic to the pests and lots of chemicals are toxic to people. At these small doses they are utterly harmless. Farmers are exposed to a million times more of them than we are, and farmers live longer than average. And we’ve been eating many more of these toxic pesticides and GMOs and chemicals in the past 10 years, and what’s the result? We’re living longer than ever. Most people are unaware of this, how? Hysterics like you, this is unsigned, are telling everybody, and the idiot media is constantly screaming about phony threats like this. The free market does not seem to be doing anything about this? Good.

The other point is, I joked about people being poisoned. People think it’s government that keeps us from being poisoned by food, and government has a huge, expensive FDA and Department of Agriculture safety regulation for food, and it probably helps a little, but it is primitive. Like all government agencies, it doesn’t change, it doesn’t innovate over time. So at every chicken plant a union inspector looks at every bird as it goes down on the line, looking for visible signs of too much fecal matter. In an age of microbiological testing, this is what they still do. But fortunately, much more important than food regulation, safety regulation, is the reputation of the company. In a free market they all know if they poison people they are toast. If McDonalds has a bad outbreak they lose zillions of dollars. So every food company puts much more effort into maintaining the safety of its food. I mean if they find a tiny bit of bacteria, they shut the whole thing down, they clean it with steaming water, they have all these specialized—. I have a chapter in the book about that. They do much more than government because of reputation, and companies selfishly worry about their reputation. This protects us better than the central planners ever will.

Participant

Mr. Stossel, back here a question. Typically a country’s environmental response is predicated on the amount of disposable income available for such things, and as we’ve seen over the last several decades, ever since the first Earth Day the government has allocated more and more to the environmental movement. What impact do you think that movement has had on the free market and why?

John Stossel

It crimps the free market, of course, every time somebody has to focus on an environmental rule rather than producing more of their project or charging less for it; we’re a little poorer. But I say, thank God for the EPA. When I was young you couldn’t open your window in New York City because soot would come in. They’ve gotten rid of—. Look, a lot of us libertarians say the Constitution is all we need. I would go further than that because the Constitution said black people were 3/5 of a person; we amended that. The Constitution has nothing about these pollution rules and Hayek said a small safety net is a reasonable thing for government to do. But I’m really glad we have an EPA. Pure libertarians say the tort system could handle it, it’s your private property, your air, your water. But given our slow judicial system I think that would be impractical. So good for the EPA for getting rid of a particulate matter in the air, good for the EPA for requiring sewage treatment plants so I can swim in the Hudson River as I do. But enough, already. Let’s stick a fork in it and say it’s done. All right, that’s a joke; it’s not done, but it’s largely done. Now you get to diminishing returns.

They did all the big progress, and they keep getting bigger and doing more. They’re going to make the air so pristine that we’re broke—and that’s what the bureaucrats do. If they’re a bureaucrat at the EPA they feel they’re not doing their job unless they’re passing more rules. Plus the kind of people who want to be an EPA bureaucrat tend to be environmental zealots. So they were wonderful, and now they’re a threat to freedom and prosperity.

David handed me from Rob, whoever he is: “How did you land your gig at Fox Business. Did they reach out to you?” Sadly, no. I was at ABC for 28 years, and people would say, “Why don’t you go to Fox? They’d be a more sympathetic audience, you’ll be more comfortable.” And I would always answer, “I don’t want to preach to the converted, I want to talk to people who haven’t heard these ideas before, who don’t know about free markets.” And I had a big audience at ABC. My first specials were watched by 15 million people. These are American Idol numbers. That was largely because our silly government had limited the number of channels. We didn’t have a lot of choices. But finally that broke and we had many more choices. And now 20/20 reaches 5 million people, and Bill O’Reilly with repeats reaches 5 million people. And always my career at ABC—these stories were a fight: people would say, “You really should soften that. This can’t be—how can you say rent control hurts poor people?” Because these lawyers and liberal producers just had no clue about these ideas, and I fought them for 28 years, and then finally I had enough.

It also got worse at the end. I had done a show on healthcare—government healthcare—after Michael Moore came out with his movie Sicko, where he said Cuba was great. And we went to Canada and found some great healthcare: places that had cutting-edge medicine, you got treated right away, you had to meow or bark to get that kind of treatment, because healthcare was still private. But it was a good show, and then Obamacare happened and I said, “Let’s update this show. Obamacare is the issue of the day.” “Oh no, we’re not interested. You’re predictable. Your libertarian stuff is predictable.”

Likewise, I did a show called “Stupid in America” about education choice. I was worried that it wouldn’t get good ratings because kids sitting in a classroom isn’t sexy, like what they cover, but it got great ratings. So five years later now there was an education-choice movement, there were charter schools, stuff was happening, even Al Gore’s producer made that movie—what’s it called? Waiting for Superman—which really said pretty much the same thing I said. So I said let’s update this, cover this. Nah, you know, Michael Jackson died, we have to cover that. We have to interview his sister this week. How about this week? No, Michael Jackson’s still dead; we have to report of it. So I went to Fox and begged them to hire me, and fortunately they did. And at Fox Business Network half of you don’t even get the network, so it’s a smaller audience. But this charity, Stossel in the Classroom, now is in enough classrooms that more people watch me in high schools than watch 20/20. So the heck with 20/20. 20/20 just covers crime and kidnappings of pretty blonde people. Yes?

Participant

Hi, John. I mentioned before, I’m a high school teacher who has enjoyed using “Stupid in America” in my classroom for about 10 years, and I get a kick out of showing it. I wish I had time in my curriculum to show more of your DVDs. I show about two. But when you look at your old programs—I’m thinking about Chavez and Oakland Unified or that Governor of South Carolina—are there any guests that in hindsight make you wince say, “Oh, I wish I hadn’t used this support or I wish I hadn’t use this expert in my program?”

John Stossel

I don’t get the point, what did Chavez do that I should know about?

Participant

Well, Chavez has kind of had a checkered past since then. Now maybe this is because of Oakland Unified more than Chavez, but he was asked to leave. And now there’s a big ethics thing about how money was spent in Ben Chavez’s schools and he’s had to appear in court about that. Heads are going to roll about the money and him writing checks to himself and his own companies. So it’s that type of case, maybe it’s more of a local story than I thought. He’s down I think in Arizona now.

John Stossel

Yeah, apparently.

David Theroux

He’s down in Arizona, but he’s had to come back and testify and what not.

John Stossel

Well they persecuted him because he was successful. Maybe they persecuted him because he exposed the blob, the education establishment, for the horrible people they were who were hurting children, and maybe this is just a witch-hunt, I don’t know. But thank you for pointing this out, I will investigate that. And you know the fact that Mark Sanford claimed he was on the Appalachian Trail and he was having an affair in Argentina, that doesn’t discredit his school choice idea. We always worry when we’re interviewing people that this is something who we’re relying on—this person—and for this part of the story is something going to come out, we try to check them out. But I can’t think of anybody I’ve regretted. And by and large the ideas that stand for themselves. And the results of Ben Chavez’s schools—they went from the worst schools with the most so called underprivileged kids to the highest performing in California, so regardless of what he’s accused of doing with checks, he got results and he’s a great talker on TV.

Steven

Hello my name Steven, and I was thinking about things I would like to ask you if I had a chance to talk to you personally. Since I didn’t I thought I would raise my hand for the mike. And after one hundred thank-you’s, I wanted to ask the question: would you consider doing something like Milton Friedman did for PBS with his “Freedom of Choice”?

John Stossel

“Free to Choose.”

Steven

“Free to Choose.” If he was able to get to PBS, which I kind of find surprising, and you’d be considered sort of exotic, I would think, in that environment, and they would probably be happy to entertain. And I don’t mean that in a negative since, no I mean they really would listen. I heard from him, what, 30 years ago now, and now I hear from you, and I mean that with all due respect.

John Stossel

I think David’s derisive laughter is the better answer of that. I would, too, think that they would welcome these ideas and want to argue with me perhaps, but they are close-minded—I mean, NPR radio. I’m an author now—I’ve had two bestselling books and this one, which I hope will be a bestseller—and all of us authors most want to get on those NPR shows because they don’t scream, they have a reasonable discussion, they go on longer, they sell books. They interview every wacko left-wing author all the time, so you’d think they’d put me on; they never have. I got on the local one in Utah and she even attacked me. She said, “John Stossel, an unabashed libertarian who blah blah blah.” I mean she talked about the stuttering, a nice long interview and she finally said, “So do you really consider yourself a reporter? Isn’t it wrong that you have a point of view?” And I said, “Well I think you have a point of view.” “No I don’t.” “Well you called me an unabashed libertarian; I bet you would never call anyone an unabashed democrat.” “Oh I would use the same...” “I’ll bet you money that you would never...” and then the interview turned bad a little bit after that. But these national NPR shows: “All Things Considered” and the woman who—Terry Gross—we ask to get on and you’d think they’d want to argue with me or just, if it’s a bestseller, at least, say here are these ideas. They won’t have me on. So Bob Chitester got “Free to Choose” on PBS. He ran a PBS station before that, and maybe that’s why, and maybe they didn’t realize how threatening Milton Friedman was, I don’t know. It was great that he got to do that. I would love to get on NPR and PBS, but I can’t.

Denise

John. Denise, Walnut Creek. You talk about the EPA being sort of good. You mentioned other departments. Why aren’t you saying privatize? I’m looking at the FDA versus Underwriters Laboratory, which actually makes us safer but which we don’t think about day to day.

John Stossel

Well, the EPA—I don’t see how you can effectively privatize pollution control for the whole country. The FDA, I absolutely agree with you. I mean people rely on the FDA. Their mandate is make sure the drugs are safe and effective, and if there’s any death then somebody’s head is going to roll. So this means that they’re very scared about approving new things. Their first big success was Thalidomide, it was this drug that some woman took during pregnancy. They gave birth to kids with no arms and no legs. And it wasn’t that they were so cleaver that they detected the problem with Thalidomide; they were just so slow that by the time it was nearing the end of the approval process, the bad effects were being seen in Europe and Australia. So they saved us from Thalidomide—hurray and I’m glad they did—but is it worth it? Now I have to say no. I agree with you, because since then they grew like all bureaucracies.

Now to get a new drug approved it takes 10 years and costs about a billion dollars. So a few years back they said they were approving a new beta blocker. This new heart drug, they announced at the press conference, this new heart drug will save 14,000 American lives a year. And that was great, except nobody at the press conference stood up to say, hey great, but didn’t that also mean you killed 14,000 people last year and the year before and the year before? No reporter asked that because reporters don’t think that way. But it did mean that. Think about it, a 10-year-approval process. Right now in this 10-year pipeline there are fat substitutes that would let you eat all the chocolate cake you want and not get fat. We want to make sure, intuitively—let’s make sure there’s no carcinogen in there, let’s make sure that it’s safe and effective and that’s our instinct. Except thousands of Americans die because they’re too fat. They would be saved now, don’t they count? No not really, not in the bureaucrat’s eyes, because if you approve something that saves somebody’s life, nobody knows. If he approves something that hurts somebody, he’s in trouble. The media makes it worse because we can take a picture of the Thalidomide baby. We did we put him on the cover of Life magazine, Time magazine. But I don’t know; I can’t take a picture of who’s life might be saved by the new drugs. I don’t know who it is. It could be somebody here. So the bias is against approving things. Now most people, unlike you and your wisdom, say, well no FDA, it’s just the snake-oil sellers who would poison us. But that’s not true, because the private sector would step in and do the job better, faster, more cheaply, groups like Underwriters Laboratories or Consumer Reports, or who?

Participant

—a private drug-testing laboratory.

John Stossel

Or a private drug-testing laboratory that I never heard of. But there would be all kinds of things that would appear and would do the job better. But above all, in a free society—I mean, I think it’s pretty amazing that in America we are not allowed to put in our—if you’re dying, you’re not allowed to try something, it’s forbidden. It ought to be our choice. And those of us who are cautious might only take those FDA approved drugs, but if you were terminal you could experiment without having to break America’s laws and import something illegally from Europe or sneak into Mexico, and we’d learn from that experimentation. But above all it ought to be about freedom. And Patrick Henry didn’t say, “Give me absolute safety or give me death.” It’s about freedom, and we’ve become very wimpy about that.

Participant

One from the streamer.

John Stossel

From the streamer, okay. Marcus of Temecula, California, via YouTube. Man this is cool. “Being here from California we obviously find an abundance of philosophical opposition.” What? You’re saying that people are stupid in California, Marcus? “What’s your opinion of the best argument on behalf of private institutions versus public institutions when discussing it with our peers?” Hmm. Private versus public. Well it’s true people like public. Public is nice and for everybody, and private is selfish. But think about schools and supermarkets. Public schools—I think we should call them government schools: what’s public about them? Can you go into your kid’s school anytime you want? No, they might arrest you. But the private supermarket is open all the time. I’m on the Board of Central Park. It’s a public park, but now it’s a private charity that maintains it. It was awful, now it’s good. You think public is good? Think public toilets. Does that convey a good image? Those are my best arguments.

Participant

Hi. I come from a little country called Israel. And in Israel we did change the system, the economic system from a union-run country to a much more capitalistic one, and the Israel economy is doing really well. And my question to you: do you think the size of the country has anything to do with it? Hong Kong is doing well, but it’s a very small place, unlike the United States.

John Stossel

No, I think it’s one of those areas where size doesn’t matter. Once you get past 300 people I think you have either a free society or not. And if you’re a big country or a small country, in terms of economic growth it doesn’t matter. I mean, I don’t really agree with you about Israel. Israel has a big boom in tech because tech wasn’t regulated to death, but the whole attitude of Israel is sort of socialistic. There’s an economist there whose name is eluding me, who’s really fighting against this, and nobody will pay any attention to him. I mean they have all kinds of cartels in Israel and rules and welfare states; and Israel’s a mess, but it’s got educated Jews so they overcome it, but it’s still got lots of socialism there.

Participant

It used to be worse there.

John Stossel

It used to be worse, okay.

George Zimmer

John, Hi. I’m George Zimmer, and I’m a capitalist and I have enjoyed listening to your talk but--

John Stossel

Are you a radio host? Listen to that voice.

George Zimmer

So my question concerns—. By the way I applaud your support of the EPA, but here’s the question. I’m trying to ask, in a capitalist society how do we make sure that companies, in this case I’m going to talk about fracking for oil. How do we know that oil companies in order to make larger profits are not endangering us with this process? And it ties back to that pipeline that has been discussed.

John Stossel

Well that’s two different [issues]: the pipeline and fracking. Fracking is hydraulic fracturing, which is why we don’t have an energy crisis in America, because by doing this they discovered vast new fields of oil and natural gas, and that’s wonderful for us. It is a chemical-laden process. It involves exploding the rock and it’s creepy. And there’s this movie Gasland, which shows somebody lighting his faucet. That get’s your attention. Now it turns out that the government investigated that guy’s faucet, and it was natural leakage in his well. There’s lots of methane, and if you got a poorly sealed well, that stuff happens. Fracking could cause it, and that’s a reason there should be some environmental rules about this. But we’ve had lots of fracking. The fracking is done below the water table. I think most of its safe. But there’s now a public outcry. This is the good political balance. Some people will scream. The government will get involved, and I hope there’s a reasonable balance that allows fracking to continue. And it is important that they do it properly and that they seal the pipe that they put down.

The other point you mentioned was the pipeline. I mean this one is ridiculous. The news programs show this pipeline going through pristine Nebraska; it might leak and poison everything. But why don’t they put up that other picture, which shows how there are already a million pipelines going through Nebraska and thank God because that’s how we get our fuel? And this would just be one more, but it’s the new political hysteria over this Keystone Pipeline that prevents us from getting oil and natural gas from Canada. Now they’re going to ship it to China, and we’ll pay more.

One more question, last person who wants the microphone. “What is your position on completely open immigration?” says Jackson. I’m for completely open immigration, but as Milton Friedman says you can’t have open immigration and a welfare state, because then people will come here to freeload. I would add now as something since he said that: you can’t have open immigration when there are religious fanatics that want to murder us. So we ought to have work permits to let people in so they don’t sneak in; and more open borders. And people who want to hire people—there shouldn’t be limits on these visas: we should let more people in; immigrants built America. But we do need more controls and limits. Please, you know Father’s Day, Mother’s Day coming up. Get me on the list so we can discount this book. Thank you very much.

David Theroux

There is one heck of a lot that this book covers. It’s everything from topics like immigration to food safety to war to you name it. So I really hope you get a copy. It’s a great read, it’s witty, it’s a great book. I want to thank John Stossel for coming and joining with us and for his work. And I want to thank all of you for coming and making our event this evening so successful. For those of you who have not gotten a copy of his book, there are copies right next door and he would be delighted to autograph copies. Please join with us in the future, our website is Independent.org and thank you and good night.



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