National Clothesline

There was a time when John Stossel believed consumers needed lawyers, regulators and reporters to protect them from predatory businesses. That time was 30 years ago when he began his career as a consumer reporter. But his views have changed over the years. Now he sees how regulations stifle business and suffocate the economy.

Stossel, now a reporter for ABC’s 20/20, described his current views in a talk at the Neighborhood Cleaners Association TexCare exhibition last month where he was the keynote speaker.

Regulations have both direct costs and indirect costs, he said. First, there is the direct cost of dealing with them, then indirectly the loss of focus on the business because of the distraction of trying to understand and comply with the rules.

Making matters worse, many of the rules simply don’t work, he said. That’s because that while good business people are busy complying, the bad ones still get away with whatever the regulations were aimed at preventing.

“Government regulations may make us less safe,” he said. “They interfere with our freedom and there are unexpected side effects.”

As an example he cited anti-drug laws which have had a host of negative unintended consequences.

“The law creates the crime,” he said, and from that, we get more criminal activity, not just drug use but all types street crime. Honest employment suffers when youths choose to join in the more lucrative illegal drug trade. Out of that grow rich criminal gangs who create the potential for corruption of law enforcement officials.

“All this is done to protect us from ourselves,” Stossel said.

Meanwhile, another set of laws hurts the legitimate drug business. Because of Food and Drug Administration rules, Stossel said it now takes years and millions of dollars to get a new drug approved. Meanwhile, many people die who might benefit if the new drugs were available.

“Markets solve problems better than regulators,” Stossel said. The government, he said, simply doesn’t run things very well. “Private groups could do the job better, cheaper and quicker.”

But Stossel had criticism for one type of a free-market solution that isn’t working very well: trial lawyers.

“In theory it is good, but it is wrong in practice.”

The problem, he said, is that people “working on the edge of life and death,” like medical professionals, are the ones who are attacked by the lawyers. Because of the risk of lawsuits, many people are leaving the medical professions, he said.

But don’t we need the government to protect us? Yes, Stossel said, the government has a legitimate role to play in protecting citizens. But the hazards are not as great as we think because we are always scaring ourselves so much, Stossel said.

“We run from scare to scare without putting things in perspective,” he said. Stossel said he ran into resistance when, as a reporter, he refused to do a story on a particular scare-of-the-day, instead offering to do one that listed the likelihood of an individual suffering any of several causes of death so that various types of risks could be compared and evaluated.

For the NCA audience, he provided just such a chart. At the low end of the chart was flying in a commercial airliner. Next on the list was toxic waste. A person’s chance of dying in a fire or of murder ranked a little higher.

Any of those risks rank high on most people’s fear list. But Stossel said there is an everyday activity that is far more risky: driving a car.

The irony comes, he said, when people are made afraid to fly, instead using their cars to travel. They are far more likely to be killed in a car wreck than an airplane crash.

Ranked highest on Stossel’s cause of death list was poverty.

“Poor people can’t afford the things that keep people alive,” he said. “Wealthier is healthier.”

And therein lies part of his argument against regulation.

“When it takes longer to develop a business because of regulations, it kills people because the economy is depressed.”

A fear of innovation and new technology is also dragging down the economy, Stossel said.

As an example, he asked audience members if they would be willing to take a chance on a new energy source for their homes which is odorless and environmentally friendly but carries some risk of death — perhaps 200 people a year using it might die from it.

Most audience members were disinclined to take the risk — until Stossel pointed out that he was describing natural gas, which is already widely used.

“What’s happened? When did we become a nation of wimps? We’re living longer than every and much of it is due to technology that we fear so much.

“When people take risks it creates a freer, more resilient society. The real heroes aren't the ‘consumerists,” but the people who work to provide new products, better, faster and cheaper,” he said.