March 2000 Laissez-Faire TV ABC's John Stossel is a man on a mission: to teach Americans about the evils of government regulation and the rewards of free enterprise.

By Ted Rose Read Stossel in Court For a big-shot television news star, John Stossel has a lousy office. Sure, he gets to look down on Columbus Avenue from his room inside ABC News headquarters in New York, but that's about it. The eighth-ffloor office has no plush carpeting and none of the cushy furniture you'd expect a television news luminary to have, just a dirty old couch and a couple of stiff office chairs. Instead of a silver bowl cradling sweets, there is a plastic bag of jelly beans -- a hole torn across the side -- lying across his beat-up metal desk. His Emmys are carelessly crowded onto a tiny shelf far above eye level. It's the real estate Stossel occupies on ABC's schedule that commands attention. He is a regular contributor to 20/20, the ABC newsmagazine, and he's the only correspondent in the show's history to get his own weekly segment. But that's just part-time work. Stossel also produces four one-hour prime-time specials each year on any topics he chooses. To help produce those specials, Stossel has his own production unit, a staff of ten producers and assistants working full time to get his stories ready for airing. On average, 9 million viewers watched each time he took to the airwaves last year. What's more, his contract stipulates that each special be repeated. Stossel is well known for diving into complicated, esoteric debates and coming back with well-polished stories that deliver good ratings. He has used his platform to ponder why teenagers act the way they do, whether love can survive marriage, and the power of belief in our society. But he is best known for his reports on the subject of government regulation. Once a consumer reporter who rallied against corporations, Stossel has become a friend of big business. He has suggested shrinking the Environmental Protection Agency and boarding up the Food and Drug Administration. His anti-regulation advocacy has made him a hero in the libertarian ranks. "I think one John Stossel segment taking a skeptical look at government is worth a million dollars to the movement," says Stephen Moore, director of fiscal policy at The Cato Institute, a libertarian think tank. But this free-market slant has also made him one of the most controversial reporters on television. Stossel is enemy No. 1 to Jeff Cohen, who runs the liberal group Fairness & Accuracy In Reporting (FAIR) and has been a Brill's Content columnist (see "Face-Off," page 54). "He's clearly one of the most openly and proudly biased reporters in the business," says Cohen. Stossel's detractors denounce him as a sloppy, close-minded reporter; they credit his rise to the corporate dominance of today's media world. His supporters say that Stossel is a smart, thoughtful contrarian, a journalist who follows his nose for news and pushes viewers to think for themselves. "So which is it?" a Stossel television treatment might ask: "Is John Stossel a hero or a villain?" As is often the case, the answer is more complicated than television news makes it out to be. It's just after noon on a Saturday in early December at the Washington, D.C., Renaissance Hotel. John Stossel is in the main ballroom, eating stuffed chicken with the bigwigs from the American Legislative Exchange Council, one of the largest groups of state legislators in the country. The group is officially nonpartisan, but that declaration doesn't fool anybody. The crowd is overwhelmingly conservative-Republican, and The Heritage Foundation, the conservative think tank, is hawking pamphlets outside the ballroom. Stossel used to collect Emmy awards regularly for his consumer reporting, but these days he's more likely to be honored, as he will be today, with a journalism award from a conservative political group. The attention seems to make Stossel slightly uncomfortable. He's much more reserved and shy in person than his on-air persona might suggest. He has asked his presenter not to include the Emmys in his introduction, but the presenter does so anyway. On cue, Stossel rises to accept the trophy and a healthy round of applause, and to tell the group of legislators about his former life as a consumer reporter. "Every night, I would go on TV and talk about a company doing something bad to somebody," Stossel says. "I think I approached life the way most young reporters still do, which is that consumers are preyed upon by [businesses]." Stossel didn't plan on becoming a reporter. He never expressed any interest in the trade during his childhood in suburban Chicago, nor during his undergraduate years at Princeton University. (He served on the college newspaper at Princeton, but as a business manager.) At the end of his senior year, in 1969, he had already received an acceptance from a graduate school in Chicago when he was wooed by a recruiter from King Broadcasting who was trolling the Princeton campus for young talent. The adage is that all you need to get on television is good looks and smooth talk, but Stossel didn't even have those. He had the looks -- his puppy dog eyes and bushy mustache make him look like Tom Selleck -- but his stuttering was so pronounced that it secured him a draft deferment from the Vietnam War. He started as an off-camera researcher in Portland, Oregon, working for KGW, an NBC affiliate. "I found it dull compared to Princeton," says Stossel. "In Oregon, I kept offending people with my sarcastic sense of humor because people in the West would take me seriously." In Portland, he made his minor league debut. He stuttered sometimes on air, but learned to avoid it by recognizing words that would trip him up. (The word dollar, in particular, haunted the consumer reporter.) After four years, he accepted an offer to work in New York City at WCBS, a prestigious station in the largest market in the country. In those days, local television news produced longer, more thoughtful pieces, and Stossel quickly established himself as a talented long-form storyteller. "He was clearly bright beyond his years," says Eric Ober, who hired Stossel in 1973 and went on to become president of CBS News. When he was the in-house consumer reporter, Stossel says, his goal was one scam every day. He reported on bogus claims by aspirin companies, uncovered price-fixing by milk suppliers, and caught a group of census workers filling out the forms over coffee at McDonald's. Popular with viewers and in the newsroom, Stossel made the move to the big leagues when he was hired by ABC News, in 1981. For more than a decade, he continued his consumer crusade on a national scale. Then stossel decided he would shift the focus of his reporting. Back in his ABC office, Stossel says that he experienced no epiphany, just a growing realization that he (and all the other reporters) had been asking the wrong questions. "It took me too many years of watching regulators work before I saw the law of unintended consequences," says Stossel. Journalists and politicians tend to focus on the benefits of government action, according to Stossel, without considering the negative impact of those regulations on the free market. "The big rip-offs were what the state was doing," he says, "spending 1.8 trillion dollars on programs that often didn't work." Stossel points to a set of bar graphs tacked above his bulletin board. It is a risk-assessment chart. When Stossel first explored the issue, he assigned an assistant to develop this chart; it took her a year and a half. Stossel gestures to show how the statistical risk of the dangers trumpeted by news organizations -- airplane crashes, murders, toxic chemicals -- pale in comparison to the risk of more mundane activities, such as driving and smoking. Stossel decided he wanted to do a special on risk assessment, a decidedly unsexy topic -- and one that did not generate much interest at ABC, he says. "There was no overt ‘You can't do that.' It was just indifference," says Stossel. "[People would say] ‘Yes, that's interesting,' and nobody ever did anything." Then the free market stepped in. When Stossel's contract with ABC came up for renewal, he received overtures from both Fox News and CBS News. Stossel demanded that his next contract include a series of one-hour specials. ABC agreed. Few reporters were eager to work in the long form, and for ABC, the specials were an opportunity to promote new talent with Stossel positioned as the in-house contrarian, according to Alan Wurtzel, a senior vice president at ABC News at the time. "I just thought [his stories] were interesting," says Wurtzel. "That's all I cared about. Interesting programs that people would come to because I thought they were provocative and they could be well promoted." Stossel's first special, "Are We Scaring Ourselves to Death?" encapsulated the philosophy that has become his mantra, clarified his editorial style, and gave rise to the serious criticisms that dog him to this day. Stossel portrayed the Environmental Protection Agency as a byzantine bureaucracy that almost gleefully ignored the wishes of individuals. He lambasted journalists, including himself and ABC colleague Ted Koppel, for having unnecessarily exaggerated the risks of crime and toxic chemicals to most Americans. "We've talked about focusing on the wrong risks, the wrong regulations," said Stossel near the end of the hour. "But what if simply having so many regulations kills people?" That comment was incendiary enough to make ABC plaster a sign saying commentary just below Stossel's mouth. The program, which made a cogent case that regulations were the enemy of Americans, received strong ratings. "The most dishonest mass-media journalist I have ever encountered," says consumer crusader Ralph Nader, who was portrayed in "Are We Scaring Ourselves to Death?" as the boogeyman of excessive fear. Nader was a fan during Stossel's consumer advocate days but now talks about him as if he'd been afflicted with a mysterious disease. Nader's beef is that Stossel doesn't focus on the impact of regulations beyond their direct cost to corporations. Nader believes that many regulations produce collateral benefits that Stossel's narrow statistical analysis ignores. "His concept of cost is completely inside a corporate circle," he says. In "Are We Scaring Ourselves to Death?" for instance, Nader backs a regulation that would mandate seat belts in school buses, a change that could cost as much as $1,800 per bus to implement. Stossel reports that a risk-assessment study concluded that the cost is not worth the relatively low risk to the children. "Ralph Nader says we can afford to worry about everything," Stossel says in his piece. Nader argues that that statement distorts his point. If one includes collateral benefits that come out of regulations, such as getting children in the habit of buckling up, regulations are a bargain, Nader says. But in the special, Stossel offers only the simplistic reduction of Nader's point before moving to another topic. In Nader's mind, Stossel's distortion is no accident. "He's the great corporate exonerator," says Nader. "John is approaching [his stories] from a certain point of view that is different and fresh," explains Victor Neufeld, executive producer of 20/20 and Stossel's boss. But Stossel still works to present opposing opinions and deliver fair reports, according to Neufeld. "It's a very fine balancing act." And a very public one. Most television reporters choose to conduct their reporting -- and make their mistakes -- behind the curtain of supposed objectivity. But Stossel's ideological position robs him of that comfortable cover. Such a nonconformist as Stossel invites scrutiny (from an organization like FAIR), and scrutiny inevitably uncovers errors. And every mistake raises the nagging question Is he willing to manipulate his reporting to support his argument? Take his 1999 special "Greed," in which Stossel argues that profit-hungry capitalists end up enriching everybody in society, not just themselves. Stossel manages to pick a fight with Mother Teresa in this show. "Michael Milken made a billion and went to jail," says Stossel's announcer. "Mother Teresa died without a penny. Who did more for the world?" The statistical crux of the report is video footage of a rally on Wall Street, protesting the widening wage gap between American workers and bosses, and the fact that the compensation of bosses, including bonuses, has risen by 500 percent over the past 15 years. "Still, this doesn't mean the workers were hurt," Stossel reports. "Factory wages were up, too -- up 70 percent." The statistics are technically accurate but also terribly misleading. Neither number was adjusted for inflation -- a must for an accurate representation of real wages. Furthermore, when the statistic involving factory wages is adjusted, it tells a different story: The average wage of factory workers rose by 3 percent -- hardly a great gain. Stossel points out that he got the number from the liberal AFL-CIO and that he believes other statistics prove his point, but he admits that using unadjusted numbers was a mistake: "We shouldn't have done that." The truth is that Stossel's stories utilize a remarkably combustible mix: a sexy narrative made out of relatively unsexy material via a constricting medium. Toss in a number of producers, each with the potential to shape a story, and the results are not surprising. Last year, Stossel aired a special called "Is America # One?" His answer was yes, and the reason, he argued, was the United States's relative freedom from government intrusion. At one point Stossel compares Europe and America and argues that Europeans' social-minded labor policies -- such as extensive vacation and generous parental leave -- make the Continent lag economically behind the more laissez-faire United States. He continues: Stossel: Many economists who once argued that we could learn from Europe, like James Galbraith, have now changed their minds. Galbraith: There might be a moment for the Europeans to learn from us, rather than for us to be studying them. The problem is that Galbraith, a liberal economist at the University of Texas (and son of Harvard professor emeritus John Kenneth Galbraith), says that one brief sound bite misrepresented his views; he was making a different, almost contradictory point about how Europeans could learn from America's redistributive programs, such as Social Security. When asked about the Galbraith problem, Stossel sounds concerned but defends his work. "It was something that got put in late," he says. Still, Stossel, who says that he was given only selected clips of the interview, insists that the reporting was in context. Todd Seavey, the associate producer who conducted the interview, denies that the staff made any distortion. Stossel doesn't need to twist other peoples' positions to fit his own, explains Seavey. "For good or ill," Seavey says, "Stossel has proven he's perfectly happy to go on camera and say it himself." That willingness to speak his mind into the microphone -- and his libertarian views -- makes Stossel somewhat of an outcast in the straitlaced world of New York television news. There's no overt hostility from his colleagues, Stossel says, just some eye-rolling. "Almost no one here agrees with me about these things," he says. "People just aren't interested in it." Judging by the ratings, some people are. Stossel gets the specials and the viewers because, as Adam Smith might remind us, he is skilled at shaping and delivering his ideas -- and because his ideas are in demand. As he transforms his agenda into primetime television, Stossel may cut corners, as was revealed in 1992 when he was sued unsuccessfully -- over a story involving a dentist who had allegedly performed unneccessary procedures (see "Stossel In Court," page 82). That such a smart and talented reporter can be fallible ought to warn the buyers of television news to beware. But that warning doesn't eliminate the value of Stossel's bringing a strong point of view to the airwaves. Stossel's perspective is badly needed inside network television, according to Arnold Diaz, who followed in Stossel's professional footsteps by moving from WCBS to ABC, where he has Stossel's old job as 20/20's consumer reporter. "As journalists, we deal with government agencies so often -- they generate news. It doesn't occur to a lot of us to question it, whether it's even necessary why they're doing it," he says, adding that he doesn't always agree with his friend's conclusions. "He reflects libertarian philosophers that have come before," says Diaz. "He's certainly a worthy messenger." Stossel is always eager to share his views. In January 1995, he went to Washington to attend the first meeting of a newly formed bipartisan congressional caucus considering regulatory reform. Stossel didn't go to cover the event; he went as a featured speaker to proselytize for deregulation. "I would consider it wrong if I would write a bill or lobby for some specific bill," he was quoted in USA Today as having said at the time. "But I'm delighted to pitch the miracle of markets and the evils of regulation every chance I get." Stossel, who likes to cast himself as a learned scholar who has a responsibility to tell as many people as possible what he has learned, talks a lot. By his count, he has spoken to 27 groups over the past two years. And he has collected more than $263,000 in speaking fees for his trouble. ABC News policy says employees are allowed to speak to groups they cover or could potentially cover, but they can't accept money for it. Yet Stossel does. He says charging people is his way of thinning out invitations. In addition to conservative political organizations such as ALEC and The Federalist Society, Stossel has spoken to The Michigan Petroleum Association and to Chase Manhattan Bank. Stossel gives most of the money away to charities of his choosing, he says. Despite ABC's stated policy on speaking fees, Stossel's bosses approve his speeches on a case-by-case basis. But they don't sign off on the charities. They might be interested to learn that one of Stossel's favorites is an obscure nonprofit called the Palmer R. Chitester Fund. One of the fund's initiatives, started last year, is called "Stossel in the Classroom," which takes Stossel's specials and repackages them in a teacher-friendly educational kit. Stossel doesn't receive any monetary compensation from the effort, just the knowledge that he's helping introduce his thoughts and ideas to America's young.