May 2006

Myths, Lies, and Downright Stupidity

Daily horror stories in the media about unfit doctors, unhealthy foods, dangerous chemicals, soaring gas prices, and incompetent child care have created a culture of fear. But is that fear well-founded? In his new book Myths, Lies, and Downright Stupidity (Hyperion, May 2006), John Stossel tackles the misconceptions, misrepresentations, and plain inanity that plague our society. Does outsourcing hurt U.S. workers? Can price gouging actually be good for consumers? Do public schools have enough money? Are we experiencing a cancer epidemic? Addressing a range of topics--including education, organic food, the government, and gender-bias in the workplace--Mr. Stossel explains why conventional economic, political, and social wisdom are often wrong. Mr. Stossel debunked popular myths about the roles of law, genetics, and environmental activism in today’s world, at a May 23 AEI book forum.

John Stossel
Author of Myths, Lies, and Downright Stupidity: Get Out the Shovel--Why Everything You Know Is Wrong

John Stossel, who is an avid supporter of free markets and the power of individuals to improve his own situation by taking responsibility, discussed the power of the marketplace in achieving what is now done through regulation, without many of the harmful side effects of government intervention. As a thought experiment, he discussed the FDA and what could potentially happen if it were removed. Would the market be flooded with unsafe products? No, argues Mr. Stossel, because the market effectively disseminates information about products if they are harmful; the FDA instead keeps potentially beneficial products away from the consumers longer than it needs to. The essence of his argument was that while government protects the consumers from harmful products, it also keeps the good ones away longer than needed. Instead, it would be possible to have private organizations that put a stamp of approval on products, or simply let manufacturers put the FDA stamp on their product if they passed its inspections, and then let consumers decide if they want the product or not.

The second layer of protection that Mr. Stossel criticized in his presentation was the American legal system. Trial lawyers make millions by suing companies, and not much good has come of this. Innovative individuals are discouraged from inventing, health care professionals perform useless and costly procedures in order to protect themselves against malpractice suits, and the victims are not even compensated, as research has shown that approximately 70 percent of the damages that are awarded are paid in legal fees. Again, the benefit of the system - the deterrence of potentially harmful products -can be achieved through the market without incurring the costs of the current system.

Mr. Stossel also argued that the media is responsible for creating many of the myths that lead consumers to desire these systems of protection by over-reporting about the events that are the most dramatic, but not the most dangerous. This has led to a culture of fear of things such as terrorist strikes and plane crashes--relatively rare events, when people should be more concerned over the dangers of driving, smoking, and poverty, which kill thousands of Americans per year. Mr. Stossel concluded with the remark that the true heroes in America are the innovative entrepreneurs who bring us better, safer products -not the regulators and lawyers that hinder them from doing so.

John Entine
AEI

John Entine discussed the public perception of organic and genetically modified foods. Much of the public perceives organic foods as safer, while genetically modified foods are seen as unsafe. This is the due to the campaigning by environmentalist groups, who often base their assertions on poorly conducted science. Instead, much research has shown that there are several environmental benefits to genetically modified foods, such as a reduction in the amount of pesticide that is used, while there is no research that shows that there is any risk to humans or animals in using genetically modified organisms. The environmentalists often counter with the precautionary principle, claiming that genetically modified organisms should only be introduced when they are sure to be free of risks. However, Mr. Entine notes that the “no risk” principle would keep much of the organic food that is advocated by environmentalists off the shelf as well.

There are many unintended consequences of the fear and excessive regulation of genetically modified crops. One of the most devastating examples is that of Zambia, which refused to accept genetically modified crops that could have helped prevent a famine that killed 10 million people, in order to appease the European Union.

Ted Frank
AEI

Ted Frank used the case of Vioxx to highlight many of the deficiencies in the American tort system. Many of the trials that have awarded damages to claimants have done so on the basis of questionable court proceedings. In four out of seven cases where claimants were awarded damages, it was doubtful if they had even taken Vioxx. One of the main reasons, he argued, that these weak cases make it to the court in the first place, is that there is no cost in going to court, as the loser does not pay the winners legal expenses.

Asbestos is another case that illustrates the flaws in the system. Around 80 percent of those that sued for millions due to personal injuries caused by asbestos had suffered no real injury. The fear of asbestos and the resulting lawsuits drove all of the original manufacturers into bankruptcy, costing the American economy thousands of jobs, based on what many have claimed is junk science. Tort reform is urgent and long overdue, as it is costing the American economy far more than anyone could have imagined when the system was instituted.

Kenneth P. Green
AEI

Ken Green dedicated his time on the panel to debunking a few popular myths in the field of environmental policy. First up was the idea that we are facing an imminent environmental crisis. Studies on global warming that come to these predictions are based on computer models that are full of erroneous and dubious assumptions about the planet’s future economic development and its impact on the environment, which leads them to conclude that the planet will be heating up at an alarming rate. These models are not based on actual data, but rather on manipulations of evidence, rendering these results at best open to debate.

The second myth Mr. Green debunked regarded the chemical Phthtalates, which is used to make plastic flexible. Environmentalists have tried to ban this chemical for over a decade based on studies performed on animals that were fed amounts of the chemical that are nowhere near what any human would ever ingest.

Mr. Green then proceeded to discuss the myth that commonly used pesticides are poisonous and responsible for making children sick. Again, the basis for this assertion is tests where the ingested amounts exceed any conceivable human intake

This myth is closely related to another popular misconception that was debunked by Mr. Green: that economic growth damages the environment. It is true that, initially, societies pollute more in the beginning stages of their economic development. However, studies have shown that when people become wealthier, they can afford to think about the environment by, for example, donating to organizations that protect it, or by purchasing environmentally-friendly products.

AEI research intern Victor Snellman prepared this report.