-Caveat Lector-
<<Jes' 'cause he's an expert don't mean he knows the facts. A<>E<>R >>
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Date sent: Thu, 11 Nov 1999 17:00:43 -0500
FAIR-L
Fairness & Accuracy in Reporting
Media analysis, critiques and news reports
FAIR Responds to ABC's John Stossel:
Stossel's New Mistakes and Evasions
November 11, 1999
On September 28, FAIR released an alert about ABC News reporter John
Stossel's one-hour news special, titled "Is America # One?." By comparing
several countries, including the U.S., India and Hong Kong, Stossel's
September 19 broadcast sought to show that laissez-faire economic policy
is "what makes a country work well for its people." FAIR found that the
program was filled with so many factual inaccuracies, Limbaughesque
distortions and unsubstantiated claims that it called into question
whether ABC News applied any sort of journalistic standards to the
broadcast.
On November 6, FAIR received a reply to its critique from John Stossel
"and some of his staff," in which they attempt to defend the accuracy of
their broadcast against FAIR's criticisms. On each point, Stossel either
changes the subject, avoids the issue, or produces new erroneous claims
(to read Stossel's response, go to
http://www.fair.org/activism/abc-response.html)
This is FAIR's response:
* Stossel's "America" erroneously claimed that Hong Kong is the only
country in the world that runs a government budget surplus. FAIR pointed
out 11 industrialized countries, including the U.S., that ran budget
surpluses last year.
In his response, Stossel does not defend the accuracy of his show's claim.
Instead, Stossel makes a different claim: that Hong Kong is the only
country which *usually* runs a budget surplus. "Hong Kong is unique in
chronically running a surplus... while most other countries have regularly
run deficits," Stossel wrote. "In 1992-1996, for example, all but two of
the countries FAIR cites had budget deficits every year. It would be
unfair to dismiss Hong Kong's consistent performance based on rare good
years among its competitors."
Whether or not Hong Kong has demonstrated "consistent performance,"
Stossel's original broadcast was still inaccurate. But even on his new
point, Stossel is wrong: Hong Kong ran a sizeable $4.4 billion deficit in
1998, according to the International Monetary Fund. And the government
forecasts a $4.7 billion deficit this year (Agence France Presse, 3/3/99).
Even when he moves the goalposts, Stossel is unable to score a goal.
* One important part of "America" contends that the U.S. enjoys a unique
degree of economic mobility. Conservative author Dinesh D'Souza says: "If
you are an ordinary guy, without connections, you're best off coming to
this country. It's a very mobile society in which lots of people who start
out at the bottom can find a place at least in the middle, and some will
rise to the top." FAIR pointed out that a major OECD [link] study
comparing earnings mobility in eight countries found that low-paid workers
in the U.S. were the least likely to rise to the middle or upper level of
earnings.
Again, in his response, Stossel does not challenge FAIR's assertion that
his broadcast was inaccurate. Instead, he pleads that "most" of the
nations compared in the OECD study are "small, homogenous nations that
have less distance between the highest and lowest earners." Yet Stossel
devoted a significant portion of his "America" broadcast to expounding the
idea that the U.S. has the greatest degree of economic mobility in the
world. If he recognizes that claim is questionable, why did he make it so
vehemently, and without opposing viewpoint, in his broadcast?
* In "America," Stossel portrayed China as a country that has become
"stagnant" because of its government's interference in free markets. FAIR
pointed out that, according to the Treasury Department's Larry Summers,
"China has been the fastest growing economy in history since reform began
in 1980." (http://www.ustreas.gov/press/releases/pr2808.htm)
Stossel responds: "In a Communist nation where millions have often found
themselves on the brink of starvation or beyond...it doesn't take much to
look like a comparative boom -- just as a very clumsy bowler may be more
likely to win the 'most-improved' award." As people living in much of
Latin America and Africa could tell Stossel, it's not easy for a poor
country to grow quickly. It's simply inaccurate to describe a country
whose growth rates average more than 8 percent per year as "stagnant."
* At one point, "America" cited "the Federal Reserve's wage data." FAIR
pointed out that the Federal Reserve does not collect wage data. Stossel
responds that "the Federal Reserve has all sorts of economic data. The
compensation statistics featured in 'Is America #One' came from the Board
of Governors of the Federal Reserve."
Stossel is mistaken. The compensation data featured in his show are
collected, analyzed and published by the Commerce Department's Bureau of
Economic Analysis, as part of a statistical program called the National
Income and Product Accounts (http://www.bea.doc.gov/bea/dn1.htm). The
Federal Reserve may reprint some of those data in its publications, or
Stossel may have obtained the data from a member of the Fed's staff, but
the data are not produced by the Fed. Many institutions use the Commerce
Department's data, including FAIR. That does mean the data come from FAIR.
Stossel is correct in a single point he makes about our action alert: His
broadcast did note the time frame for his claims about compensation
growth. He did not mention it himself, but it appeared onscreen.
* "America" claimed that U.S. workers' compensation, rather than
declining, has actually risen by 20 percent since 1973. FAIR pointed out
multiple inaccuracies in Stossel's discussion of this subject, and showed
that hourly compensation for a typical worker has actually declined.
Every part of Stossel's rebuttal to this point is erroneous, casting grave
doubt on Stossel or his staff's comprehension of the statistical issues
involved. In his original broadcast Stossel apparently was calling into
question conventional statistics that he does not understand.
Stossel says in his response that "about a third of the working
population, most of them high earners, no longer fall within FAIR's
'hourly workers' category, biasing FAIR's compensation downwards." That
statement is completely false. The numbers FAIR cited--like all statistics
on median wages--are based on wage data from the Bureau of Labor
Statistics' Current Population Survey (http://www.bls.gov/cpshome.htm).
That survey includes both hourly and salaried workers. Stossel seems to
have this survey confused with the BLS' Production and Non-Supervisory
Workers survey, which excludes managers and supervisors. (The BLS numbers
are analyzed and published in the Economic Policy Institute's "State of
Working America," a standard reference source for wage and income data.)
Stossel claims that FAIR's criticism "only holds true by artificially
restricting the debate to hourly workers' compensation at precisely the
juncture in history when more and more high-earners are getting their
compensation in the form of commissions, bonuses and other non-hourly
forms." That is also false. The BLS's survey counts all bonuses,
commissions and other premium pay earned by salaried workers.
Stossel contends that "the great rise in real buying power (caused by
increased productivity and improved technology) has greatly enriched the
average worker and dwarfs subtle changes in [the] mere dollar amount of
hourly compensation." FAIR's figures on hourly compensation were adjusted
for inflation, and were clearly labeled as such. Therefore they were not
"changes in mere dollar amounts." Stossel appears either not to have
noticed that our figures referred to inflation-adjusted hourly
compensation, or he does not understand that adjusting for inflation is
the technique used to compare real buying power at different points in
time.
* In "America," Stossel misrepresented the views of University of Texas
professor James Galbraith
(http://www.utexas.edu/lbj/faculty/galbraith.html), a prominent liberal
economist, in order to make it appear as if Galbraith agreed with
Stossel's views about Europe's employment policies.
In his response, Stossel says that he "did not intend anyone to think he
endorsed every statement made in the hour." This is clearly true, yet
what did the broadcast imply that Galbraith was endorsing? The response
suggests that Galbraith was agreeing with Stossel's contention that
"America has become more egalitarian than Europe."
But the passage that proceeds the Galbraith quote has nothing to do with
the relative egalitarianism of Europe and the U.S. Just before citing
Galbraith in "America," Stossel criticizes Europe's generous labor
regulations, claiming that these policies are responsible for unemployment
rates that are much higher than those in the United States, where
regulations are looser:
"Europe tries very hard to protect jobs, yet it creates few new ones. Why
would that be? Well, France, for example, to make life better for workers,
requires that almost all employees be given six weeks vacation, paid
parental leave, and makes it very hard to fire anyone. It sounds good, but
the unintended consequence of the law is that employers are now reluctant
to hire, because new workers are so expensive and permanent. Unemployment
in France is now over 11 percent. It's almost that high in Germany. It's
18 percent in Spain. That's four times America's rate."
Stossel then says: "Many economists who once argued that we could learn
from Europe, like James Galbraith, have now changed their minds." James
Galbraith's sound-bite follows: "There might be a moment for the Europeans
to learn from us, rather than for us to be studying them," Galbraith said.
Stossel continues: "OK, so Americans have jobs..." and then moves on to
another topic.
Galbraith's sound-bite--stating that the Europeans have something to
"learn from us"--is clearly intended to appear to refer to the looser U.S.
labor policies that Stossel has just finished praising. Yet Galbraith has
long been one of the most determined and outspoken critics of the view
that Europe's labor and social-welfare are responsible for their high
unemployment rates.
In fact, the current issue of the British journal New Left Review
(9-10/99) contains an article co-written by Galbraith that elaborates his
position on the issue.Galbraith refers to the "widely-held view" that
"high unemployment rates in Europe are due to that continent's generous
social welfare systems and 'rigid' wage structures... In this view, low
unemployment in the United States is credited to that country's 'flexible
labor markets,' [and] willingness to tolerate increasing wage inequality."
"This view is strikingly inconsistent with the facts," Galbraith
concludes. He then elaborates on his own view that Europe's higher
unemployment rates are actually caused by over-zealous anti-inflation
monetary-policies -- as contrasted with Alan Greenspan's more relaxed
recent policies -- as well as Europe's lack of continent-wide
redistributive programs like Social Security.
Stossel's use of Galbraith is a classic example of quoting a source out of
context. The attempt by Stossel to redefine the context after the fact
does not change that.
* In "America," Stossel claimed that poor Americans enjoy the same access
to medical care as the wealthy: "Our system does sometimes fail poor
people, but the truth is that when someone is denied care, it makes
headlines because it's so unusual. Most of the time, even the poorest
person going to the emergency room gets the same high-tech, cutting edge
treatment that lures foreign leaders like Jordan's King Hussein to
American hospitals."
FAIR countered with a 1995 article (3/95) from the "American Journal of
Public Health" that found that in one year, 945,000 people in the U.S.
needed but could not obtain emergency medical treatment.
Stossel's response does not address FAIR's criticism at all. His broadcast
claimed that poor people receive equal medical treatment, but he gave no
evidence and cited no sources. His response to the data we cited is a
string of non-sequitors and vague platitudes.
* In "America," Stossel contended that hunger is not a significant problem
among poor Americans.
FAIR pointed out that the Census Bureau's 1995 Food Security Survey
(http://www.econ.ag.gov/briefing/foodsecurity/reports.htm) classified 13.8
percent of Americans as either hungry or "food insecure." Food insecurity
is defined as "having a limited or uncertain availability of nutritionally
adequate and safe foods or limited or uncertain ability to acquire
acceptable foods in socially acceptable ways." (81 percent of households
in this category said that sometime in the last year the food they bought
"just didn't last" and they "didn't have money to get more.")
Stossel responds that "a nation is doing relatively well when the closest
thing to hunger that can be found is some degree of uncertainty amongst a
small subset of the population about how long food in the refrigerator
will last."
While it is possible that Stossel did not understand the definition of
food insecurity -- which has nothing to do with food going bad -- we
suspect that he did understand it and is making a joke at the expense of
the poor. In any case, it is surprising to find Stossel belittling
evidence about the extent of hunger in the U.S., when his own broadcast
apparently made no attempt to determine how prevalent hunger actually is
in this country -- besides asking people in line at a food pantry whether
they own microwave ovens.
*******
Links:
FAIR's original report: http://www.fair.org/activism/stossel-america.html
Stossel's response to FAIR: http://www.fair.org/activism/abc-response.html
Read the transcripts of the ABC special:
http://abcnews.go.com/onair/ABCNEWSSpecials/stossel990919_scriptA.html
ABC's e-mail address: mailto:[EMAIL PROTECTED]
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A<>E<>R
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