A Response by Stossel and Some of His Staff to the Group ‘FAIR’

The media watchdog group FAIR says that the ABC News special Is America #One? contained many inaccuracies. We stand by our report:

–FAIR claims that numerous countries (the UK, Canada, Australia, Denmark,Finland, Iceland, Ireland, New Zealand, Norway, Sweden, and the U.S.itself) run government budget surpluses comparable to Hong Kong’s.

In fact, Hong Kong is unique in chronically running a surplus, often a”huge surplus,” as one interviewee put it, while most other countries haveregularly run deficits. In 1992-1996, for example, all but two of thecountries FAIR cites had budget deficits every year. It would be unfair todismiss Hong Kong’s consistent performance based on rare good years amongits competitors.

–FAIR implies that Dinesh D’Souza was falsely presented as an economist.

However, as FAIR noted, we identified D’Souza (correctly) as an author andresearch scholar at the American Enterprise Institute. Many intervieweeson the show commented on economics-related matters, from radio commentator JimHightower to former steel worker George O’Neil, without any implicationthat they were economists. Furthermore, D’Souza’s views were shared andsupplemented by Nobel Prize-winning economist Milton Friedman, who alsoappeared in the hour.

–FAIR suggests that the U.S. lacks earnings mobility.

FAIR notes only seven countries purported to have greater income mobility,most of them small, homogeneous nations that have less distance between thehighest and lowest earners to begin with than does the large, diverse U.S.Europe as a whole-the entire continent-might be a more justifiable standardof comparison with the U.S. than any individual European nation. Europewould be found to be more income-stratified than the U.S., and thelikelihood of rising from, say, Greek levels of poverty to, say,upper-class British levels of wealth would be considerably rarer than climbing theeconomic ladder in the U.S.

In fact, a University of Michigan study of people starting out in thelowest earnings quintile in the U.S. found that less than one percent remainedthere over the entire sixteen-year period of the study.

–FAIR disputes the claim that China is mired in poverty.

In a Communist nation where millions have often found themselves on thebrink of starvation or beyond (due to tragic government plans such asordering people to grow rice plants too close together, in a misguidedeffort to save space), it doesn’t take much to look like a comparativeboom-just as a very clumsy bowler may be more likely to win the “mostimproved” award. Even after two decades of loosened controls, China’s percapita annual income has risen only to about $600. Any improvement inChina’s situation is cause for celebration, but compared to Hong Kong’s$28,000 per capita annual income, mainland China remains impoverished.

–FAIR denies that the Federal Reserve uses wage data.

The Federal Reserve has all sorts of economic data. The compensationstatistics featured in Is America #One? came from the Board of Governors ofthe Federal Reserve. The resulting compensation-increase graph seen in ourshow did indeed have dates on it (contrary to FAIR’s implication), runningfrom 1973-1999.

–FAIR repeats the common claim that American wages have stagnated.

FAIR’s wage-stagnation claim only holds true by artificially restrictingthe debate to hourly workers’ compensation at precisely the juncture in historywhen more and more high-earners are getting their compensation in the formof commissions, bonuses, and other non-hourly forms. About a third of theworking population, most of them high earners, no longer fall within FAIR’s”hourly workers” category, biasing FAIR’s compensation numbers downward.Furthermore, the recent immense boom in teen employment means an increasein the number of usually lower-paid, fledgling workers (who will go on tohigher-paying jobs as they age), also biasing FAIR’s numbers downward. The”median worker” FAIR refers to is less and less representative of the wholepopulation.

More importantly, the great rise in real buying power (caused by increasedproductivity and improved technology) has greatly enriched the averageworker and dwarfs subtle changes in mere dollar amount of hourlycompensation.

–FAIR accuses ABC of misrepresenting the views of Prof. James Galbraith.

We too were surprised to find that the author of the book Created Unequal,which depicts the U.S. as terribly economically stratified, was now sayingthat America has become more egalitarian than Europe, but that wasprecisely what Prof. Galbraith’s latest data showed. As a result, he was upbeatabout America during our interview. Here, for instance, is some more context forthe (admittedly brief) quote used in our show, which is indicated initalics:

In our interview, Galbraith told us we are “reducing unemployment andreducing inequality at the same time. I don’t think the Europeans canclaim as much. And in fact, the European economies are slipping towardstagnation. They may be slipping toward recession. They have unemploymentrates in a number of countries which would be catastrophic in the UnitedStates. Unemployment in Spain has been 20% and above for over twenty yearsnow. It would not be-such unemployment in the United States would not betolerated for twenty weeks…if you compare Europe and the United States ascontinents, I think the U.S. comes across right now rather well, and Ithink there might be a moment for the Europeans to learn from us, rather than forus to be studying them quite as closely as we’ve sometimes done in thepast.”

While we would not pretend that the entire complexity of Galbraith’sthought could be summed up in a single sound bite, his views on this particularmatter were not misrepresented. We acknowledged in narration that hisenthusiasm about the U.S. represented a change of tone for him, and we didnot intend anyone to think he endorsed every statement made in the hour.

–FAIR claims millions lack health care.

One of the side effects of America’s increasingly dynamic economy is arising generation of freelancers and people who change jobs frequently.Many of those lacking health insurance at any given time fall into thiscategory or are young workers who will soon be enrolled in standard healthplans. Saying they temporarily lack health insurance is very differentfrom saying they lack health care. Even in worst-case scenarios, peoplechronically too poor to afford either health insurance or out-of-pockethealth care receive Medicaid and Medicare. We acknowledged, though, thatour healthcare system has its problems. Whether those problems are aresult of markets or yet another detrimental effect of excessive regulation is adebate unto itself.

–FAIR claims millions suffer from “food insecurity.”

No nation is perfect, but a nation is doing relatively well when theclosest thing to hunger that can be found is some degree of uncertainty amongst asmall subset of the population about how long food in the refrigerator willlast. This is a far cry from the severe hunger that, as we suggested,still plagues many places on Earth.

–FAIR calls John Stossel a free-market ideologue, noting his claim thatmarkets are the best protectors of consumers.

As a reporter, Stossel reached his conclusions about the efficacy ofmarkets not as a result of armchair philosophizing or gut instinct but as a resultof years of accumulated evidence, having started out as a Nader-styleconsumer-advocate reporter. Taking note of the spectacular rise in livingstandards created by markets in this century-and the millions killed orimpoverished by governmental control-makes one a careful observer, not anideologue.

Please read FAIR’s response to this report, and FAIR’s original critique of Stossel’s special.