watch this week, thanks to adjudicate die miller, monica crowley and jehmu greene. i'm jon scott. we'll see you back here for another edition of fox news watch. i'm embarrassed watching some of the stuff. i won emmies for it. this machine used chemical sprays to make people feel younger. like this one, this says erase wrinkles.

>> or could you buy this device. >> it's an ugly facial thing. >> the consumers fall for the tricks all the time. what are the new ones and what should be done about them. that is our show tonight. >> john: as you saw i built my career exposed scams and products that don't work as advertised. here is another example. >> with summer coming. this ad caught my eye. the world's smallest air conditioner. >> we tried it out in the smallest room we could find. we ran the air conditioner for half an hour and watched. it went up two degrees. >> i was young once and i did that reporting for some 20

years. then i finally realized who really rips people off for more money than business ever does? government. so i changed to focus of my reporting. another reporter took over my old consumer beat. now, he works for the fox station in new york and he has a popular segment called shame, shame, shame. here is a wonderful clip of i am picking on martha stewart. >> i came to confront her about another dangerous product. >> pardon? >> it's arnold again. i wanted to talk about your chairs. >> three people had their fingers severed in your chairs. >> she could wave me off but we've got the proof. >> i pushed down and then my hand i saw my finger tips gone. >> look how easy a pencil is

snapped in two when the chair closes on it. >> john: okay, please welcome arnold diaz. [ applause ] >> john: you took over my old job. >> i improved on it. >> john: come on, 30,000 people lose their fingers from various accidents, accidents happen. why is it martha's fault? >> this isn't an accident. its design flaw. you sit down in a lounge chair and you scoot up and she designed a chair in such a way there is a pinch points and a bunch of people have lost their fingertips. so she should be responsible for that. >> john: so we have this huge government that is protecting us but they didn't recall it? >> no, this in this case government failed. >> john: you agree government

fails, too? >> consumer product safety commission failed. >> john: we thought it was going to solve these problems? >> maybe sometimes it does but it takes many deaths before the cpsc really stepped in and they do a voluntary recall before they force anything. it just doesn't happen. >> john: here is another of your confrontations on a contractor that took people's money and just walked away leaving houses a wreck. >> can i talk about the charges against you. >> he and his company face charges of deceptive trade practices involving a dozen homeowners saying they left his houses in unlivable conditions and owes them almost a had million dollars. >> can you tell me what is happening? >> no, sir. >> don't you have a responsibility? you did notish homes and you don't rebuild them?

>> no comment. >> what do you mean no comment. what are they supposed to do? you left them without a place to live. you destroyed these people. you have no feelings about it? >> all right. i get this stuff three years myself. it's useful that you chase them down and publicize it. i would argue that is enough. consumer reporters, there will always contractors, there are contractors doing a lousy job. i once called, let's license these guys it would improve it and it didn't. you say we have to have licensing? >> in this case it helped. first of all if you have license go there is a people can call to get a history on someone. you call up the agency and say i am checking on jvac construction so they have a license number. it doesn't make them good, but

here is the kicker. >> john: it doesn't stop? >> no. but these people are entitled to $15,000 each under the contractor trust fund which takes some of the money that they put up for licensing fees and sets it aside when you are ripped off by an unlicensed contractor. if you get ripped by an unlicensed you are out. >> john: do they get compensated? >> yeah, they got $15,000. in many cases they put up a hundred thousand or more. at least it was something. in this case i would argue the licensing did really serve a purpose. in principle i agree with you, most of the consumers --. >> john: i cheered it on but most of this stuff doesn't work. even the licensing law, doesn't it keep good contractors out in just fruirlts it, we have a list for what you have to do to get a license is endless. you have to provide your child support certification form,

fingerprints. it raises the costs of construction for everybody. >> maybe, on the other hand it weeds out the fly by night guys. if you want a construction business, maybe you take the time to go through these steps. >> john: you better or you are in trouble but it adds costs and maybe doesn't protect us? >> maybe, but i would say a world of unlicensed contractors is not a world i would want to do home improvement. >> john: stand by audience, we'll ask you questions. arnold and i built our reporting career on hidden camera reporting. the camera protects people from scams. we need protection because consumers are often stupid. >> you i've been a consumer report reporter for years, i've done stories where the cheap

cosmetics came out of the same vat as the expensive ones. it's so much better. it was the saich same stuff. i watch my friend fool people in a restaurant by having a fake water steward offer people different samples of what she said was fancy bottled water but it was tap water that came from the back in a hose. it tastes like a glacier. [ laughter ] >> john: coke was worried about losing customers in pepsi because in blind tests, pepsi won. so coke came out with new coke. they did lots of blind tests, and in test after test, people preferred new coke. so coke spent money for a big new product and the result new

coke just died. people didn't like the container. part of their brain wouldn't allow the very taste they preferred on the blind test. package but i don't know, new coke is gone forever. my con can conclusion after the taste tests, consumers are full of it. even people express strong preferences, on the blind test they flung again and again. no one has had more fun than candid camera. remember this? >> we have number of glasses but to repeat all the glasses have the very same lines. >> and yet taster after taster. >> this i like better. >> describe differences.

>> it's not real strong. it's up to this one here. >> that smells the best. [ laughter ] >> john: for me, disappointing part, when i sprang the truth and expected a dramatic reaction i rarely got one. here is typical reaction when they told the man all four glasses held the same wine. >> what would i say? it would be hard to believe. because they do taste different. >> it's the same wine. [ laughter ] >> john: that was typical reaction all the time. people never said, gee, i guess i'm pretentious. it never happened. here is one more example that got suzanne somers she was introducing a new perfume. >> you tell me what you think, okay? it's not really flowery.

you'll like it. there is lavender in there. >> john: it was just actually water. yet this man said it made him hungry. others said it smelled like manure. only a few people got it right. [ laughter ] you're candid camera. >> john: we're joined by the host of candid camera peter funt. >> if the consumer is misled, buyer beware. they should be wary what they encounter in the marketplace. i took water from lake michigan and put it into a bottle and

identified it correctly in the supermarket. i told people this is lake michigan water. but we put it in a nice bottle and now a 1.50 and people bought it. [ laughter ] >> john: so people are dumb enough to buy bottled water for a lot of money that is no better. so what? is it the role of government to protect these people from their own stupidity. let me ask the audience. >> no! >> john: that is my kind of audience. >> i say personally when i am getting on an airline, i want a guy from a government who can assure me that that plane is in good condition. in other words, i think government has a role. >> john: you don't think the airline which has own pilots and flight attendants would try as

hard as the government that the plane was safe? >> i wish that were true. i bet in some cases it is. not intentionally but what if they are cutting corners. >> john: they happen under government protection, too? >> the question we can't answer which way would it work better or worse. i think when it comes -- that is what i meant. i'm with you john. i'm with you all the way. i guess waut i got some water from lake michigan for you. >> john: i grew around lake michigan and i lake the water there. now, more on our stupid consumers. [ male announcer ] to the 5:00 a.m. scholar. the two trains and a bus rider. the "i'll sleep when it's done" academic. for 80 years, we've been inspired by you.

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>> john: that sound immigrate. make it so easy, i would go natural and organic. i buy cage free eggs and food made with whole grains. says here no corn syrup then i would be happy and healthy. many products are green. they are better for the world. people believe it. i bet my audience believes it.

how many of you buy organic produce? i would say half of you. organic food is the fastest growing part of the food business but they say the more expensive foods and environmentally friendly products are a scam and consumers are stupid to buy this stuff? you know, stupid is a strong world but at the same time, they are letting themselves being led a around by the nose. everyone wants to stay ahead of the trend. i eat organic, what do you mean you don't use reusable shopping bags so a little bit of guilt. >> john: what is wrong with organic? it costs more but people say it tastes better? >> people may say it tastes better. it's the placebo effect, it should be tasting better and

they paid more for it. what i would like to see. manure is the thing in organic. that is how they grow it. >> john: it's grown with synthetic fertilizer, organic is natural but it's out there with the cow manure. >> and food safety issues you have a higher likelihood of some products getting food contamination. that is not to say anything is unsafe. i eat all this stuff. i don't want to create a panic. at the same time actual health benefits are negligible to zero. >> john: studies have been done? >> over and over again. in fact two years ago the british food standard agency which is like our fda, they said there is no perceived health benefits. that is what the usda did. it says usda organic, that is not a health program. that is considered a marketing

program. >> john: it's not better. >> it has good marketing. that is about all there is to it. >> john: let's go on to cage free eggs. i didn't even know they existed but chickens walk around free. wehave a rooster, doesn't he look happy. and happier birds would lay healthy eggs. >> i'm sure the rooster is happy because he is not the egg laying. >> john: cage free costs more? >> it costs significantly more, $6, $9 i once saw. the problem is the actual health benefits are zero. there are ethical issues when it comes to cage free eggs. >> john: normally the birds are crammed in. >> and they are trying to increase the size of cages and working with animal welfare people to figure out what the right way is. part of the reason we have animals in smaller areas, "a"

they can better be controlled and keep external pathogens out. the reason they put hens in hen houses so foxes don't get them and they don't get diseases. that is part of it. >> john: let's move to local foods. i'm hearing that is kinder to the earth and better for us? >> sure. carbon credits and all that. i don't go to a dinner party, we got this all at the farmer's market. if you think you are helping the environment, 200 pounds of vegetables and drove 50 miles. >> john: it's shorter than 300 or thousand miles? >> if a farmer is trucking in a couple hundred pounds. you see how it works. you know, it makes it feel good about themselves and gives themselves to talk about. >> john: and locals give you something to talk about. another is natural food, that is

superior. this not a new sales pitch. they have come out with natural rat poison. [ laughter ] >> john: will you rat really care? natural food isn't better? >> more than 30% of the product that came two years ago had the word natural in front of it. works for consumers. you are looking at shelf and looking at two things of juice, and you don't have a preference for one and they are priced the same. it's what on the front of the package, one says natural and other one says juice, you more likely to buy it. >> john: the center for consumer freedom. next, sweat shops. our guest says they are good,

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>> john: three words that can

help put americans back the work. made in america. >> john: that is diane sawyer. star anchor of my former employer. i'm glad i don't work there. [ laughter ] >> john: but the point they were pushing is that it would help americans get jobs only if only people bought things made in america sounds right to people. economists say it's nonsense. it would create jobs? >> not only does david henderson it's nonsense and the reason is we should buy things that are cheaper that lets us buy more things so other americans get more jobs. why isn't it to have buy alabama then why not buy montgomery, alabama. >> john: you wouldn't get very good stuff from montgomery,

alabama. >> huge history of mankind is increasing division of labor. that division of labor goes across national boundaries. >> john: that creates wealth and jobs? >> in a similar vein is fair trade coffee. it costs much more money. the label, if i buy this i am doing good. i should enjoy this with a warm feeling inside. >> what you are doing is essentially paying a higher price for something that isn't clearly higher quality. >> john: but somebody in a poor country is getting paid more. by the way a huge part of the premium is taken by the bureaucracy, most of it doesn't go to the farmer. a better way to help those farmers is to buy what you would have bought anyway, take the premium you spent and give it to the people. >> john: there is the big one. sweatshops.

i'm for free trade but trade meaning to get the lowest price so you are buying something from the sweatshop. the name inimportant tends evil. >> sweat shops where children work. free trade they say causes this kind of suffering. >> john: yet you say, it doesn't? >> no, in fact they are better off taking those jobs. there are few cases where people working in those places are slaves and that is wrong. >> john: slavery is wrong? >> slavery is wrong but the vast majority is people choosing that over an alternative? >> yes. what people do the mistake americans work they would never work in a sweatshop and therefore these people shouldn't. nobody is offering them green cards. they are stuck in those countries. they are choosing their best of

bad options. when you take away best of bad options they are worse off. >> john: they have done that couple times after some senators in america complained. kids were laid off in bangladesh they found the kids were often in prostitution? >> prostitution or starving. the person that tries to get you fired is not your friend. >> john: so think about that next time when you are on sweatshop campaign. these conglomerates, whether nike making shoes, they pay a little more. i have a note in honduras, the average sweatshop pays $3.10 per hour which seems low but most people there earn less than $2. >> most of the people people were in ago debris culture. talk about sweat, one more note about better or fairer trade.

>> john: some fall makers that worked in the auto industry came up with this announcement -- public service announcement. >> i don't know when the guy -- where did he get them. who taught to you only like foreign cars? >> i heard it by watching you. >> parents that drive foreign cars have children that drive foreign cars. [ laughter ] >> john: i hated it even more pause the guy looks like me. [ laughter ] >> john: i think they are not just evil people. they really believe they are serving america. >> i'm not saying they are evil. i think they are just thinking mistaken. the point is i come from a

family that has two foreign cars both made in japan, probably made here but by japanese companies. we try to get the best deal we can. we are getting a higher quality from japan and that frees our income up to spend on other things. detroit is motivated to compete more. >> john: and detroit got better because of that competition. and the money that gets free up might create a job here at home? >> that's right. and therefore more wealth. >> john: thank you david anderson. next, consumers do fall for a lot of fads but what should america do about that? we'll debate that next. [ applause ] capital one's new cash rewards card gives you a 50% annual bonus! so you earn 50% more cash. according to research, everybody likes more cash.

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>> john: i call tonight's show stupid consumers because during my years i learned most of us consumers are stupid. it's easy to fool us. we fall for all kinds of scams. so the question is what should be done about that? ben barber from a think tank says he knows, he says government must protect us. i say we need a partnership between government, civil society and the private sector. >> come on. >> john: either government is for us or people left alone to do their own thing or private sector forcing. >> but the private sector can't use force, we have to entice people to watch this program. sellers have to get people to buy it. here is the problem. back in 19th century we had

rotting meat. we had nuclear plants that weren't safe. we had medicines that turned into prescriptions before well tested. we had a consumer market right down to meat and drugs were being given to the public. we were told, let the industries that produce them police them. that is like asking the fox to police the hen house. i made animal fox, not this fox. >> john: in this case it might be appropriate. >> in any case, you can't ask the people who are in the business of making things for profit to often police their goods. >> john: yes, you can i would argue. let's talk about one at a time. you said nuclear. i'm with you that on pollution issues. nuclear regulatory agency, all kinds of pollution controls because there is month market. >> john: they don't have to keep passing more rules.

that happened under richard nixon. the air and water are cleaner. let's talk about the filthy meat and all that stuff that created this big inspection agency and meat is safer now. do you think it's safeer because the government inspectors? >> what the government does they provide standards when industry perceives using it, my favorite example is light bulbs. incandescent light bulbs waste very little but industry hated it for a while. but now they are on their way to a brand-new market in which innovation in responding to a government standard is doing it. same thing with so many --. >> john: wait a minute.

of course industry likes it if they can make more money. somebody out laws the cheapest product. that is collusion with government. let's stay with meat. i have been to the meat plants where they are watching each bird go by on the chicken line looking for visible signs of fecal matter. when the company can maintain the reputation they do microbial testing. it's brands. they want to protect their brands and it's companies that want to keep their food safe and not government. [ applause ] >> i never come here expecting applause. [ laughter ] >> the truth the firms that do these things, a lot are good firms, they do it in part out of response to government setting the standards. when there are no standards at

all, there is nothing to live up to, it makes sense to take the quick way, the easy way, the cheap way out because they are in the business of making a profit. you were talking earlier about child labor. if you use child labor it's cheaper, government says we can't do it we have to pay more. minimum wage, same way. they would pay less. >> john: you think child labor is gone because of government. you think government would want to hire children? >> i heard previous guests say where people are poor, it's the only choice. one in five children live in poverty. >> john: maybe we should put them to work, you would ban that in this country? >> i would ban it in this country. >> john: kids becoming prostitutes? >> you can't take one problem and isolate it and refuse to do anything else. >> john: certainly the fda protects from snake oil sellers.

the drug has to be effective. i have to say now, you are killing us too because it takes 14 years to get the drug approved. in those 14 years, they kill people. that drug wasn't available to keep me alive. nobody even complains about it because you don't know, you don't know what you might have had. >> the fda has standards excruciating slow if you are i will. i had a friend die waiting for drugs that was okayed by fda. it's okay because far more people would die, take it to market. we're not going to test it. it's always a case of the lesser evil. there are other companies that do it faster. consumer reports, underwriters laboratories, this false confidence of trusting the government. >> john: wouldn't they do it better? >> here i think you and i agree. if you make your profits from

safety like electricity consumer reports do, you are in the business of making a profit from really enforcing safety standards. i don't mind that. but you kachblt do it, we can't have just government but we can't do without it. >> john: your book is called, markets corrupt children and swallow citizens whole. stupid consumers but swallow citizens whole? the market unlike governments can't use force. how can you make this comparison >> the thesis of this book is simple. we have created a consumer society in which shopping is the national pastime and instead of making love, listening to music >> john: it's voluntary and that makes it fine. government tax ache and enforcement is forced.

>> voluntary is one of these terms that looks good in the private sector, not government because government has the army. >> it's voluntary. >> a lot of things make the private sector, merchandising. >> you told me how stupid consumers are. >> john: they get suckered and there is a lot money in suckering them. they buy things they don't need or want. that is problem. >> john: then you ben barber. please stay with us because when we come back my audience has questions and also want to ask questions of my other guests. [ applause ] sweetie i think you need a little extra fiber in your diet. carol. fiber makes me sad.

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[ applause ] >> john: audience questions for our guests. ben barber, a progressive that wants government to protect us. arnold diaz who does protect us now and then. economist justice wilson and both of them are skeptical about government protection.

yes. >> martha stewart we have the trial lawyers that can sue if a product has a flaw. what kind of regulation would you put in place to keep martha stewart under control? >> i wouldn't put any regulation in place. i would have hoped had she seen the product was causing people fingertips to cut off, she would have reacted in a voluntary way. hey, everyone who has bought these from k-mart, watch out. maybe even offer a refund which they never did or a credit. i don't think necessarily other than safe manufacturing and all that -- we don't need to go over every design. >> would you like to see an actionable response? >> exactly. people of buying it because of her name. >> john: her name from stories like her bad reputation, she is toast?

>> that's right. if people know about it. in this case it was being one fingertip at time. it wasn't getting out there. >> justin, was it people for people organic food to avoid pesticides and hormones injected into meat? >> if you want to avoid pesticides, round-up allows significantly less pesticides yet people suggested that is somehow evil. they have invented something to reduce the amount of pesticide that we use. yet it's the same people that argue in favor of organics and trying to save the earth. wait a minute, you are caught in this sort of strange situation where you disagreeing with yourself. did read it in seat belts, governments mandated seat belts in cars. with new technology and how afterwards, deaths with high

speed car accidents went up as a result. >> john: there is evidence what is called the pelsman effect, they drive more recklessly when they are belted in seat belts. we have one seat belt but one government standard, we would have companies competing. this is easier to wear. more people would wear them. i bet now more lives would than saved. >> when was left to the industry there were no seat belts. >> they would have not been made in the united states. >> after how many lives? >> john: now we have just one standard. >> not anywhere near as much as no standard. >> a company comes up with a safer way to do it. >> safety is what economists

call a normal good. what has happened since 60s we're a lot of richer we were in the 50s and we would have demand add lost those things anyway. here a graph of fatalities million man-hours work. it goes down like this. tell me where on that axis osha happened the point is -- >> it was under mr. nixon. >> john:ly make a statement on tv. he was not a good president. >> we would agree. >> since you brought this up, we happen to to have a graph of this very thing you are talking about. here the graph of workplace fatalities. they have dropped steadily since osha created. then somebody went back before osha and look what happens there. there is no different in the lines. the deaths were dropping just as

much. >> look at two buildings, empire state, lots of deaths. st. louis arch built in 1965, zero deaths. what had happened in that time, tremendous increase in income and wealth and therefore people wanting more safety. >> john: without government doing it. thank you ben barber and david anderson and justin wilson. my take on the real way to protect stupid consumers. [ applause ] i'm a home. and recently, i flooded. excuse me. him? he's helping me get back to normal. hey, i don't even live in a floodplain. but i've got flood insurance, so i'm covered. how's that? nice. flood insurance, it helps make your home a home again. or, your me a me again.

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>> john: that machine supposedly used chemical sprays to make people look younger. coffee institute coffee is a drink that picks you up and calms you down. how could it do both? i called them up, how can you say that? it's contradictory. they said we have research that backs that up. i asked them what is your research? they said we surveyed thousands of coffee drinkers and what do

you get out. some said it picked them up and some said it calmed them down. oul how about alka-seltzer. it's become a big seller. another ads take it for an upset stomach and lots of you do. probably shouldn't because alka-seltzer contains baking soda but it also has aspirin in it and it makes your stomach bleed a little. let's say you have a bleeding ulcer, you take the alka-seltzer to relieve the pain and but then your stomach bleeds and you are really in pain. when i learned this stuff there ought to be law. there ought to be restrictions on advertising to protect

consumers maybe a ban on it. maybe a ban on anacin. it advertised it was a tension reliever. >> minutes after taking it, headache pain is gone so tension is gone. you see anacin is a combination of ingredients. >> its combinations of aspirins and caffeine. in the case of anacin they made them stop advertising tension relief. for a long time i believed we were better off but then i really watched the regulators work. every year this many rules. they had 80,000 new pages every year. they are drowning us in rules. yet, cheaters keep cheating. these rules don't stop that. they sell phony diet pills and claims for food. they keep getting away with it. despite all these rules. because government doesn't do

anything very well including regulate. the regulators do add more paper and they stop few of the frauds but most of the cheaters slime around the paper. my first instinct we need more paper. now i understand there can never be enough paper. so what am i saying? let people be ripped off? no. thinking the government will protect you is false security. what does protect us is the free market. there will always be some scams from enrons but where there is competition, those scams will be a tiny piece of the economy. businesses get rich under capitalism is serving their customers well. that is how gates and steve jobs got rich. word gets out about the good products and good companies. scammers lose their customers and they lose customers to good businesses.

what happened to alka-seltzer, bokts now has a warning may cause stomach bleeding. thanks to competition, word has gotten out what we should take if we have an upset stomach. antacids, now they are best sellers. the market works this stuff out. it's good that we have consumer reports like arnold diaz chasing people down embarrassing them, warning them us about them. now thanks to the internet we have more consumer protection, it makes it harder for cheat teors hide. when people injury others or commit fraud, we have contract laws that can be used to punish them. that is enough. we don't need more laws. this paper doesn't help. it just raises costs.

leaves us with less freedom. today's consumer protection hurts consumers more than it helps them. competition and open society protect us far better than government ever can or ever will. that is our show. thank you for watching. good night. [ applause ] [ sniffs ] i have a cold. [ sniffs ] i took dayquil but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that. really? [ male announcer ] alka-seltzer plus fights your worst cold symptoms, plus it relieves your runny nose. [ deep breath] awesome. [ male announcer ] yes, it is. that's the cold truth!

prego?! but i've been buying ragu for years. [ thinking ] i wonder what other questionable choices i've made? [ '80s dance music plays ] [ sighs ] [ male announcer ] choose taste. choose prego.

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