ProfessorBainbridge.com

High Executive Compensation Saved American Business?

Today's W$J offers a chart showing the whopping pay taken home by CEOs of top Wall Street firms.

Interestingly, all of these firms used to be privately held partnerships, but in recent decades have transformed into publicly traded corporations.

As Holman Jenkins points out in today's Journal, this runs counter to economist Michael Jensen's famous prediction that the public corporation was on its last legs.

As Jenkins notes, back in the 1980s, Jensen argued that: "the eternal conflict between managers and shareholders had given rise to a more efficient way of allocating large amounts of capital, through LBO groups that would concentrate ownership in the hands of management and a small circle of closely involved outsiders." (You can download Jensen's 1989 essay, The Eclipse of the Public Corporation, from SSRN.)

Instead, as Jenkins points out the public corporation thrived in the 1990s. Why? Jenkins offers a provocative hypothesis:

Mr. Jensen's prediction -- more of a provocation, really -- was not borne out; the publicly traded corporation was not eclipsed. It engineered its own comeback by rediscovering its intrinsic advantage: a stock price. A publicly listed stock remains the greatest corporate governance tool yet invented, because it creates the opportunity and incentive for all the knowledge in society to mobilize around a company and its prospects.

The usual scolds insist that high CEO pay in the form of stock options is a product of cronyism and self-dealing. In fact, high CEO pay seems to have been precisely the publicly traded corporation's way of re-establishing its primacy over the privately held company. This is illustrated by Xavier Gabaix and Augustin Landier's study showing how closely the rise in pay has tracked the rise in market value of U.S. companies.

Count me a skeptic. While I don't believe the executive compensation system is as badly broken as do some observers (such as Lucian Bebchuk), the system is flawed. As I wrote in my essay, The Compensation Conundrum:

According to Bebchuk and Fried, boards of directors -- even those nominally independent of management -- have strong incentives to acquiesce in executive compensation that pays managers rents (i.e., amounts in excess of the compensation management would receive if the board had bargained with them at arms'-length). Among these are: Directors often are chosen de facto by the CEO. Once a director is on the board, pay and other incentives give the director a strong interest in being reelected; in turn, due to the CEO's considerable influence over selection of the board slate, this gives directors an incentive to stay on the CEO's good side. Directors who work closely with top management develop feelings of loyalty and affection for those managers, as well as becoming inculcated with norms of collegiality and team spirit, which induce directors to "go along" with bloated pay packages. Finally, Bebchuk and Fried argue that those few directors who resist these incentives and seek to put shareholder interests first face a number of obstacles in both the law and practice of corporate governance.

The net effect of managerial power is that CEO pay packets are higher than would obtain under arms'-length bargaining and less sensitive to performance. As a result, compensation of CEOs and other top managers has become a not insignificant chunk of corporate earnings. Yet, Bebchuk and Fried claim, much of that pay has been insensitive to the performance of those companies.

While I caution that the managerial power theory of executive compensation is far from a complete explanation of what's going on with compensation, it has enough validity to leave my doubtful of Jenkin's thesis that it was high compensation that saved the public corporation. (Unless you believe CEOs declined to take their companies private, because doing so would have made them subject to effective monitoring by the private equity funds - such as KKR - that finance LBOs.)

Having said that, however, I share the belief so ably expressed by John Micklethwait and Adrian Wooldridge in their wonder ful book, The Company: A Short History of a Revolutionary Idea, that the public corporation is is “the basis of the prosperity of the West and the best hope for the future of the rest of the world.” Accordingly, I share Jenkin's concern that:

The economic and political battle today is between the corporation and outside interests who've discovered that "value at risk" is an opportunity they can exploit too. For a share price is a vulnerability that opens the door to all kinds of implicit shakedowns -- from trial lawyers and prosecutors and union pension fund chiefs, from peddlers of corporate governance cure-alls, from purveyors of "corporate social responsibility," from the sort of politicians who write letters to ExxonMobil demanding it recant its views on global warming.

Or, as the Paulson Committee recently observed:

Maximizing the competitiveness of U.S. capital markets is critical to ensuring economic growth, job creation, low costs of capital, innovation, entrepreneurship and a strong tax base in key areas of the country. Regulation and litigation play central roles in protecting investors and the efficient functioning of our capital markets, particularly in light of recent, highly publicized abuses. Yet excessive regulation, problematic implementation and unwarranted litigation – particularly when occurring simultaneously – make U.S. capital markets less attractive and, therefore, less competitive with other financial centers around the world.

Speaking of Stross

Charles Stross does a thorough work up of the Litvinenko assassination, suggesting that the FSB is a likely suspect (well, duh), but concluding:

... what disturbs me most is that all the other possibilities I've been able to think of are worse.

Given Stross' expertise at geek horror (see the previous post), I don't even want to think about what possibilities Stross can come up with that are worse than the FSB.

Stross' Jennifer Morgue

Charles Stross' new book, Jennifer Morgue, turned out to be the perfect read for today's 5 hour airplane ride from DC to LA.  This sequel to the brilliant Atrocity Archives is a fun, fast read. Imagine a hybrid of Thunderball and Lovecraft's Shadow Over Innsmouth whipped up by a computer geek whose spent a bit too much time playing magical role playing games at renaissance festivals. The plot's a bit silly, even given the context, and the geek technobabble's a bit too thick for my taste, but the novel pulls you along at an incredible rate even so. Plus, the concluding tongue-in-cheek quasi-academic essay on spy fiction is almost worth the price of admission on its own.

It's increasingly clear that Stross has a multi-book franchise on his hands here that rivals Ian Fleming's. Now we just need to get Steven Speilberg working on the movie.

Corporate Chaplains

From the NYT (HT: Althouse):

From car parts makers to fast food chains to financial service companies, corporations across the country are bringing chaplains into the workplace. At most companies, the chaplaincy resembles the military model, which calls for chaplains to serve the religiously diverse community before them, not to evangelize. ...

Workplace chaplaincies are generally less costly to operate than the more familiar employee assistance program model of counseling and making referrals. Most chaplaincies also go beyond such programs to bring something of the local pastor to the workplace: the person who is on call around the clock to rush to the hospital when an employee has been in a car accident, or to find housing for families burned out of their houses, or to visit a worker’s relative in jail, even to officiate at weddings and funerals.

There's a 200+ year history of military chaplains, of course, plus a long traditions of hospital and university chaplains. Bring the chaplaincy concept into a commercial workplace, however, is novel and may present serious legal risks.

As a policy matter, I agree with my friend and UCLA law colleague Eugene Volokh that:

... the government has no business suppressing our ideas, whether religious or political, and whether or not they are “disparaging” (the EEOC’s term), are made “for the purpose of exposing [another religion] to contempt and ridicule” ... or fail to “exhibit adequate sensitivity to [another’s] feelings."

In addition, there likely are substantial management benefits to be had from a workplace chaplain. In the exercise of pastoral functions, a chaplain can serve as a counselor, adviser, and councilor. Likewise, the chaplain can function as an ombudsman intermediating between management and the workforce, just as military chaplains often intermediate between the troops and brass. As Corporate Chaplains of America explains:

Corporate Chaplains of America incorporates a variety of means for caring in the workplace. These include any or all of the following: confidential care giving, crisis intervention, management consultation, programs for worship or prayer, referral to other professionals and agencies, training and education for employees and supervisors, employee/community/church relations and programs, and special events scheduled in response to needs which arise in the workplace. Whatever the scope of each family's problems or concerns, Corporate Chaplains of America has a network of qualified and caring outsource providers that can help.

Indeed, the Christian Science Monitor reports that:

Corporate chaplains serve people of any or no faith, and the use of their services is voluntary. But business leaders increasingly recognize that employees who face crises often can't help bringing their personal difficulties to work, and job performance can suffer. Making provision to care for their workforce becomes a part of good business practice.

One wonders, however, whether Christian corporate chaplains will not inevitably experience a tension between the secular aspects of their job and the Great Commission. As one commentator writes of the analogous concept of hospital chaplains:

the function of the chaplain within the hospital . . . is to relate the dynamic content of the Gospel to the experiences through with men and women pass while they are hospital patients, that they may know its saving grace in the power of God's Holy Spirit.

A corporate chaplain who seeks to relate the Gospel to the experience of the firm's employees, however, risks being accused of  proselytizing. In turn, the employer of such a chaplain risks being sued for workplace religious harassment.

As one source explains:

Hostile work environment has been found in such cases where there was a daily broadcast of prayers for a one year period over the employer’s public address system. Or where an employee was subjected to repeated religious lectures about her salvation. ... In addition, the absence of a religious harassment policy is evidence of failure to exercise reasonable care to prevent harassment.

All of which raises some interesting questions:

1. From an employer's perspective, do the benefits justify the litigation risks? I haven't found any empirical data, but my guess is that corporate chaplains are far more common in privately help businesses than public ones. My expectation is that the decision to hire a corporate chaplain is often made not on the basis of cost-benefit analysis but rather because the boss is devout (probably tending to be evangelical Protestants). As a result, we might expect corporate chaplains will push the edge of the harassment envelope by proselytizing with implicit or explicit support from the boss.
2. From a prospective corporate chaplain's perspective, if one cannot proselytize, is the social aspect of the job an adequate ministry and witness? Will workplace chaplains feel they are falling short of their religious duties if they do not actively evangelize their fellow employees? Here, Catholic chaplains might have an advantage. After all, since we Catholics reject the doctrine of sola fide, practicing a social Gospel is not inconsistent with our faith.
3. From a social perspective, should the government be in the business of regulating this sort of practice via employment discrimination law or should the First Amendment free exercise and free speech rights of private employers validate workplace chaplains?

Zywicki on Religious Conservatives

In a post that's mostly about how "people, and libertarians specifically, choose their political affiliations," Todd Zywicki notes in passing that:

I've never really understood why religious voters would be partial to free market economic policies. There seems to be an obvious distrust of the amorality of the market there, especially as it often produces what religious voters obviously consider to be immoral entertainment and other products. Nor have I ever seen among religious folks a particular appreciation of the invisible hand process of the market, as their worldview seems much more comfortable with a constructivist rationalism than spontaneous order systems. To the extent that there is a coherent economic philosophy here, it seems to me that it is more naturally communitarian than free market.

Todd's got a very good point, in that there is a strong strain of economic populism among man evangelicals, as well as a communitarian element in both left-liberal evangelicals and catholics. Yet, for Todd to say he's never seen religious conservatives who embrace free markets is to ignore the important strain of Christian thought represented by Michael Novak (and, if I may say so, myself).

As I wrote in my essay Catholic Social Thought and the Corporation:

If a concern for human freedom is not at the center of Catholic social teaching, it is at least very near. As [John Paul II] has observed, “the good of the individual [cannot] be realized without reference to his free choice, to the unique and exclusive responsibility which he exercises in the face of good or evil.” Hence, Catholic social thought rejects socialism or other forms of command economies.

Or, as I wrote in my essay Law and Economics: An Apologia:

If my defense of wealth maximization has evolved into a defense of the limited state, that move should be neither surprising nor troubling. Here I draw on the strong evangelical tradition that finds it purest expression in the Calvinist principle of sphere sovereignty. Social institutions—including the state—are organized horizontally, none subordinated to the others, each having a sphere of authority governed by its own ordering principles. Expansion of any social institution beyond its proper sphere necessarily results in social disorder and opens the door to tyranny. In our era, the state’s expansion beyond those functions prescribed by custom and convention, legitimized by ancient usage, into the pervasive nanny state has become the principal threat to personal liberty.

While sphere sovereignty is a creature of Reformation theologians, there are scriptural passages that presaged it. The strongest scriptural example of this principle doubtless is Samuel’s speech to the people of Israel when they desired a king. Indeed, I suspect many modern evangelicals would be grateful if the government would content itself with “a tenth of [our] seed and of [our] vineyards.”

SEC Split Expected re Shareholder Access

TheDeal.com reports:

SEC observers expect Cox to introduce a draft rule on Dec. 20 clearly spelling out that companies may block shareholder groups from placing director candidates on company proxy cards. Democratic SEC Commissioners Campos and Annette Nazareth oppose that idea and support giving shareholders the ability to nominate one or two candidates on the company proxy documents. Republican Commissioner Paul Atkins is likely to be opposed to their suggestion.

This is, of course, the fallout from the AFSCME v. AIG decision, in which the Second Circuit held that shareholders could use rule 14a-8 to put forward a proposal that "would amend the AIG bylaws to require the Company, under certain circumstances, to publish the names of shareholder-nominated candidates for director positions together with any candidates nominated by AIG’s board of directors." Such proposals are an effort by shareholder activists to end-run the SEC's decision to let proposed rule 14a-11 die. I opposed Rule 14a-11 on a number of grounds, including:

The election of a shareholder representative also will disrupt the delicate internal dynamics that make boards successful. Its effect will be analogous to that of cumulative voting, which allows minority shareholders representation on the board. Experience with cumulative voting suggests that it often leads to pre-meeting caucuses by the majority and a reduction in information flows to the board as a whole. In turn, this results in adversarial relations between the majority and minority board members, which interferes with effective board governance. (Link)

Endrunning 14a-11 via 14a-8 strikes me as an even worse idea. As I detail in The Short Life and Resurrection of SEC Rule 19c-4, the DC Circuit's seminal decision in Business Roundtable v SEC, the federal proxy rules were not intended to deal with the substantive aspects of shareholder voting rights. The federal proxy rules are properly concerned only with the need for full disclosure and fair solicitation procedures.

It is state corporation law that decides the rule of the game by which directors are elected. It is precisely for this reason that the exclusion of matters relating to election of directors created by Rule 14a-8(i)(8) needs to get an expansive interpretation. The AIG decision intrudes federal regulation into a core matter of corporate governance left to the states. To be sure, some will argue that the federal intrusion is minimal, since it goes only to whether shareholders get to vote on a proposal, but the logic of the Business Roundtable case is that deciding what issues are the proper subject of shareholder action is a matter of state law (which is also the logical interpretation of SEC Rule 14a-8(i)(1)'s exclusion of matters that are not a proper subject of shareholder action).

Plus, of course, there are all the standard reasons to be dubious of shareholder activism. See, e.g., my TCS column on the Bally bylaws.

US Competitiveness

From Marketwatch:

Rules governing U.S. public markets are driving businesses to overseas exchanges and private sources to raise money, damaging the competitiveness of the American capital markets, a high-profile panel of chief executives and academics co-chaired by the former economic adviser to President Bush said Thursday.

The Providence Journal blames Sarbanes- Oxley Section 404:

Section 404 is one reason why fewer companies are going public in the United States, and why so much money is moving so fast to Europe, especially to London, and to Asia, especially Hong Kong. (Unlike private firms, public firms can raise money by selling stock on Wall Street, but must offer more information to buyers.)

We're all for increased transparency for shareholders, and for the proposition that managements and boards be held to the highest standards of accountability and integrity. But Section 404 has hurt America's business vitality without doing much about corporate corruption. It needs to be radically revised, lest Wall Street lose its position as the world's capital of capital, with accompanying disastrous effects on our economy.

I agree. 404 has been a disaster:

Because ... small cap firms are such an important engine of economic growth and technological innovation, the ripple effects of SOX will be felt throughout the economy. By raising the cost of access to the capital markets, SOX likely will slow down the economy in the long-run.

The Perils of Being a Wine Blogger

When I go out to business dinners these days, I increasingly often find myself being handed the wine list and told to order for the table. This is always an awkward moment. First, you're dealing with somebody else's expense account. You don't want to get them in trouble by pushing the boat out too far, but given the huge markup on most wine lists, it's often hard to find a wine whose price fits most law school budgets. Second, unless you're Robert Parker or you get really lucky with the list, most of the wines amongst which you'll be choosing will be unfamiliar. There's a serious risk that you'll blow your reputation by picking a loser.

Usually, I try to beg off. I've got a story to tell about blowing the lid off a friend's expense account that's admittedly grown somewhat in the telling and is a tad exaggerated for effect, but is still sadly accurate in its basics. Indeed, my friend tells me that seven years later his Dean still doesn't let him take law school guest speakers out to dinner unsupervised. Typically, this gets me off the hook.

Tonight, however, I was handed the list and given a budget. Unfortunately, the markup on the list was fairly high - about three times retail - so the number of wines within the budget was limited.

I went with two California red wines that have proven reliable in the past: Domaine Carneros Pinot Noir and Honig Cabernet. The Pinot was modest, but quite good for an inexpensive Pinot. The Honig, however, was a major disappointment. I hate when this happens. But I guess it is the risk you take when you start writing about wine. And the lesson is to stick to what you know best.

Domaine Carneros Pinot Noir (Napa Valley) 2004

A modest but pleasant Pinot Noir with good blackberry, cherry, and earth aromas and flavors. Some smoke on the finish. There's a little vanilla and toast from new oak, but it's well integrated and unobtrusive. Grade: B+ 

Honig Cabernet Sauvignon (Napa Valley) 2004 

Honig is usually a very reliable source of moderately-priced Napa Cabernet. (I liked the 2000 a lot, for example.) In most vintages, the black currant flavors typical of ripe Napa cab dominate, with a modest amount of oak spice. In this 2004, however, toasty oak dominated. Both on the nose and palate, the dominant impression was buttered popcorn. In my book, this buttery oak is acceptable (if not preferred) in California Chardonnay, but is a serious flaw in red wine. Grade: C- 

Pay for Play

From TNR (HT: Hewitt):

Are Jerome Armstrong and Markos Moulitsas (of the famous Daily Kos) engaged in a pay-for-play scheme in which politicians who hire Armstrong as a consultant get the support of Kos? That's the question that's been bouncing around the blogosphere ever since The New York Times's Chris Suellentrop broke the news last Friday about a 2000 run-in Armstrong had with the Securities and Exchange Commission over alleged stock touting. But Armstrong, Kos, and other big-time liberal bloggers have almost entirely ignored the issue, which is a bit surprising considering their tendency to rapidly respond to even the smallest criticism.

In case you were wondering, I have never been paid to play on this blog.

Interim Report of the Paulson Committee

The interim report of the Committee on Capital Markets Regulation (a.k.a. the Paulson Committee) is now available here. Warning: It's an 11+ MB file and takes a while to download.

The report is in 5 parts: (1) Impact of SOX on competitiveness, by Luigi Zingales (about which I posted earlier), (2) regulatory process by Robert Glauber, (3) enforcement by Robert Litan, (4) shareholder rights by Allen Ferrell, (5) Sarbanes-Oxley (404) by Andrew Kuritzkes.

An executive summary is available here.

Detailed analysis will have to wait. I'm immediately skeptical of the proposals to expand shareholder rights, of course. As I explained in The Case for Limited Shareholder Voting Rights, the "record of success" of US corporations "occurred not in spite of the separation of ownership and control, but because of that separation." But I'll try to keep a (semi-)open mind.

Update: Blogosphere reactions:

Dale Oesterle:

The Committee on Capital Markets, a high powered committee attempting to provide political cover for needed changes in our regulation of the securities markets, has issued its 135 page report.  There are no surprises in the report.  The Committee recommends that we lighten Section 404 of Sarbanes Oxley and decrease the bite of litigation (public and private) against companies and their "gatekeepers" (auditors and directors).  To fend off charges that the Committee is for lax corporate governance the report also supports more shareholder rights (majority voting bylaws and votes on poison pills).  It takes no position, however, on the thorny questions of executive compensation and the new AIG case (shareholder nominations to the board).  The ultimate irony of the recommendations is the Committee's conclusion that the President should direct another committee -- the Working Group on Financial Markets (Paulson is on this committee; he sponsored the Committee on Capital Markets)-- to "examine" the recommendations and "propose" reforms.  So Secretary of the Treasury Paulson is, in essence, has his committee recommending that another committee of which he is a member be directed to study the recommendations and propose reforms.  Perhaps the Working Group will then recommend that the Secretary of the Treasury support and champion the reforms in Congress and the SEC.

Tom Kirkendall:

... the clear implication is that the U.S. is losing its previous competitive edge in securities markets to countries with sophisticated securities markets and less onerous corporate governance regulations.

Lisa Fairfax:

... the report strongly suggests that Sarbanes-Oxley is not the problem. Indeed, the report makes 32 recommendations, only six of which focus on reforms associated with Sarbanes-Oxley, and those six are relatively modest proposals about how the Act should be implemented differently (including possible exemptions for small and foreign companies). Moreover, the report states at the outset “we recommend no statutory changes in the Sarbanes-Oxley Act, including Section 404.”

Larry Ribstein:

Here's a WSJ op-ed by the Glenn Hubbard and John Thornton. It repeatedly emphasizes a broad-based focus on both costs and benefits of capital markets regulation, including SOX 404, and criminal and civil liability.

Unocal at 20 at UVa

I'm at my alma mater (Virginia) today to present my paper Unocal at 20: Director Primacy in Corporate Takeovers to a faculty workshop. (Given how long this paper has been in press, I probably ought to change the name to Unocal at 21.)

Abstract: In Unocal Corp. v. Mesa Petroleum Co., the Delaware Supreme Court made clear that the board of directors of a target corporation "is not a passive instrumentality" in the face of an unsolicited tender offer or other takeover bid. To the contrary, so long as the target board's actions are neither coercive nor preclusive, the target's board remains "the defender of the metaphorical medieval corporate bastion and the protector of the corporation's shareholders."

Unocal is almost universally condemned in the academic corporate law literature. Building on his director primacy model of corporate governance and law, however, Bainbridge offers a defense of Unocal in this article. Bainbridge argues that Unocal strikes an appropriate balance between two competing but equally legitimate goals of corporate law: On the one hand, because the power to review differs only in degree and not in kind from the power to decide, the discretionary authority of the board of directors must be insulated from shareholder and judicial oversight in order to promote efficient corporate decision making. On the other hand, because directors are obligated to maximize shareholder wealth, there must mechanisms to ensure director accountability. The Unocal framework provides courts with a mechanism for filtering out those cases in which directors have abused their authority from those in which directors have not.

Back when I was in law school here, the business faculty was mainly Chicago School law and econ types who inclined towards the Henry Manne, Frank Easterbrook & Dan Fischel, Ron Gilson view that takeovers were a critical accountability mechanism and that takeover defenses therefore should have little or no validity. It'll be interesting to see how the current faculty reacts to my argument that takeover defenses differ only in degree and not in kind from any other conflicted interest transaction and therefore should be regulated in much the same fashion as any other conflicted interest transaction.

Is There 'No Obligation to Act'?

A recent report from the UK's Nuffield Council on Bioethics, Critical care decisions in fetal and neonatal medicine: ethical issues, concludes that "there are some circumstances in which imposing or continuing treatments to sustain a newborn baby's life results in a level of irremediable suffering such that there is no ethical obligation to act in order to preserve that life." Accordingly, the Council opines that physicians ethically may withhold or withdraw treatment from such infants. Indeed, while the Council claims not to accept active euthanasia as ethical, it invokes the principle of double effect to justify the use of "potentially life-shortening but pain-relieving treatments."

Given the trends in Western society towards acceptance of abortion and euthanasia, one is no longer surprised when a principally secular ethical body reaches such a conclusion. The attitude of the Church of England came as something of a surprise, however, at least to observers outside the Anglican sphere.

The Daily Mail recently reported that "a bishop representing the national church has now sparked controversy by arguing that there are occasions when it is compassionate to leave a severely disabled child to die. And the Bishop of Southwark, Tom Butler, who is the vice chair of the Church of England's Mission and Public Affairs Council, has also argued that the high financial cost of keeping desperately ill babies alive should be a factor in life or death decisions." (Bishop Butler's full submission to the Nuffield Council has now been released and is available here.)

In suggesting that some children be left "to die," Bishop Butler broke with 2000-plus years of Judeo-Christian ethics.

It was commonplace in pagan Greek and Roman society for parents to "leave a ... child to die." Although active infanticide was known, apparently passive euthanasia was more common. Parents would simply abandon their children in the outdoors to die of exposure.

Jewish and Christian theology, however, squarely forbade this practice. Numerous early Christian sources, for example, confirm the Didache's teaching that it is a grave sin to "murder a child" or to "kill that which is born."

To be sure, Justin Martyr's Guilt of Exposing Children justified the prohibition in part on grounds that "almost all so exposed (not only the girls, but also the males) are brought up to prostitution." Yet, in a later chapter, Justin makes clear that the possibility abandoned children would be brought up in a life of prostitution was not his sole concern, writing: "And again [we fear to expose children], lest some of them be not picked up, but die, and we become murderers." (Emphasis supplied.)

This tradition remains a core part of the magisterial teaching of the Christian Church. In 1980, for example, the Catholic Church's Congregation for the Doctrine of the Faith issued a Declaration on Euthanasia, in which it stated that "Nothing and no one can in any way permit the killing of an innocent human being, whether a fetus or an embryo, an infant or an adult, an old person, or one suffering from an incurable disease, or a person who is dying."

More recently, Pope John Paul II feared that "the point has been reached where the most basic care, even nourishment, is denied to babies born with serious handicaps or illnesses," which is, of course, precisely what the Nuffield Council and the Church of England contemplate.

On behalf of the Church of England, Bishop Butler justifies his departure from this 2,000 year-old Church tradition on grounds that:

There are many instances in the life of Christ where he overrode rule-based systems. There may be occasions where, for a Christian, compassion will override the 'rule' that life should inevitably be preserved.

Butler's argument is specious. The tradition of opposition to infanticide is not just a "rule." To the contrary, as John Paul proclaimed, "The Gospel of life is at the heart of Jesus' message."

Although most infants allowed to die per the Nuffield Council's recommendations likely will do so in a hospital setting, there is little ethical difference between allowing a child to expire from denial of nourishment or other forms of care, and allowing a child to die of exposure. Indeed, in both cases, hunger or thirst will be the agent of death.

As Western culture has given increasingly short shrift to the sanctity of life, the Christian Church - whether Catholic, Orthodox, or Protestant - has been a prophetic voice in favor of life. Sadly, as part of its ongoing accommodation to the values of post-Christian secular society, the Church of England has chosen to turn its back on the Gospel of Life.

Is There 'No Obligation to Act'?

From TCS Daily:

A recent report from the UK's Nuffield Council on Bioethics, Critical care decisions in fetal and neonatal medicine: ethical issues, concludes that "there are some circumstances in which imposing or continuing treatments to sustain a newborn baby's life results in a level of irremediable suffering such that there is no ethical obligation to act in order to preserve that life." Accordingly, the Council opines that physicians ethically may withhold or withdraw treatment from such infants. Indeed, while the Council claims not to accept active euthanasia as ethical, it invokes the principle of double effect to justify the use of "potentially life-shortening but pain-relieving treatments."

Given the trends in Western society towards acceptance of abortion and euthanasia, one is no longer surprised when a principally secular ethical body reaches such a conclusion. The attitude of the Church of England came as something of a surprise, however, at least to observers outside the Anglican sphere.

The Daily Mail recently reported that "a bishop representing the national church has now sparked controversy by arguing that there are occasions when it is compassionate to leave a severely disabled child to die. And the Bishop of Southwark, Tom Butler, who is the vice chair of the Church of England's Mission and Public Affairs Council, has also argued that the high financial cost of keeping desperately ill babies alive should be a factor in life or death decisions." (Bishop Butler's full submission to the Nuffield Council has now been released and is available here.)

In suggesting that some children be left "to die," Bishop Butler broke with 2000-plus years of Judeo-Christian ethics.

It was commonplace in pagan Greek and Roman society for parents to "leave a ... child to die." Although active infanticide was known, apparently passive euthanasia was more common. Parents would simply abandon their children in the outdoors to die of exposure.

Jewish and Christian theology, however, squarely forbade this practice. Numerous early Christian sources, for example, confirm the Didache's teaching that it is a grave sin to "murder a child" or to "kill that which is born."

To be sure, Justin Martyr's Guilt of Exposing Children justified the prohibition in part on grounds that "almost all so exposed (not only the girls, but also the males) are brought up to prostitution." Yet, in a later chapter, Justin makes clear that the possibility abandoned children would be brought up in a life of prostitution was not his sole concern, writing: "And again [we fear to expose children], lest some of them be not picked up, but die, and we become murderers." (Emphasis supplied.)

This tradition remains a core part of the magisterial teaching of the Christian Church. In 1980, for example, the Catholic Church's Congregation for the Doctrine of the Faith issued a Declaration on Euthanasia, in which it stated that "Nothing and no one can in any way permit the killing of an innocent human being, whether a fetus or an embryo, an infant or an adult, an old person, or one suffering from an incurable disease, or a person who is dying."

More recently, Pope John Paul II feared that "the point has been reached where the most basic care, even nourishment, is denied to babies born with serious handicaps or illnesses," which is, of course, precisely what the Nuffield Council and the Church of England contemplate.

On behalf of the Church of England, Bishop Butler justifies his departure from this 2,000 year-old Church tradition on grounds that:

There are many instances in the life of Christ where he overrode rule-based systems. There may be occasions where, for a Christian, compassion will override the 'rule' that life should inevitably be preserved.

Butler's argument is specious. The tradition of opposition to infanticide is not just a "rule." To the contrary, as John Paul proclaimed, "The Gospel of life is at the heart of Jesus' message."

Although most infants allowed to die per the Nuffield Council's recommendations likely will do so in a hospital setting, there is little ethical difference between allowing a child to expire from denial of nourishment or other forms of care, and allowing a child to die of exposure. Indeed, in both cases, hunger or thirst will be the agent of death.

As Western culture has given increasingly short shrift to the sanctity of life, the Christian Church - whether Catholic, Orthodox, or Protestant - has been a prophetic voice in favor of life. Sadly, as part of its ongoing accommodation to the values of post-Christian secular society, the Church of England has chosen to turn its back on the Gospel of Life.