Peter Schiff spoke today at a conference I am attending. I have heard him before, and also have read his recent book, so it is not as though he said anything that startled me -- but he did get me thinking.
His main point was simple: the Fed has a tiger by the tail, and cannot let it loose without disastrous consequences for America and for the world. The Fed has reached this point because it unwisely chose, back in 2008, to use its power to print money out of thin air to prevent the collapse and bankruptcy of America's biggest financial institutions.
The Fed bailed out those institutions by purchasing their worthless mortgage-backed securities and other derivative instruments. This put worthless paper on the asset side of the Fed's balance sheet, but allowed the financial institutions to show actual Federal Reserve notes as assets in that paper's place. The Fed could withstand the deterioration of its balance sheet because it is the Fed -- with an unlimited checking account, it literally can never go broke, no matter how worthless are its assets.
From buying worthless paper to buying Treasury bills and notes was a simple next step, once the Government started spending more money on bailouts than it was taking in from taxpayers. The Fed's then President, Ben Bernanke, called this "quantitative easing", or "QE" for short, but in reality that was just a circumlocution for "printing money." When the Fed buys T-bills directly from the Treasury (instead of going through the usual bond brokers), for example, here's how it works.
Every week, the Treasury auctions off a mixture of bills, notes and bonds (bills are short-term, bonds are long-term, and notes are in between) to meet the cash flow needs of the U.S. government. Normally what the Treasury has to offer is picked up by the bond market and by foreign governments (central banks) wishing to acquire dollar reserves.
But when the government runs a huge deficit, as it has during the latter Bush years and all of Obama's first and second terms, the Fed can step into the bond market to buy up any bills, notes or bonds that are not sold to dealers or central banks. By doing so, the Fed ensures that interest rates on the Treasury's borrowings remain stable in accordance with their maturity dates. (If, for example, the Treasury could not find a buyer for all of its long-term bonds at its offered rate of interest, it would have to raise the interest rate to find more buyers. But if the Fed steps in and buys what's left first, the Treasury does not have to offer higher rates -- it just pays the Fed the same rate it pays all the other buyers).
When the Fed buys, say, bonds from the U.S. Treasury, it simply credits the Treasury with cash from its bottomless checking account, and takes possession of the bonds. When the Treasury later buys back those bonds at maturity, as it must for every bond it issues, it has to pay the face amount of the bond plus the interest at the bond's stated rate. And to do so, it needs the required amount of cash in its accounts.
Now, think a minute: if the Fed buys $1 billion worth of 30-year bonds at 3% (say) interest per year, the Treasury is credited with $1 billion when it first sells them. But then it is has to pay the Fed $30 million each year in interest, for 30 years -- or a total of $900 million (almost as much as it borrowed in the first place). And when the bonds mature, it has to come up with another $1 billion to pay off the principal.
So by selling $1 billion of bonds to the Fed, the Treasury commits its budget to come up with a total of $1.9 billion over the next thirty years. And so it goes, week after week. As Sen Everett Dirksen once famously noted: "A billion here, a billion there, and pretty soon you're talking real money."
Now, here's the wrinkle: all interest the Treasury pays to the Fed gets turned over, at the end of each year to: (you guessed it) the Treasury! (The Fed simply deducts what it needs to erect and maintain all of its splendid marble buildings, and to pay all of its officers and staff the very best salaries and benefits.)
So it is not quite a merry-go-round, because of the Fed's needs for money to operate. Out of the $1.9 billion the Treasury pays to the Fed in my example, $1 billion (the principal) is a wash, and the Treasury might net, say, $870 million out of its original $900 million paid in interest. The figures don't matter as much as the fact: the Treasury still, after everything is said and done, has to come up with new money in order to clear its books with the Fed.
By using "quantitative easing" to help out the Treasury, therefore, the Fed is really simply delaying the ultimate day of reckoning. For if the Treasury did not have the Fed buying those bonds from it, it would have had to come up with a full $1.9 billion to pay them at maturity, instead of being able to use what the Fed returns to it each year.
The same result occurs in the end, however. As long as anyone keeps buying bills, notes and bonds from the Treasury, the Treasury has to come up with more cash to pay back the principal plus the stated interest.
The Fed's QE to date has kept the interest rates the Treasury has to pay artificially low, because the Fed always buys whatever bonds are left without demanding higher rates. But how long can the game continue?
And that is just what Peter Schiff points out. The Fed has thus far "phased out" QE three times. Each time, it said (at first) that there would be no more QE, but then as interest rates began to threaten to rise, and the stock market threatened to panic, the Fed would step in again and announce "another round" of quantitative easing. Thus we have had QE#1, QE#2 and QE#3 so far. The Fed is now almost done with the process of phasing out QE#3, as it has been buying less and less bonds each passing month.
And how has the stock market taken this? Exactly as it always has -- with panic drops and uncertain swings because of the inability to predict how high interest rates will have to rise for the Treasury to sell all of its bonds without the Fed being the buyer of last resort. And if bond interest rates rise, the stock market will really plummet.
Moreover, if interest rates rise, the Treasury will have to come up with ever more and more cash to pay the interest on each new bill, note or bond it issues. Since it cannot print money itself, the Treasury has to go into the market to borrow that extra cash. And the more it has to borrow, the more the interest rates will rise -- it is a vicious cycle.
Mr. Schiff therefore predicts the Fed will soon be forced to announce QE#4. Most agree with him, because the alternative is to let the Government default on its debt, which would lead to institutional and commercial failures of all kinds, all around the world.
But QE#4 will at best be a temporary solution. How long will the Fed be able to continue to tell gullible markets that each new phase of quantitative easing will be only "temporary"? The fact is that, having started down the QE road, the Fed cannot reverse course permanently without disastrous consequences for everyone.
And once the Fed's game is seen to be what it is -- the repeated printing of paper money with nothing to back it except the promise to print more paper money as needed -- the notion of inflation will begin to get a toehold on the economy. Would you accept the promise to be paid in a year with paper that will be worth less than what you turn over to your borrower today? Not without demanding a suitably high rate of interest, you wouldn't. And so the Fed's policies inevitably will lead to a war between the demand for more interest to compensate for the shrinking value of paper money caused by the printing of ever more and more paper money to pay that interest.
This is all so simple, yet very few financial advisers are talking about it besides Peter Schiff. The process embarked upon by the Fed can lead to no good, no matter how things turn out. The government must stop borrowing what it can never pay back, or else it must either default on that debt (which will lead to massive deflation on a scale never before seen), or it must print so much worthless paper that hyperinflation ensues.
The choice between hyperinflation and super-deflation is truly a Hobson's choice, but that is where the government's policies, and the Fed's willingness to abet them, have led us. Of course, if a new world war breaks out, then all bets are off until after it is over -- but who wants the devastation of a world war just to postpone the inevitable devastation of hyperinflation or super-deflation?
This may not be original with him, but Peter Schiff has a striking analogy to portray what the Fed is now doing. "It's as though," he says, "a pilot were to take credit for successfully getting a plane from A to B without being able to land it. He has all sorts of excuses for why he can't land: the weather is bad, the airport isn't properly equipped, the plane's instruments aren't working right. But the truth is he does not know how to land the plane -- he just knows how to make excuses. And eventually the plane is going to run out of fuel -- and crash."
The Fed is that pilot, and we are all passengers on the plane. Better start praying for a miracle, because neither the Fed nor the current government has a clue as to how to get out of this predicament. They know only how to keep doing what got us to this point in the first place. And they keep doing it, and keep doing it ...
(Readers who would like more background as to how we got here may want to read the series of posts linked at this page.)
Thursday, October 23, 2014
Monday, October 6, 2014
Scalia's Prophecy Fulfilled (Sub Silentio)
Sub silentio (literally, "under [the cloak of] silence") is a legal term of art for the technique of a court that, say, wants to accomplish something like the overruling of an earlier case -- without having to admit in express words what it is doing. For whatever political or collegial considerations prevail at the moment, the court finds it more "convenient" to stop short of saying what it is doing, while doing it nonetheless. Then, either a few (or even many) years later, the court can "discover", say, that the case of W. vs. X was in fact overruled, sub silentio, by the case of Y vs. Z.
Courts also understandably shy away from overturning their own prior decisions. As Justices O'Connor, Kennedy and Souter noted in declining to overrule Roe v. Wade in the later case of Planned Parenthood of Southeastern Pa. v. Casey, 505 U.S. 833, 844, 112 S.Ct. 2791, 120 L.Ed.2d 674 (1992), “Liberty finds no refuge in a jurisprudence of doubt.”
Today the United States Supreme Court in effect overruled, without saying so, its earlier holdings in which it expressly declined to declare that homosexuals enjoyed a "fundamental right" to practice their lifestyle without State interference. And the most remarkable thing is that it did so sub silentio, without even issuing any written opinion!
The Court accomplished this astonishing feat by the simple tactic of exercising its power to review lower court decisions. It denied review of decisions by three different Circuit Courts of Appeal striking down bans on same-sex marriages in the states of Indiana, Oklahoma, Utah, Virginia (three cases) and Wisconsin. Those seven decisions are now final, and mean that the same courts could in the future strike down similar laws in six other States within their jurisdictions: Colorado, Kansas, North Carolina, South Carolina, West Virginia and Wyoming.
Moreover, a decision striking down bans on same-sex marriage in Idaho and Nevada is expected soon from the very liberal Ninth Circuit Court of Appeals in San Francisco, with jurisdiction over seven more States than those two. Cases that could be affected by that ruling are currently pending in the lower courts of Alaska, Arizona and Montana.
Before today's denials of review, the Court had uniformly struck down refusals by the lower courts to stay the effect of their decisions (and thus begin the process of marrying same-sex couples before those decisions became final). But now that those decisions are made final, by the Court's refusal to review them, the couples in the States affected by the rulings will begin marrying as soon as next Monday.
So by refusing to exercise its powers of review, the Court has in effect given a green light to same-sex marriage in as many as thirty States, with more sure to follow. And all of this without a single uniform ruling that same-sex marriage is a "fundamental right" under the Constitution!
Previously the Court had held that State statutes having a discriminatory effect against a class of people could be upheld if there was any "rational basis" for the discrimination -- unless the case involved a "fundamental right", in which instance the statute would be subjected to a higher standard of review, called "strict scrutiny." In Roe v. Wade, for example, the Court struck down an anti-abortion statute on the ground that the right to abort an unborn child was "fundamental" under the Constitution.
But after today's (in)action, that is a distinction without a difference. In its 2003 decision in Lawrence v. Texas, striking down a Texas criminal statute outlawing acts of sodomy between people of the same sex, the majority went out of its way to declare that it was not finding a "fundamental right" to engage in sodomy. Rather, it struck down the statute on the ground that the only basis for the provision was in a moral or religious code. States could not enact penal laws on such a basis, it declared, without infringing on "a personal relationship that, whether or not entitled to formal recognition in the law, is within the liberty of persons to choose without being punished as criminals." (My bold emphasis added.)
As Justice Scalia pointed out in a stinging and prophetic dissent, this rationale had no limits at all:
(Lawrence v. Texas (2003) 539 U.S. 558, 590 [123 S.Ct. 2472, 2490, 156 L.Ed.2d 508] [footnote omitted].)
Justice Scalia called it exactly, right down to today's (in)action. The sequence of rulings from the Supreme Court is thus as follows:
1. Bowers v. Hardwick (1986) 478 U.S. 186 [106 S.Ct. 2841, 92 L.Ed.2d 140]: Georgia's anti-sodomy statute did not violate the "fundamental rights" of homosexuals. Justices in the majority: White, Burger (C.J.), Powell, Rehnquist and O'Connor; Justices dissenting: Blackmun, Brennan, Marshall and Stevens.
2. Lawrence v. Texas (2003) 539 U.S. 558 [123 S.Ct. 2472, 156 L.Ed.2d 508]: While not deciding that homosexuals had any "fundamental Constitutional right" to engage in sodomy, the Court held that States could not penalize such acts without interfering with the essential liberty of individuals to make lifestyle choices. Justices in the majority: Kennedy, Stevens, Souter, Ginsburg and Breyer (O'Connor concurred in the judgment); Justices dissenting: Rehnquist (C.J.), Scalia, and Thomas.
3. United States v. Windsor (2013) __ U.S. ___ [133 S.Ct. 2675, 186 L.Ed.2d 808]: While not deciding that same-sex marriage is a "fundamental right deeply rooted in this Nation's history and tradition," Congress' singling out of only heterosexual marriage for federal recognition unconstitutionally deprives same-sex couples recognized by their own State of their liberty under the Fifth Amendment. Justices in the majority: Kennedy, Ginsburg, Breyer, Sotomayor and Kagan; Justices dissenting: Roberts (C.J.), Scalia, Thomas and Alito.
It will be evident at once that Justice Kennedy has been instrumental in shifting the Court's gay-rights jurisprudence from the narrow necessity of first finding that such rights are "fundamental" (in order to make laws discriminating against them subject to strict scrutiny) to the far broader, less stringent requirement that State and federal laws may not unduly infringe upon the liberty of individuals to lead the lifestyles of their choice. Each time, he attracted the Court's liberal majority to support him in that shift.
At the same time, it should be evident, in light of today's orders refusing review of any of the decisions striking down same-sex-marriage bans below, that at least one Justice on the so-called conservative side had to vote with the liberals and Justice Kennedy to deny review. The reason for that statement is that it takes the vote of just four Justices to accept a case for review, and there were four dissenting justices in Windsor who are all still on the Court today. (I speak of the "so-called" conservative side because it is becoming increasingly questionable whether the Chief Justice may still be counted among their number.)
[UPDATE 10/06/2012: For a slightly different take on what could have occurred behind the Court's sealed doors -- and especially detailing the switch in viewpoint that had to occur for Justice Kennedy -- see this post from law professor Josh Blackman (blog linked under "Juricannon" at the right).]
Before today's orders were issued, Justice Ginsburg had expressed the view in public that the same-sex marriage rulings were not yet ripe for review, as there were not yet any decisions by the Courts of Appeal that upheld a State's ban on same-sex marriages. The Court usually likes to step in only to resolve conflicts between the Courts of Appeal, and here there were none (yet). Could this viewpoint have swayed any of the four conservatives? I doubt it very much.
At the same time, if those same four Justices could read the tea leaves displayed by the prior decisions in Lawrence and Windsor, then it should have been obvious that accepting review of any of the seven cases below would have led only to another Kennedy majority opinion finding that bans on same-sex marriage infringe unconstitutionally upon individual liberties. Thus by declining review at this time, the door could be left open for a different Court at a later day to return, perhaps, to the rational basis jurisprudence that prevailed pre-Lawrence.
And given the results expected in the upcoming midterm elections, such a calculating minority Justice (or two) might well entertain the hope that the elections would stymie President Obama's ability to appoint any more Justices for the remainder of his term -- leaving open the possibility that 2016 could see the election of a Republican president with a Republican majority in the Senate.
Cynical? You bet. Calculating? Certainly. For the calculus says nothing about what will happen to all of the same-sex marriages that will be contracted in many States between next Monday and whenever there is again a conservative majority on the Court. Presumably their validity would be a fait accompli, and seen as the temporary price to be paid for a longer-term uniformity in the law.
But is that any worse than the cynicism and calculated strategies of those who are currently employing the lower federal courts to gain what they could not gain at the ballot box?
I say we are all the worse off for the sheer, unprincipled politics that now govern federal jurisprudence on issues that were traditionally left to the individual States to decide. When the courts read the newspapers rather than their own precedents, we are indeed at the point where liberty can find no refuge in a jurisprudence of doubt or politics.
Courts also understandably shy away from overturning their own prior decisions. As Justices O'Connor, Kennedy and Souter noted in declining to overrule Roe v. Wade in the later case of Planned Parenthood of Southeastern Pa. v. Casey, 505 U.S. 833, 844, 112 S.Ct. 2791, 120 L.Ed.2d 674 (1992), “Liberty finds no refuge in a jurisprudence of doubt.”
Today the United States Supreme Court in effect overruled, without saying so, its earlier holdings in which it expressly declined to declare that homosexuals enjoyed a "fundamental right" to practice their lifestyle without State interference. And the most remarkable thing is that it did so sub silentio, without even issuing any written opinion!
The Court accomplished this astonishing feat by the simple tactic of exercising its power to review lower court decisions. It denied review of decisions by three different Circuit Courts of Appeal striking down bans on same-sex marriages in the states of Indiana, Oklahoma, Utah, Virginia (three cases) and Wisconsin. Those seven decisions are now final, and mean that the same courts could in the future strike down similar laws in six other States within their jurisdictions: Colorado, Kansas, North Carolina, South Carolina, West Virginia and Wyoming.
Moreover, a decision striking down bans on same-sex marriage in Idaho and Nevada is expected soon from the very liberal Ninth Circuit Court of Appeals in San Francisco, with jurisdiction over seven more States than those two. Cases that could be affected by that ruling are currently pending in the lower courts of Alaska, Arizona and Montana.
Before today's denials of review, the Court had uniformly struck down refusals by the lower courts to stay the effect of their decisions (and thus begin the process of marrying same-sex couples before those decisions became final). But now that those decisions are made final, by the Court's refusal to review them, the couples in the States affected by the rulings will begin marrying as soon as next Monday.
So by refusing to exercise its powers of review, the Court has in effect given a green light to same-sex marriage in as many as thirty States, with more sure to follow. And all of this without a single uniform ruling that same-sex marriage is a "fundamental right" under the Constitution!
Previously the Court had held that State statutes having a discriminatory effect against a class of people could be upheld if there was any "rational basis" for the discrimination -- unless the case involved a "fundamental right", in which instance the statute would be subjected to a higher standard of review, called "strict scrutiny." In Roe v. Wade, for example, the Court struck down an anti-abortion statute on the ground that the right to abort an unborn child was "fundamental" under the Constitution.
But after today's (in)action, that is a distinction without a difference. In its 2003 decision in Lawrence v. Texas, striking down a Texas criminal statute outlawing acts of sodomy between people of the same sex, the majority went out of its way to declare that it was not finding a "fundamental right" to engage in sodomy. Rather, it struck down the statute on the ground that the only basis for the provision was in a moral or religious code. States could not enact penal laws on such a basis, it declared, without infringing on "a personal relationship that, whether or not entitled to formal recognition in the law, is within the liberty of persons to choose without being punished as criminals." (My bold emphasis added.)
As Justice Scalia pointed out in a stinging and prophetic dissent, this rationale had no limits at all:
State laws against bigamy, same-sex marriage, adult incest, prostitution, masturbation, adultery, fornication, bestiality, and obscenity are likewise sustainable only in light of Bowers' validation of laws based on moral choices. Every single one of these laws is called into question by today's decision; the Court makes no effort to cabin the scope of its decision to exclude them from its holding. See ante, at 2480 (noting “an emerging awareness that liberty gives substantial protection to adult persons in deciding how to conduct their private lives in matters pertaining to sex” (emphasis added)). The impossibility of distinguishing homosexuality from other traditional “morals” offenses is precisely why Bowers rejected the rational-basis challenge [i.e., the petitioners' challenge that the anti-sodomy law involved in that case had no rational basis to support it]. “The law,” it said, “is constantly based on notions of morality, and if all laws representing essentially moral choices are to be invalidated under the Due Process Clause, the courts will be very busy indeed.” 478 U.S., at 196, 106 S.Ct. 2841.
(Lawrence v. Texas (2003) 539 U.S. 558, 590 [123 S.Ct. 2472, 2490, 156 L.Ed.2d 508] [footnote omitted].)
Justice Scalia called it exactly, right down to today's (in)action. The sequence of rulings from the Supreme Court is thus as follows:
1. Bowers v. Hardwick (1986) 478 U.S. 186 [106 S.Ct. 2841, 92 L.Ed.2d 140]: Georgia's anti-sodomy statute did not violate the "fundamental rights" of homosexuals. Justices in the majority: White, Burger (C.J.), Powell, Rehnquist and O'Connor; Justices dissenting: Blackmun, Brennan, Marshall and Stevens.
2. Lawrence v. Texas (2003) 539 U.S. 558 [123 S.Ct. 2472, 156 L.Ed.2d 508]: While not deciding that homosexuals had any "fundamental Constitutional right" to engage in sodomy, the Court held that States could not penalize such acts without interfering with the essential liberty of individuals to make lifestyle choices. Justices in the majority: Kennedy, Stevens, Souter, Ginsburg and Breyer (O'Connor concurred in the judgment); Justices dissenting: Rehnquist (C.J.), Scalia, and Thomas.
3. United States v. Windsor (2013) __ U.S. ___ [133 S.Ct. 2675, 186 L.Ed.2d 808]: While not deciding that same-sex marriage is a "fundamental right deeply rooted in this Nation's history and tradition," Congress' singling out of only heterosexual marriage for federal recognition unconstitutionally deprives same-sex couples recognized by their own State of their liberty under the Fifth Amendment. Justices in the majority: Kennedy, Ginsburg, Breyer, Sotomayor and Kagan; Justices dissenting: Roberts (C.J.), Scalia, Thomas and Alito.
It will be evident at once that Justice Kennedy has been instrumental in shifting the Court's gay-rights jurisprudence from the narrow necessity of first finding that such rights are "fundamental" (in order to make laws discriminating against them subject to strict scrutiny) to the far broader, less stringent requirement that State and federal laws may not unduly infringe upon the liberty of individuals to lead the lifestyles of their choice. Each time, he attracted the Court's liberal majority to support him in that shift.
At the same time, it should be evident, in light of today's orders refusing review of any of the decisions striking down same-sex-marriage bans below, that at least one Justice on the so-called conservative side had to vote with the liberals and Justice Kennedy to deny review. The reason for that statement is that it takes the vote of just four Justices to accept a case for review, and there were four dissenting justices in Windsor who are all still on the Court today. (I speak of the "so-called" conservative side because it is becoming increasingly questionable whether the Chief Justice may still be counted among their number.)
[UPDATE 10/06/2012: For a slightly different take on what could have occurred behind the Court's sealed doors -- and especially detailing the switch in viewpoint that had to occur for Justice Kennedy -- see this post from law professor Josh Blackman (blog linked under "Juricannon" at the right).]
Before today's orders were issued, Justice Ginsburg had expressed the view in public that the same-sex marriage rulings were not yet ripe for review, as there were not yet any decisions by the Courts of Appeal that upheld a State's ban on same-sex marriages. The Court usually likes to step in only to resolve conflicts between the Courts of Appeal, and here there were none (yet). Could this viewpoint have swayed any of the four conservatives? I doubt it very much.
At the same time, if those same four Justices could read the tea leaves displayed by the prior decisions in Lawrence and Windsor, then it should have been obvious that accepting review of any of the seven cases below would have led only to another Kennedy majority opinion finding that bans on same-sex marriage infringe unconstitutionally upon individual liberties. Thus by declining review at this time, the door could be left open for a different Court at a later day to return, perhaps, to the rational basis jurisprudence that prevailed pre-Lawrence.
And given the results expected in the upcoming midterm elections, such a calculating minority Justice (or two) might well entertain the hope that the elections would stymie President Obama's ability to appoint any more Justices for the remainder of his term -- leaving open the possibility that 2016 could see the election of a Republican president with a Republican majority in the Senate.
Cynical? You bet. Calculating? Certainly. For the calculus says nothing about what will happen to all of the same-sex marriages that will be contracted in many States between next Monday and whenever there is again a conservative majority on the Court. Presumably their validity would be a fait accompli, and seen as the temporary price to be paid for a longer-term uniformity in the law.
But is that any worse than the cynicism and calculated strategies of those who are currently employing the lower federal courts to gain what they could not gain at the ballot box?
I say we are all the worse off for the sheer, unprincipled politics that now govern federal jurisprudence on issues that were traditionally left to the individual States to decide. When the courts read the newspapers rather than their own precedents, we are indeed at the point where liberty can find no refuge in a jurisprudence of doubt or politics.
Wednesday, October 1, 2014
Clash of the Canons and Civil Law at GTS
The recent meltdown at the country's oldest theological seminary (and the only Episcopal seminary under the direct supervision of ECUSA) puts to the test some of the canonical abuses and litigation strategy implemented in the last few years by the Church's leadership at 815 Second Avenue. Eight of the ten full-time faculty employed by General Theological Seminary declared in a September 17 letter to the Board of Trustees that due to the "hostile work environment" created by the Seminary's Dean and President, the Very Rev. Kurt H. Dunkle, they were unable to continue to work under him.
The phrase "hostile work environment" is drawn from the well-developed body of labor law enforced in the United States by the National Labor Relations Board. However, ever since a decision by the United States Supreme Court in 1979, the NLRB's jurisdiction has been held not to extend to religious schools and their faculties (including lay faculty), due to concerns over entanglement with religious rights under the First Amendment. Just as with all the recent Church property disputes, ECUSA has been at the forefront of insisting that the civil courts must defer to it in all civil litigation involving its religious affairs, governance and operations.
Nevertheless, the eight employees have announced that they have formed a union, and want the Seminary to negotiate their demands with their authorized representatives. (Scroll down to the letter of September 25, second page.) Those demands are five in number:
Instead, apparently under the guidance of its Chair, the resigned (retired) Rt. Rev. Mark Sisk, and of Dean Dunkle, the Board issued a statement to the effect that it had voted "with great regret" to accept the resignations of the eight faculty members.
In doing so, the Board took a leaf from the book at 815, where the Presiding Bishop has unilaterally rid herself of pesky dissident bishops by abusing the renunciation of vows canon. She will take any form of written or oral statement expressing disagreement with her jurisdiction as the required written declaration of "an intention to be released and removed from the ordained Ministry of this Church and from the obligations attendant thereto" (Canon III.12.7 [a]) -- regardless of what the bishop in question says to the contrary.
No one, however, is talking at GTS of renunciation of orders -- but only of resignation from a full-time faculty position. Nevertheless, the same contract principles should apply: one cannot read a resignation into a demand that the Board redress what has become a hostile workplace, and a refusal to continue to perform assigned duties until the Board acknowledges the problem and begins to address it.
In other words, the argument that the faculty members have breached their respective contracts to teach classes at GTS is unavailable in these circumstances, because no one can be required to work in a hostile environment, and the environment is the Dean's (and ultimately the Board's) responsibility. If the faculty is correct in their charges, the first breach occurred on the part of the Dean, and unless the Board cures the problem, it will be complicit in that same breach -- thereby excusing performance on the part of the faculty while the breach continues.
And what has the Board done in response to the faculty's demands? It called upon the pro bono services of one of New York's largest law firms, Covington & Burling, to make a formal investigation into the charges made against Dean Dunkle, and declared it would take no further steps until that investigation was completed. As of yesterday, the law firm was interviewing in its offices each faculty member separately to gather evidence for its report to the Board.
But the Board has not suspended Dean Dunkle, or otherwise relieved him of responsibility, pending the outcome of the investigation. So the ultimate right of the faculty to go on strike will first depend upon whether the Board finds their charges were justified.
The charges are described generally in the second through the fifth paragraphs of the faculty members' letter of September 17. For the most part they amount to saying that Dean Dunkle seems incapable of acting with sensitivity toward Asians, women, African-Americans, and gays, and that as a consequence he offends and intimidates both faculty and students alike. In other words, this is a quintessential clash between Episcopal authoritarianism and Episcopal liberalism.
Declaring that the September 17 letter amounted to a letter of resignation was an authoritarian act. And to that extent, it harks back to the authoritarian manner in which ECUSA's Presiding Bishop has chosen to deal with those bishops and clergy who openly disagree with her, and with what she sees as ECUSA's priorities.
There is another Canon to which the GTS Board may be turning to justify its authoritarian action -- and if so, it would once again be imitating the litigation strategy of 815 against departing parishes. Canon I.17.8 (in a section that deals with laity in the Church) provides:
(The question of how a vestry position for a local parish is "an office in this Church" has never stopped 815 from applying the Canon -- and so the issue of whether a faculty position at GTS is likewise such an "office" will no doubt not detain those who want to contend that the faculty have in effect resigned their positions. Moreover, since the faculty positions are arguably all lay positions within GTS, then the Board would circumvent the issue that four of the faculty happen to be ordained clergy, and so not subject to Canon I.17.8.)
The Church's Canons, however, run in both directions. As an ordained Episcopal priest, Dean Dunkle is subject to the disciplinary canons. He is canonically resident in the Diocese of Florida (where, fittingly enough, he served as Bishop Howard's point man in litigating against departing parishes). Already on the Facebook page created to support the eight faculty members, there have been calls to lodge complaints against Dean Dunkle with that Diocese's Intake Officer for violating the Canons of Title IV. The question there, however, will be whether the Bishop of Florida will want to be viewed as interfering in a matter that involves the internal governance of GTS, and that accordingly should be left to the Board.
Thus we have all kinds of balls up in the air at GTS. The faculty has organized into a union, but the NLRB will not take jurisdiction over religious schools and their unions, so the Board cannot be ordered to negotiate with it. The Bishop of Florida has putative disciplinary authority over the GTS Dean, but he likewise will probably not take jurisdiction. Whether any of ECUSA's Canons may be said to override the terms of the faculty's employment agreements again is a question without a court that can decide it. And we are not informed as to whether the faculty members even have written contracts of employment with GTS -- or whether, if they do, their employment is tenured, or is at will in some cases.
It looks, then, as though the parties will just have to come together to sort things out. And after all, isn't that the Christian thing to do?
The phrase "hostile work environment" is drawn from the well-developed body of labor law enforced in the United States by the National Labor Relations Board. However, ever since a decision by the United States Supreme Court in 1979, the NLRB's jurisdiction has been held not to extend to religious schools and their faculties (including lay faculty), due to concerns over entanglement with religious rights under the First Amendment. Just as with all the recent Church property disputes, ECUSA has been at the forefront of insisting that the civil courts must defer to it in all civil litigation involving its religious affairs, governance and operations.
Nevertheless, the eight employees have announced that they have formed a union, and want the Seminary to negotiate their demands with their authorized representatives. (Scroll down to the letter of September 25, second page.) Those demands are five in number:
1. The immediate appointment of a committee of Board members, to be determined by the faculty, to meet with us to discuss conditions necessary for moving forward as an institution during the October meeting of the Board of Trustees.The Board has thus far resisted acceding to any of the faculty's demands (one Board member wrote on her Facebook page that while Nos. 3 and 5 were "not bad ideas," the rest were "impossible").
2. That action be taken to empower the faculty with immediate oversight over the curriculum, schedule, worship, and overall program of formation for the seminary. This should also involve the appointment of a faculty council who will implement a pattern of worship consistent with the Book of Common Prayer (1979).
3. Identification and retention of a qualified person, external to the institution, to offer pastoral support to staff, students, and faculty during this period of transition and acute stress. We also seek the appointment of a Dean of Students who can ensure that the ongoing spiritual and pastoral concerns are being adequately met and their voices heard.
4. Steps be immediately taken to restore and ensure that the faculty members be afforded due process in connection with all appointments, worship and formation, and the implementation of our curriculum. The Academic Dean should be empowered with the authority necessary to implement properly the academic program, consistent with the standards of the Association of Theological Schools (ATS) and our own recent Declaration of the Way of Wisdom.
5. Retention of a qualified fundraiser to begin a capital campaign to rebuild the seminary’s endowment and meet the operational costs of the seminary.
Instead, apparently under the guidance of its Chair, the resigned (retired) Rt. Rev. Mark Sisk, and of Dean Dunkle, the Board issued a statement to the effect that it had voted "with great regret" to accept the resignations of the eight faculty members.
In doing so, the Board took a leaf from the book at 815, where the Presiding Bishop has unilaterally rid herself of pesky dissident bishops by abusing the renunciation of vows canon. She will take any form of written or oral statement expressing disagreement with her jurisdiction as the required written declaration of "an intention to be released and removed from the ordained Ministry of this Church and from the obligations attendant thereto" (Canon III.12.7 [a]) -- regardless of what the bishop in question says to the contrary.
No one, however, is talking at GTS of renunciation of orders -- but only of resignation from a full-time faculty position. Nevertheless, the same contract principles should apply: one cannot read a resignation into a demand that the Board redress what has become a hostile workplace, and a refusal to continue to perform assigned duties until the Board acknowledges the problem and begins to address it.
In other words, the argument that the faculty members have breached their respective contracts to teach classes at GTS is unavailable in these circumstances, because no one can be required to work in a hostile environment, and the environment is the Dean's (and ultimately the Board's) responsibility. If the faculty is correct in their charges, the first breach occurred on the part of the Dean, and unless the Board cures the problem, it will be complicit in that same breach -- thereby excusing performance on the part of the faculty while the breach continues.
And what has the Board done in response to the faculty's demands? It called upon the pro bono services of one of New York's largest law firms, Covington & Burling, to make a formal investigation into the charges made against Dean Dunkle, and declared it would take no further steps until that investigation was completed. As of yesterday, the law firm was interviewing in its offices each faculty member separately to gather evidence for its report to the Board.
But the Board has not suspended Dean Dunkle, or otherwise relieved him of responsibility, pending the outcome of the investigation. So the ultimate right of the faculty to go on strike will first depend upon whether the Board finds their charges were justified.
The charges are described generally in the second through the fifth paragraphs of the faculty members' letter of September 17. For the most part they amount to saying that Dean Dunkle seems incapable of acting with sensitivity toward Asians, women, African-Americans, and gays, and that as a consequence he offends and intimidates both faculty and students alike. In other words, this is a quintessential clash between Episcopal authoritarianism and Episcopal liberalism.
Declaring that the September 17 letter amounted to a letter of resignation was an authoritarian act. And to that extent, it harks back to the authoritarian manner in which ECUSA's Presiding Bishop has chosen to deal with those bishops and clergy who openly disagree with her, and with what she sees as ECUSA's priorities.
There is another Canon to which the GTS Board may be turning to justify its authoritarian action -- and if so, it would once again be imitating the litigation strategy of 815 against departing parishes. Canon I.17.8 (in a section that deals with laity in the Church) provides:
Any person accepting any office in this Church shall well and faithfully perform the duties of that office in accordance with the Constitution and Canons of this Church and of the Diocese in which the office is being exercised.In cases where vestries have voted to withdraw their parish from an Episcopal Diocese, ECUSA and its attorneys have always invoked this Canon, and argued that by the very act of voting to withdraw, the individual vestry members had disqualified themselves from further service on the vestry. A number of civil courts in California and elsewhere have upheld that argument -- turning the Canon into a sort of "ejector seat" mechanism.
(The question of how a vestry position for a local parish is "an office in this Church" has never stopped 815 from applying the Canon -- and so the issue of whether a faculty position at GTS is likewise such an "office" will no doubt not detain those who want to contend that the faculty have in effect resigned their positions. Moreover, since the faculty positions are arguably all lay positions within GTS, then the Board would circumvent the issue that four of the faculty happen to be ordained clergy, and so not subject to Canon I.17.8.)
The Church's Canons, however, run in both directions. As an ordained Episcopal priest, Dean Dunkle is subject to the disciplinary canons. He is canonically resident in the Diocese of Florida (where, fittingly enough, he served as Bishop Howard's point man in litigating against departing parishes). Already on the Facebook page created to support the eight faculty members, there have been calls to lodge complaints against Dean Dunkle with that Diocese's Intake Officer for violating the Canons of Title IV. The question there, however, will be whether the Bishop of Florida will want to be viewed as interfering in a matter that involves the internal governance of GTS, and that accordingly should be left to the Board.
Thus we have all kinds of balls up in the air at GTS. The faculty has organized into a union, but the NLRB will not take jurisdiction over religious schools and their unions, so the Board cannot be ordered to negotiate with it. The Bishop of Florida has putative disciplinary authority over the GTS Dean, but he likewise will probably not take jurisdiction. Whether any of ECUSA's Canons may be said to override the terms of the faculty's employment agreements again is a question without a court that can decide it. And we are not informed as to whether the faculty members even have written contracts of employment with GTS -- or whether, if they do, their employment is tenured, or is at will in some cases.
It looks, then, as though the parties will just have to come together to sort things out. And after all, isn't that the Christian thing to do?
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