Steve Bainbridge writes here of the passing of Henry Manne, one of the most important legal thinkers of the late 20th century. I did not know Henry at all personally until one evening a few years ago I was very pleased, out of the blue, to receive an email from him commenting on a paper of mine that had been posted on SSRN. That led to a brief but fruitful exchange of ideas about law and capitalism that proved very helpful in my own thinking and apparently, while he was perhaps just being polite in saying so, in his own thinking as well. Henry was someone who I think, alongside the late Benoit Mandelbrot whom I also was privileged to get to know in a similarly random way, should have received a Nobel Prize. Henry’s work and ideas will be of significance for a very long period of time and deserve careful study.

While many tomorrow will, understandably, recall Rev. King’s “I Have a Dream” speech, I often think of another of his great speeches, one that was, in some ways, more radical and disconcerting because he linked his struggle for racial justice to US foreign policy.

It was delivered in New York in 1967 and can be heard here.

There is also a personal aspect of that speech for me because my young son’s great uncle, Thich Nhat Hanh, was quoted by King in the speech:

“This is the message of the great Buddhist leaders of Vietnam. Recently one of them wrote these words, and I quote: ‘Each day the war goes on the hatred increases in the hearts of the Vietnamese and in the hearts of those of humanitarian instinct. The Americans are forcing even their friends into becoming their enemies. It is curious that the Americans, who calculate so carefully on the possibilities of military victory, do not realize that in the process they are incurring deep psychological and political defeat. The image of America will never again be the image of revolution, freedom, and democracy, but the image of violence and militarism.'”

Thich Nhat Hanh had met with King when he came to the United States from Vietnam and apparently had a significant impact on King’s thinking. In fact, King nominated him for the Nobel Peace Prize. This year, Thich Nhat Hanh is quite ill so there is a poignancy to this important historical connection. It is also the case that now is once again a time when America must find a way to stand for “revolution, freedom and democracy” as the events in Paris and the middle east remind us.

Coming out in (relatively) affordable paperback soon. Order now in time for the Xmas holiday gift giving season!

Source: The Facebook effect: secondary markets and insider trading in today’s startup environment : Research Handbook on Insider Trading

My co-author Stanford-based economist Jenny Kuan and I each traveled to different parts of the country recently to present our research on the problematic changes in stock market structures. I presented the paper at the meetings of SASE held at Northwestern’s Kellogg School of Business and Jenny presented the paper at the ISNIE meetings at Duke. We got helpful comments from both events and are honing in on a new draft for submission to a peer reviewed finance journal. Here are the slides I used in Chicago.

I sent The New Yorker the following letter recently in reply to a very interesting essay by Louis Menand on the complicated interaction between the battle over civil rights for women and minorities. They have not printed it so I thought I would share it with readers of the blog:

To the editor,

Louis Menand is to be commended for bringing to light certain aspects of what I and my co-author, the late Hal Draper, describe in our study of the ERA (The Hidden History of the Equal Rights Amendment) coincidentally just published in the last few weeks by the Center for Socialist History.

While Mr. Menand notes correctly the close ties between business interests and proponents of the ERA he leaves out of his account one key historical fact and misstates one key impact of the passage of Title VII. The two are related in an important way and together they act as a key to understanding the full story we set out in detail in our book.

The key historical fact is that there were, always and from the very earliest period following suffrage, two versions the ERA. Left and liberal activists (including, for example, the social feminist Florence Kelley and the liberal Eleanor Roosevelt) promoted a “labor” ERA that would, indeed, have extended the benefits of protective labor legislation to men workers. Yet at every turn this genuinely progressive alternative ERA was attacked and undermined by Alice Paul and her allies in the business community who backed what we term the “pure” version of the ERA. There is no surprise about this alliance nor was there ever any confusion – Paul herself was from an upper class background and was a natural ally of business and professional women who aspired to join their male business counterparts at the top of our socio-economic hierarchy. Paul and her colleagues in the National Woman’s Party were enthusiastic about ending expensive labor laws that protected working class women.

The related misstatement is Mr. Menand’s bald conclusion that “Labor-protection laws did not disappear, as many liberals had feared; they were written to cover both sexes.” Oddly this follows his correct statement that a federal court found such laws unconstitutional. The court opinion is accurately cited [see Rosenfeld v. Southern Pacific, 444 F.2d 1219], his follow on conclusion has no basis. In state after state, in the immediate wake of the passage of Title VII, protective labor laws were stripped from the books and any chance of extending them to men workers was gone.

At least one of the authors cited by Mr. Menand clearly concurs. Jo Freeman wrote in her study of Title VII: “As a consequence [of the passage of Title VII] the federal courts voided state protective laws on the grounds that they were in conflict with the federal prohibition against sex discrimination …. These laws, which limited the hours women could work, the weights they could lift, often prohibited night work and entry into some occupations considered too dangerous for women, had been actively sought during the first half of the twentieth century by an earlier generation of women activists …. “[citations omitted]

We describe in detail this process in the book, including for example the bitter battle over these labor laws fought out in California between trade union women and the National Organization for Women.

Only when one puts these pieces of the ERA’s history together can one explain its ultimate failure during the ratification process, a step that Mr. Menand does not, understandably, attempt in his essay. By the time the amendment emerged from the Congress for ratification by the states, Title VII had already carried out the business side of the original Alice Paul/business agenda – elimination of protective labor laws. An attempt to extend the period for ratification of the ERA was defeated as the erstwhile allies of Alice Paul in Congress, such as Senator John Tower of Tennessee, backed away from her lifelong project.

Both working women and professional women still face significant discrimination in the workplace today and thus a full understanding of this history is crucial.

In a potential violation of the state constitution and several state statutes, the longstanding right in California to insurance coverage for abortions and other family planning services including some forms of contraception was dramatically cut back by a secret administrative action that took place while Governor Schwarzenegger was in office, internal state agency documents show.

The State’s Department of Managed Health Care (DMHC) approved the cut back in coverage for abortions and other services, the documents show, at the request of a “large religious organization,” which several sources now say was Loyola Marymount University, based in Los Angeles. While the request was made on behalf of a religiously affiliated entity, no precise definition of what constitutes a “religious organization” or “religious group” was provided nor was the basis of the term “affiliated” defined.

There is no indication by the DMHC that the special exemption is limited to entities with a religious affiliation, instead the documents indicate that an insurer can cut back coverage because it is not obligated under the state’s Health and Safety Code to provide “all” family planning services but only “any” family planning services. This finding appears to shift the choice of whether to terminate a pregnancy or use contraception from the patient to the insurer and employer. Thus, the new rule opens the door to the cut back or elimination of insurance coverage for abortion, contraception and other family planning services at any California workplace.

The DMHC approved the insurance cut back secretly in 2008, while Arnold Schwarzenegger was Governor, but the decision only came to light recently when Anthem Blue Cross, one of California’s major insurance providers, agreed to implement the cut back at Loyola Marymount University (LMU) in southern California. In the wake of the Anthem decision at LMU, several other religiously affiliated entities, including Santa Clara University and St. Mary’s College, announced an intent to follow the LMU example.

Because abortion, like other health care services, is cost sensitive, the denial of insurance coverage has a significant impact on the ability of a woman to choose freely whether or not to terminate a pregnancy. Research indicates that a genuine freedom to choose whether or not to terminate a pregnancy provides a wide range of social and health benefits to women and their families, as well as to society at large.

California’s constitution guarantees a woman’s right to privacy which has long been interpreted to include the right to choose to terminate a pregnancy. California’s Health and Safety Code obligates insurance companies that offer HMO plans to cover health care that is medically necessary. Both medical abortions (including the use of the drug RU-486) and surgical abortions have long been accepted in California as medically necessary to terminate a pregnancy.

A review of DMHC’s records indicates that insurance companies never deny coverage to abortions as, by definition, an abortion is “medically necessary” to terminate a pregnancy. Once a woman exercises her constitutional and statutory right to choose the Knox-Keene Act, a 1975 amendment to California’s Health and Safety Code, obligates an HMO to provide insurance coverage for any medically necessary procedure or service, including the use of RU-486 or a surgical abortion, that safely terminates the pregnancy.

California’s Administrative Procedures Act also requires state agencies such as the DMHC to follow a rigorous and publicly transparent process when it implements rule changes such as the one required to approve the insurance cut backs. In this instance, however, the records provided indicated Anthem made the requested change to the General Counsel’s office of the DMHC. No notice or opportunity to be heard was provided to the public. It is not clear why Anthem delayed implementation of the change, approved in 2008, until now. There is some indication that the change was delayed while the debate about changes in federal health care were worked out.

Finally, the California Reproductive Freedom Act forbids a state agency like the DMHC from “interfering” with a woman’s right to choose to terminate a pregnancy. The DMHC licenses insurers like Anthem to sell HMO insurance plans, thus providing a significant benefit. By carving out undefined “religious groups” such as LMU, the DMHC is likely trespassing on that statutory obligation.

The documents, obtained from California’s Department of Managed Health Care (DMHC) through a public records act request, indicate that Anthem originally requested approval from the DMHC to terminate coverage of a wide range of family planning services including abortion, sterilization and certain forms of contraception, including the intrauterine device (IUD). The DMHC objected only to the request to terminate coverage of the IUD, but gave the green light for the other cutbacks.

In one document provided by Anthem to the DMHC in the summer of 2013 it states:

“Per agreement with the Department, only for religious groups, the text of the provisions dealing with pregnancy, maternity care, infertility and birth control may be limited to a minimum number of a “variety of family planning services,” and some may be excluded. The following exclusion will only be included for religious groups and will be omitted for non-religious groups (See Filing No. 20081015 closed out July 8, 2008.)

“Family Planning. No services are provided under this plan for: diagnosis and testing for infertility: sterilization of females or males; shots or implants for birth control; diaphragms; doctor’s services to prescribe and fit a diaphragms; or for voluntary abortion, except when medically necessary.  As indicated under “What’s covered,” “Birth Control,” family planning (counseling and consultation) is covered.”

The final version of LMU’s “Evidence of Coverage,” which must be provided by the insurance company to all plan members, is not yet available so it is not clear if their new plan will track this language. However, Anthem is now free to offer this kind of cut back to any “religious group,” however that term is understood.

The announcement at LMU caused a firestorm on its campus as staff and faculty objected to the changes. Similar reactions were heard at Santa Clara University. On both campuses faculty objected to the changes as a violation of established norms of “shared governance,” a longstanding principle that faculty must be formally engaged in major decisions about an academic institution. However, the Boards of Trustees at both campuses reaffirmed the decision to cut back insurance coverage arguing the institutions’ religious values trumped the rights of faculty in this instance.

While public attention to the universities’ decision has focused on the affiliation of the two schools with the Catholic church, the designation “religious group,” used by Anthem and approved by the DMHC, has no formal basis in current California law. There is an exemption available for a religious entity that meets a strict four part test. Thus, a religious order or seminary can obtain certain favorable exemptions from some aspects of the state’s Constitution or statutes. However, it is widely agreed that neither university fits that definition.

Thus, the new rule change by the DMHC either creates, without any legislative or judicial process, a new broader legal classification that would presumably include any employer loosely affiliated with a religious faith or the DMHC has, perhaps unintentionally, opened the door to allowing any employer expressing certain moral or religious beliefs to claim the same ability to eliminate coverage of abortion and other family planning services from the HMO’s. It appears that any employer who can claim to fit the undefined designation “religious group” would qualify for the new DMHC approved exemption.

This kind of argument is now being raised in litigation in other parts of the country in reaction to the Affordable Care Act, or “Obamacare” as it is widely known. Private corporations that clearly do not meet the existing four part test for a “religious exemption” have claimed that their insurance companies should nonetheless be exempted from the ACA’s requirement that they provide contraception coverage free of charge because the owners of the business object to contraception on religious grounds. Because there is no grounding of the California rule change in the formal definition of a “religious entity,” the change could be read as opening the door to similar arguments in California, long seen as a bastion of a woman’s right to choose.

As my decision to resign from my position as an “Ethics Scholar” at the Markkula Center for Applied Ethics at Santa Clara University has been gathering increased media attention, including from our local press and the AP but now also from the Chronicle of Higher Education and some folks in the right wing blogosphere, I thought it important to make available my full letter of resignation.

This should help as well with some of the inaccuracies that have appeared. I did not resign my position as a faculty member, as some have reported, only from my post at the Ethics Center. To leave the University, where I am a tenured member of the School of Law faculty, because of the decision by the President would not be compatible with the view I expressed in the letter that there are two souls, so to speak, within the Santa Clara community. I remain because I am supportive of what I consider the more open, transparent approach to governance of a university including the right of my female colleagues to exercise their individual right to make decisions about their health and well being.

As this is a matter of significant public concern (indicated by the media coverage) and also an area of my own research (I write and teach about governance extensively and recently published a book about the Nicaraguan Revolution that includes a chapter on the role of the Catholic Church, including the Jesuits) it is an issue that I feel is relevant and important to speak up about as a faculty member.

In addition, I express in the letter my shared concern with the Pope for certain aspects of the abortion issue. In this regard, my view is that we should as a society try to create the conditions that would make abortion less likely without trampling on a woman’s right to choose. This is not easy to do but it is the only solution in my mind. I think the Pope’s recent comments about the mistake the Church has made by obsessively focusing on this issue points in this direction.

The text:

I appreciate that there are deeply held differences within the SCU community over the question of abortion. I myself have long had concerns about the use of abortion in a “throwaway” fashion as Pope Francis recently described it. However, I firmly believe that the question of whether an abortion is acceptable is a question to be resolved by a woman after receiving appropriate medical advice from her doctor.

I am also as you know a strong advocate of shared governance as an essential principle of the modern university. I believe shared governance to be critical to the success of academic freedom. Thus, I am very concerned that the President, presumably with the support of the Trustees, unilaterally and without notice or discussion with faculty, imposed a material change in our benefits with respect to a false and unsustainable distinction between therapeutic and elective abortion insurance coverage.

As you may know, I grew up in the Catholic Church. My uncle was a parish priest for more than 50 years. My great uncle founded one of the Chicago area’s leading Catholic Churches nearly a century ago. Several of my cousins completed seminary training. One of my cousins was a close aide to Cardinal Bernardin. My parents were leading members of our parish.

My entire family worked diligently for many years to bring to fruition the teachings of John the 23d and Vatican II, particularly with respect to the rights of women and minorities. At the heart of those reforms was a commitment to a more open, transparent and accountable church. This decision by the President reminded me that these lessons have yet to reach many in the Church.

In light, then, of my support of a woman’s right to choose and my support and belief in shared governance and in light of the role the Markkula Center is playing in imposing this decision on our community, I no longer believe my views of what is considered ethical and those of the Center are in agreement and thus I am tendering my resignation as an Ethics Scholar at the Center.

I remain willing to participate in Center activities on an individual basis, including my scheduled role as a moderator of the Feinberg visit next week, as appropriate. Certainly, however, if you feel that is not appropriate I will understand. I appreciate the opportunity to have been a part of the Center’s work over the past several years.