When children are in distress or at risk in their homes, social service agencies may institute a number of measures. The most drastic entails removing such children from their homes and placing them in foster care. But placement often fails. Many children, some with severe and long-standing psychological, social, and educational handicaps, simply leave one unstable environment for another. In many cases, things just get worse.

Paul Steinhauer, a child psychiatrist at Toronto's Hospital for Sick Children, argues that foster placement has suffered from a lack of proven or generally...