The ‘stress’ of birth is good for babies, assuming they do not get into distress. The stress of labor causes babies’ stress hormones to rise, preparing them physiologically to fight to live. The squeezing they experience in the birth canal, as others have noted, helps to clear their breathing passages of fluids. And while yes, babies can be suctioned, the more aggressively a baby must be suctioned, the greater the risk of traumatising it and causing feeding problems.
Cesarean babies experience a higher percentage of breathing problems that cannot be exclusively attributed to pre-birth distress (if any).
The rate of unexplained stillbirths goes up in pregnancies subsequent to cesarean deliveries. One may indeed have a “safer” birth for the baby taken surgically, but at a statistically increased risk to future babies. This is not a very big increase in risk, but the risk is demonstrable across populations.
The rate of other complications, such as infertility, placenta previa (where the placenta covers the cervix/mouth of the uterus, placenta accreta (where the placenta grows into - literally into, and infiltrates - uterine muscle tissue), and spontaneous uterine rupture at the site of the scar without labor, goes up in pregnancies subsequent to cesarean deliveries.
The risk of catastrophic uterine rupture increases in future labors in labors which are augmented or in which prostglandins are used for induction. It has not been shown that a statistically significant risk exists for healthy VBAC women who are allowed to labor naturally, compared to women with unscarred uteri who similarly labor without augmentation. However, when the uterine scar is shown to be thinner than 4mm, the rate of rupture is quite a bit higher. I don’t know whether this is true in the absence of augmentation.
The risk of hospital-acquired infections in the incision site is obviously higher in women who are delivered by cesarean, and this is probably roughly on a par with the risk of infection to any surgical patient. Hospital germs are nasty and surely it must been desirable to avoid surgery when not medically necessary for this reason alone.
Of course, the question of ‘safer’, as Doc Paprika said, depends on the situation. A cesarean is safer in a case of malpresentation or fetal distress that cannot be resolved by changing mother’s position. It is absolutely essential in a case of cord prolapse. There are other instances in which it is safer. But outside of those instances, I don’t believe the argument can be made, medically, that surgery is safer than non-surgery for a healthy mother and baby when all is proceeding normally.