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I’ve been thinking a long time about the privatization of public services and some of the inherent dangers that go along with such schemes.  I would not say that I am anti-privatization in all cases (I suppose I can imagine some scenarios where turning over a government service to a private company might make sense), but there is one entire class of services that it seems obvious to me the government should never privatize – and yet it does.  It is the class of services I call “Necessary Evils.”

“Necessary Evils” are the services a society needs that – in an ideal world – it would never wish to have.  Things that we have to do that we wish we didn’t.  Two obvious examples of such Necessary Evils are (i) our prison system, and (ii) our military.  In an ideal world, we wouldn’t be locking people up because we wouldn’t need to lock people up.  In an ideal world, we wouldn’t have a military because we wouldn’t need to have a military.

But we don’t live in an ideal world.  We live in a world that contains some dangerous people, and both for the sake of punishment (we gave up a long time ago on rehabilitation in this country; about the time Ronald Reagan was elected, we committed ourselves to an Old Testament – not a New Testament – approach to crime) and for the sake of public safety some people must be locked away.

And we live in a world that requires (although a whole lot less, in my opinion, than our political leaders seem to think) that we be able to defend ourselves militarily.  So we have to have a military.

But when we privatize these government services we attach a profit motive to the provision of these services.  In other words, we create circumstances that argue in favor of locking up more people or argue in favor of more military action (here, I'm thinking about outfits like Blackwater).  We create conditions that further the promotion of Necessary Evils and – sometimes – just plain Evil, no qualifier required.

Remember what I said about how our criminal justice system became more punitive since the election of Ronald Reagan?  Well, this switch in our thinking has had predictable results over the past 30 years:
(h/t Seeking Alpha)

And it isn’t just that the total number of people being locked away has increased as America’s population has grown.  In fact, the number of Americans that we are locking up as a percentage of our overall population has nearly quadrupled during this time period:
(h/t Seeking Alpha)

Of course, it is no coincidence that our prison population skyrocketed at the same time the United States started looking for private sector solutions to public policy problems:

The birth of the contemporary American private prison industry may be traced to 1984, when the United States Immigration and Naturalization Service became the first federal agency to contract for private correctional services, with the Corrections Corporation of America [(CCA)].  This initial movement toward the federal privatization of corrections was quickly followed by contracts for outsourcing developed by the US Marshals Service and the US Bureau of Prisons in 1986. . . .

In 1987, approximately 3,122 inmates out of 3.5 million were confined in private corrections facilities in the United States.  By 2001, the total United States inmate population had swelled to a staggering 6.5 million inmates – 123,000 of whom were confined in private facilities.  This 4,000% increase in the number of prison beds in private hands was fed by the concomitant 90% growth in total inmate populations in the United States as a whole. (emphasis added)

Today, CCA, the company that snagged that first government contract in 1984, is the leader in the private prison industry – which generates a staggering $5 billion in gross revenues each year, all of it paid for with taxpayer dollars.

Let me repeat that.  American taxpayers pay five thousand million dollars a year to private companies to lock up other people, including especially non-violent drug offenders and (increasingly) undocumented workers.  And, of course, making the business of locking people up so lucrative has had exactly the effect one would expect it to have had.

Just this past Thursday, David Donnelly over at HuffingtonPost published an article about a new report from Public Campaign and PICO National Network titled "Unholy Alliance:  How the Private Prison Industry is Corrupting Our Democracy and Promoting Mass Incarceration."   The report finds that America’s exploding prison population

. . . .  Has been part of an intentional effort by the prison industry to shape public policy to push more people into prison and keep them there longer.  The industry has achieved this through the classic three-pronged strategy of contributing to political campaigns, lobbying, and gaining access to policymakers through close relationships.
If you click through to read Donnelly’s article you’ll find further information about the millions of dollars the private prison industry has invested lobbying Congress and state governments, and the millions more it has contributed to political parties, candidates, and PACs.  You also learn that
Through involvement in the leadership of ALEC (American Legislative Exchange Council), private prison companies have played a key role in lobbying for and passing harsher sentencing for non-violent offenses including three-strike laws, mandatory sentencing, and truth-in-sentencing.   They are also behind the recent spate of anti-immigrant state laws that are putting more and more immigrants behind bars – the new profit center for the prison industrial complex. (emphasis added)
So we’ve got private companies, taking public monies, to perform a service that any sane society wishes weren’t necessary, and then using some of that public money to lobby legislators to change the law to increase demand for something we shouldn’t want in the first place.  Because of course they are.  Brilliant.

Certainly, though, the clearest example of the distorting effect profitability can have on the provision of Necessary Evils – and how it can turn such services into just regular ol’ Evil – is the Pennsylvania “Kids for Cash” Scandal from a few years ago.

There, two top administrative judges conspired with private prison companies to (i) shut down the county’s public detention center on the grounds it was in poor condition (state and local health and welfare departments determined it was actually safe and up to standards), (ii) secure government contracts for the private prison companies to take over the detention of juveniles, and then (iii) send thousands of kids to the for-profit detention centers on minor or questionable charges.  In exchange, the two judges pocketed $2.6 million in bribes.

John Rogers, who goes by the nom de blog “Kung Fu Monkey,” provided what is for me a perfect explication of this scandal.  Rogers is the creator/writer/showrunner for FX’s Leverage, which is about a group of con artists who work as freelance Robin Hoods.  Rogers has explained that each of the crimes his heroes are called upon to correct/avenge are based on real life events, and Episode 301 – “The Jailhouse Job” – was based on the Kids for Cash Scandal:

One of my favorite moments concerning 301 was when we were screening the episode, and I was sitting next to a very conservative friend.  (Yes, I have those.)  When the corporate prison pay-for-prisoners scam was explained in the episode, he threw a sidelong glance at me.  I shrugged.  “We didn’t change that much from the real case, sadly.”

A beat.  “Wait, that really happened?”

“A little tweaked, but yeah.”

A longer beat.  “In America?”

And there you have it, in a nutshell.  I think the sincerely well-intentioned liberal ideal that a good government can rein in the excesses of corporate culture is somewhat naive, since the social system was hacked a long time ago.  And I think the sincerely well-intentioned conservative belief that rational markets will rein in the excesses of corporate culture is naive, because . . . well, as legendary game designer Flint Dille recently reminded me, there’s a great quote in The Big Sleep.  To paraphrase:  “A large enough amount of money takes on a life of its own.

* * *

To reiterate, I’m not ideologically opposed to privatization under any circumstances.  If you can convince me that contracting out the provision of some particular public service to private industry would be more efficient or would save money or would do both, then I’d be all for it.

But it seems to me that even if that were the case with contracting out the provision of Necessary Evils like locking people up or going to war, we should still -- as a rational society -- establish a general prohibition against doing so.  If there is one thing we know about our “free market system,” it is that any for-profit industry will demand that it be permitted to grow over time.  So we should understand that any short-term gain achieved by outsourcing these Evils ultimately will be outweighed by the societal cost of allowing these Evils to grow to the fullest extent possible.  Not the fullest extent desirable, or the fullest extent necessary, but the fullest extent possible.

Like the man said, a large enough amount of money takes on a life of its own.

Cross-posted at Casa Cognito.

Originally posted to swellsman on Sun Nov 20, 2011 at 05:46 AM PST.

Also republished by American Legislative Transparency Project and Exposing ALEC.

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