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Friday, June 22, 2012

Paul Krugman: Prisons, Privatization, Patronage

What's really behind the push to privatize government services:

Prisons, Privatization, Patronage, by Paul Krugman, Commentary, NY Times: Over the past few days, The New York Times has published several terrifying reports about New Jersey’s system of halfway houses — privately run adjuncts to the regular system of prisons. ... The horrors described are part of a broader pattern in which essential functions of government are being both privatized and degraded. ...
It’s a terrible story. But ... you really need to see it in the broader context of a nationwide drive on the part of America’s right to privatize government functions... What’s behind this drive?
You might be tempted to say that it reflects conservative belief in the magic of the marketplace.... And that’s certainly the way right-wing politicians like to frame the issue.
But if you think about it even for a minute, you realize that the one thing the companies that make up the prison-industrial complex ... are definitely not doing is competing in a free market. They are, instead, living off government contracts. There isn’t any market here, and there is, therefore, no reason to expect any magical gains in efficiency.
And, sure enough, despite many promises that prison privatization will lead to big cost savings, such savings ... “have simply not materialized.” ...
So what’s really behind the drive to privatize prisons, and just about everything else?
One answer is that privatization can serve as a stealth form of government borrowing... We hear a lot about the hidden debts that states have incurred in the form of pension liabilities; we don’t hear much about the hidden debts now being accumulated in the form of long-term contracts with private companies hired to operate prisons, schools and more.
Another answer is that privatization is a way of getting rid of public employees, who do have a habit of unionizing and tend to lean Democratic in any case.
But the main answer, surely, is to follow the money. Never mind what privatization does or doesn’t do to state budgets; think instead of what it does for both the campaign coffers and the personal finances of politicians and their friends. ...
Now, someone will surely point out that nonprivatized government has its own problems of undue influence, that prison guards and teachers’ unions also have political clout, and this clout sometimes distorts public policy. Fair enough. But such influence tends to be relatively transparent. ...
The point, then, is that you shouldn’t imagine that what The Times discovered about prison privatization in New Jersey is an isolated instance of bad behavior. It is, instead, almost surely a glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation.

    Posted by on Friday, June 22, 2012 at 02:07 AM in Economics, Politics | Permalink  Comments (68)



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