The fireworks were flying at the conference on prisons.  The audience, not to mention the opposing panel, were vehemently opposed to all prisons.  I’m in favor of ending the war on drugs and emptying the prisons of non-violent offenders but one speaker argued that 80 percent of the people in prison ought to be released – sure, if we bring back the penal colony.

Later I was chastised for referring to inmates – don’t you understand, I was told, they are people.

All very fine and well but I’d had enough when one speaker blamed the massive increase in prisons over the past twenty five years on private prisons.  This is a hard square to circle because private prisons today house less than 7 percent of the prison population.  Obviously, the increase in prisons has been almost entirely in the public sector and has been driven primarily not by nefarious profiteers or even by prison bureaucracies but by crime and the public’s demand for crime control.

A more sophisticated version of the argument can be found in the comments section of my last post.  It is true that a private prison could lobby for tougher sentences in order to boost demand for its product.  It’s hard to take this too seriously, however.  Do we think that contracting out garbage pickup is a bad idea because the garbage men will lobby for wasteful packaging?  Moreover, the problem becomes less serious the more private prison firms there are because with more companies each will gain less from lobbying for say tougher sentences in general

Finally, we have to compare with the current situation.  The prison guard unions typically have monopolies and do lobby for tougher sentences.  The California Correctional Peace Officers Association, for example, has spent millions shamelessly creating a front of victim’s rights groups who campaign against drug rehabilitation programs instead of jail, revising the three strikes law, and reducing sentences.   

Despite the fireworks, or maybe because I woke a few people up, I am invited back today to speak on three strikes.

Today, I will be debating the value of private prisons at the National Debate on Prisons and Punishment.  I intend to say the following:

1) Many studies (see also Changing the Guard) find that private prisons are cheaper than comparable public prisons.  Operating costs savings are a modest but not insubstantial, about 10-15 percent per year.

2) We should not be surprised that private prisons are
cheaper.  Mueller (2003), for example, looks at 71 studies
comparing public and private firms from Australian airlines, to German mail
delivery, to Indian manufacturers. In
only 5 of 71 studies were public firms found to be more efficient. In 56 studies private firms were
more efficient (the remaining studies found no difference).  Tellingly, the private firms were most efficient in the least regulated industries.

3)  Having said that, there are still potential problems with prison privatization and a puzzle that needs to be faced.  Prison privatization is really a misnomer.  What is really going on is contracting out and there at least two problems with contracting out.

a)  You get what you contract for. If the contract says cheaper prisons and nothing else – you will get cheaper prisons and nothing else. Contracts must cover quality as well as quantity.

Quality is not always easy to measure so contracting
out must be accompanied by investments in technology for contract monitoring
and output measuring. 

b)  In part as a reaction to the above problem there is the problem of governmentalization of the private sector.  Governmentalization occurs when the contract is written so that the private firm is restricted to duplicate the public firm, thus precluding innovation.  Some private prison contracts have gone so far as to detail the type of toilet paper to be used in the prison!

4) I think these problems can be addressed. For example, we should be contracting over outputs not inputs i.e. over the number of inmates who learn to read rather than the
provision of "reading programs."  (The British and Australians do this better than the U.S.)

Contracting out also requires an investment in technology for measuring outputs carefully. E.g.
recidivism rates.

With good contracting much more is possible from prison
privatization than lower costs including more innovation in prison management, better training
programs, reduced recidivism etc.

5)  But here is the puzzle.  If the reason for contracting out is that public prisons are run poorly, why should we expect government to do a better job at writing contracts?

I have some ideas on this but comments are open.