Last summer, the Justice Department decided to start winding down its use of private prisons.
Deputy Attorney General Sally Q. Yates noted in a memo that while private prisons were useful when public prisons were overflowing, they made little sense now that the prison population was falling. They didn’t save much on costs. Nor did they provide the kind of rehabilitation programs proved to reduce recidivism.
And they are particularly dangerous. A recent report by the department’s inspector general found that prisoners in private facilities, which house some 12 percent of federal inmates, were much more likely to have weapons. Private prisons had many more assaults on inmates and prison workers than those run by the Bureau of Prisons. And they went into lockdown to respond to disturbances 10 times as often.
But on Nov. 9, the day after Donald J. Trump was elected president, the stocks of correctional conglomerates were among the best performing on the New York Stock Exchange. Shares in Corrections Corporation of America, now CoreCivic, gained an astonishing 43 percent on the day. The reason? Privatization is back at the top of the government’s agenda
While this is being applauded in executive suites across corporate America, the cost for the rest of society is likely to be high.
“There’s a magical thinking among business executives that something about the profit motive makes everything run better,” noted Raymond Fisman, a professor of economics at Boston University. “What is government going to be like when it is run by billionaire C.E.O.s that see the private sector as a solution to all the world’s problems?”A serious body of economics, not to mention reams of evidence from decades of privatizations around the world, suggests this belief is false.It is critical to understand how profit seeking can go awry, giving companies a motivation to skimp on quality to bolster margins. When a private provider faces little or no competition, or when quality of service is difficult to track properly — think of the well-being of patients in a nursing home, or the health of prison inmates — there will be nothing to stop it from pursuing higher profits at society’s expense.