On Prisons for Profit

| categories: politics, economics | View Comments

I've said to friends that the problem people have with capitalism is that it gives people what they want, and most people don't like knowing what that is.

It's a facetious jab at the people moaning about "alienation" (whatever the hell they mean by that) that completely ignores a lot of real problems, but it does get at the one most important property of markets: everyone gets what they pay for.

The application of this to privatization seems to continually elude the state. It should be simple: "when privatizing, make sure the provider makes money when, only when, and exactly when, your ultimate goals are met." Like most simple-but-effective rules, there's a lot of emergent complexity to the execution, and unsurprisingly, our leadership rarely gets it right.

So it is with private prisons, which the ACLU says produce poor conditions and are more expensive and which Facebook says conspire with the government to drive up incarceration rates (I can find nothing reputable on either side of that issue, though there's quite a few paid search results to the contrary on Google).

From what I can gather government went for the obvious "tenancy" pricing model: they pay $X per inmate per time. That's a fine way to get a place to imprison all these people you're imprisoning, but not so fine a way to ensure that the social goals prison ostensibly exists for are accomplished.

I'm in to goofy thought experiments on this blog, let's try a complete justice system reform with a private penal system at the center. I'm going to put emphasis on the "experiment" here, we'll make this as weird as possible:

  • No sentence lengths. You get out of the penal system when you're reformed. You'll see in a moment why we don't need them.
  • Private penal companies are not paid to keep you. They keep you at their own expense, then discharge you. They are not obligated to remove any of your freedom, but are liable for any further social damage you cause during your sentence.
  • Upon discharge, the company is paid a sum for reforming you.
  • If you commit a crime again, the penal company is fined an amount greater than they were paid and a different penal company is put in charge of your next sentence.

Not perfect, but let's look at the perks:

  • Penal companies are paid strictly for turning prisoners into reformed productive citizens. They don't get paid unless prisoners get out and stay out.
  • There's limitless creativity allowed for fixing social ills. If the right thing to do with criminals is to get them in a vocational program and get them jobs, that's what penal companies will do. If we don't need prisons we don't have any.
  • Sentence length adjusts to appropriate dimensions. Pressure on the penal companies is for smaller sentences.
  • Completely dispenses with foolish activities like retribution.


  • It's not impossible to imagine a scenario where just sitting on a prisoner forever is the least expensive strategy. A clerical error preventing release might also be harder to redress legally.
  • A multiple repeat offender, if one still exists in this system (and at scale, there's always one) could eventually exhaust the list of penal providers.
  • More expensive to punish "difficult case" prisoners.
  • Retribution is politically popular.

There's some extreme ideas here, but the thought of something this different should at least get a few out of the "privatization is always bad" rut. The effectiveness of privatization is a function of how well you structure the incentives, not of some innate property of privatization itself.

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