Private Prisons free essay sample

The concept of the prison has existed for more than two thousand years. It probably goes back as far in time as practice of cannibalism, where victims had to wait for their turn in contributing to the chief course in the menu of their captors. Examples of prisons can even be found in the Old Testament when Joseph was incarcerated in Egypt. It was not until the 19th century that a clear shift occurred from corporal punishment to imprisonment. As societies prospered and the industrial revolution began, the formal prison system, as we know it today, developed. Throughout most of the world, the correctional system is administered by the state, and it is considered a key function that the government must fulfill: protect its citizens by guaranteeing the state of law while enforcing the judicial system. More than two decades ago, the United Sates and Great Britain began experimenting with privatization of their prison systems, outsourcing the management to private enterprises. Like most privatization issues, this topic has many supporters from the liberal economic philosophy, as well as many detractors that argue against profit seeking enterprises. The discussion promotes themes such as the ethical dilemma of the private sector â€Å"administering punishment†, selecting the correct metrics used to evaluate the performance of private sector versus public sector, disputes of what are â€Å"just and fair† services that the inmates are entitled to, among others. In the following essay we aim to bring these topics into light and try to analyze the pros and cons of privatizing the prison system. Private prisons are one of the fastest growing industries in the security and protection industry. Up until 2003, there were an estimated of 102 private prisons in the U. S. holding more than 100,000 inmates. As of 2008, there were 128,524 inmates held in private prisons, representing 8% of the total 1,610,466 inmates held in all state and federal prisons. Many researchers and academics have argued that although the United States has only 5% of the world’s population, it holds 25% of the world’s prison population. Is this trend directly correlated to the use and promotion of a private prison system? The U. S. as half a million more inmates than China, even though China’s population is five times the size of the US population. Some reasons of China having a lower imprisonment rate can be linked to a lack of reliable statistics (government controlled information), Chinese law/ judicial system are very different to that of the United States and the investment in infrastructure the US has to detect crime. According to the California Prison Focus, â€Å"no other society in human history has imprisoned so many of its own citizens. † What incentive does the government have to privatize prisons, or encourage public/private alliances? In a time of fiscal constraints, governments have used public/private partnerships in order to provide services that had been formerly delivered by the state. However, although private participation may have been seen as a solution to avoid public failures (i. e. the privatization if highways, garbage /waste management collection, telephone/cellular lines), results can vary according to the sector raising questions concerned with the efficiency of the alliance. The Reagan administration exploited the momentum for privatization and deregulation, giving rise to Corrections Corporation of America (CCA). Among the incentives the government has for prison privatization is their desperate need to cut budget deficits. For privatization to be economically feasible, the cost/benefit analysis must be positive and provide savings to the government. Likewise, the outright inflow of cash coming in from selling a prison can be very important for local state administrations. According to the disclosure provided by the Ohio Department of Rehabilitation and Correction, the reason of why they recently sold one of their prisons for $75 million is to â€Å"improve staff and inmate safety, reduce daily operating expenses and to reduce the states long-term budget† Although the prison privatization topic has generated many controversies and has important lobbying groups behind it, there are few reliable studies comparing privately and publicly operated facilities. Segal and Moore (2002) identified about 23 U. S. cost comparison studies and fewer quality studies. Many of those studies were of questionable value because they did not comply with specific characteristics of meta-analysis (did not have explicit comparison of private and public facilities, the study was based on citations of other studies, few recognizable databases, among others). The most recent review, a meta-analysis by Lundahl et. al. (2009) only identified 12 studies of cost and quality meeting their criteria for sound methodology†. According to Alex Tabarrok, privately managed facilities can have cost savings of 15-25% on prison edification and 15% on administrative expenses. Likewise, private prisons generate competition and exert pressure towards public prisons. They encourage public prisons to also innovate and lower costs. Other studies (Lundahl et al. 2009, page 392) argue, â€Å"prison privatization provides neither a clear advantage nor disadvantage compared with publicly managed prisons. † The economic nature of private corporations is to be profit-seeking agents whose sole focus is to maximize shareholder value. This is a fair reason and a reason that will always exist. Detractors of privatization and free market systems, argue that the only way to achieve profit maximization is at the expense of third parties (zero sum game) and stress that corporations do this by lowering service quality and reducing personnel. In the example of prison privatization, following this â€Å"linear† thinking of profit maximization equaling low quality service and thus suboptimal conditions for inmates, generates arguments relating to negative externalities. Corporations such as CCA argue that they can systematically reduce operating expenses while minimizing externalities and social costs. According to the Ohio State Department of Rehabilitation and Corrections, the sale and outsourcing of the Lake Erie prison will cost the state 6% annually less to run amounting to a savings of $3 million per year. CCA has gone on the record saying that it will keep over 90% of the existing jobs in Ohio. As mentioned earlier, a lack of reliable information challenging these assertions of measurable cost reductions is a major concern to elected officials. On February 14th the state of Florida, also desperate to cut its budget deficit, held a controversial vote to privatize state prisons. Ultimately, Republicans rejected the bill in a tight 21-19 vote, dividing the caucus. Those voting against privatization sighted a lack of transparency on the forecasted budget savings. While we believe that many government services would be better of if privatized, the incentives and processes regarding prison privatization must be explored further. Actual evidence demonstrates that the actual privatization process has generated perverse incentives and powerful forces in Washington advocating for special favors. The end result has been a perverse mercantilism. This can clearly be seen by a report investigating the top five interest groups lobbying to keep marijuana illegal. Private prison corporations make millions by incarcerating people who have been imprisoned for drug crimes, including marijuana. Likewise, CCA has sent letters to more than 48 states asking for a â€Å"20 year management contract plus an assurance that the prison would remain at least 90% full† and have advocated for direct incarceration of illegal immigrants. To reduce the negative externalities and obscure process that surround prison privatization, serious steps must be taken in order to align incentives. Why are prisons being paid on the quantity if inmates instead of being paid on how many inmates they can re-incorporate to society? The best example can be found in the Delancey Street Foundation and as stated in their web site, â€Å"we take applications from people who have hit bottom, from prison, jail or walk-ins. Residents who have been at Delancey Street awhile interview all applicants. The minimum stay is 2 years; the average stay is 4 years. We have 3 rules: no drugs or alcohol, no physical violence, and no threats of violence. The goal is to learn to lead a productive crime-free, drug-free life of purpose and integrity. Everyone learns a marketable skill (the goal is 3 skills), and earns at least a high school equivalency degree. Advanced education is available. † Moreover specific KPI’s must be developed to â€Å"rate† the performance of private prisons accompanied with in depth studies regarding state savings by not incurring in prison management. Certain benchmarks must be achieved by every concessionary in aspects concerning security levels, staff training, among others. These standards can be revised by benchmarking against other private prisons operated in other countries. Additionally, many people argue in favor of prisoner’s living standards and rights concluding that privatization will worsen them. Why is it that society is overprotecting individuals, which have committed a serious crime, and therefore deserve â€Å"high standards† while in prison? On average, an inmate costs $50,000 per year. The majority of these criminals don’t even make that amount of money a year; hence they might be better off living in prison. For those advocates that in general think public prisons are much more favorable than private prison, they should take a look at our exhibit of the public prison system in El Salvador and Honduras (please see exhibit). Inmates are human beings and should be treated with dignity and have access to basic necessities (food, water, shelter) and should not be deprived of their right if they are respecting their fellow constituents. Most importantly, they should be given the necessary conditions to re-evaluate their behavior and to experience what it means of not having their liberty. We advocate that proper rehabilitation of prisoners tends to lower overall social costs, as convicts will be less likely to repeat offense. While it logically makes sense for a state to rehabilitate prisoners to the best of their ability, the opposite can be true in the privatized system if the incentives are not properly aligned. Firstly, proper counseling and rehabilitation costs money, and corporations whose sole incentive is to maximize shareholder value vehemently oppose â€Å"unnecessary† increases in operating costs. The second reason is the perverse irony behind privatized prisons: they need customers. In the case of the sale of the Lake Erie prison in Ohio, the state had agreed to provide CCA a guaranteed minimum occupation rate of 90%. Lastly, if investors are not incentivized accordingly, they will tend to have a narrower view on the global problem, excluding the cost of negative externalities (without proper rehabilitation, inmates will repeat offence, triggering additional cost for public and private entities. ) In the current political and austere environment, few politicians would risk their fate by opening up the discourse that crime prevention and more lenient laws are a solution to lower costs. Having a â€Å"tough† approach on prevention can be even better than being stern with crime. New York cut its incarceration rate by 15% between 1997 and 2007, while reducing violent crime by 40%. By evaluating the behavior and development of other privatized services (i. e education, transportation, highways, garbage removal, among others) prison privatization can take their operating framework as a general base. Communities and consumers evaluate the services of educational institutions, garbage removal companies and healthcare facilities. Based on the consumer preference, the most efficient companies remain in operation. Why not do the same for private prisons? Let the state, independent parties (associations) and the final customers (inmates) evaluate the performance of the privatized system. For this to function well, exploitation of contracts cannot simply be given for 20 years without a â€Å"call option†. Private firms interested in providing services must be fully aware that if they don’t comply with the required standards and rank low in evaluation criteria can have their contracted removed with sufficient penalties for the transition period. As discussed earlier, an important percentage of the compensation given by the state to the private concessionary should be linked to performance. One of the key metrics that must be included is the rehabilitation and re-insertion rate of inmates to society (logically this inmates must not have been sentenced for â€Å"life† in prison and must not have committed high grade crimes). This will generate an incentive for private companies to make strategic alliances (private prisons with rehabilitation centers, educational institutes, voluntary programs, firms like Delancey Street among others). Independent institutions (universities, associations and think tanks) should constantly monitor and evaluate the cost-benefit of having privatized prisons in certain areas. There can be situations were government run prisons will be economically more viable than private ones. As in any topic involving the co-participation of government and private firms, public choice issues arise and must be carefully considered. Further extending the reasoning by considering different Social investing/entrepreneurial initiatives in the world, creative solutions focusing on social impact could be applied to the private prison system. Considering that most of the inmates are idle, designing social impact programs to foster inclusion and additional revenue streams for government administered prisons can be beneficial. This could be favorable for multiple stakeholders in the prison sector: public authorities reduce costs by having additional income, crime rate reduction with higher prevention (protagonists for preventive message are the prisoners themselves) and a better rehabilitation in society (prisoners learn skills, values†¦). On the other hand, private investors are enticed to follow â€Å"social measuring† inside prisons (this social actions would be audited and closely followed). Finally the prisoners are dissuaded to commit new offences. As an example, the company Heavy Eco operating in the United Kingdom believes that the reason why people go to jail lies in their childhood. In order to help the situation, as well as paying the convicts for their work, Heavy Eco empowers prisoners to create organic T-Shirts and bags from recycled materials (50% of the profits go to help homeless and orphanage children) . In Philippines, another initiative grew also around fashion made by prisoners. It is proven that the severity (harshness) of the punishment is not directly correlated with crime reduction. Law and penalty enforcement, on the other hand, does have a direct impact in crime reduction. With this in mind, it is not how â€Å"strong† or â€Å"severe† the conditions are inside a prison but instead that all of the inmates and future convicts know that if an offense is committed the law will be enforced upon them. Societies don’t prosper with high imprisonment rates, they proposer under good rule of law and productive citizens.