Privatizing Government – Cui Bono?

Paul Krugman points out that rationale behind right-wing calls for privatizing many government functions, most recently and infamously prisons, does not stand up even to quick scrutiny.  The free-market can not respond with the best solution because there is no market.  There are two or three big groups which are essentially set up to suck at one big teat.


You might be tempted to say that it reflects conservative belief in the magic of the marketplace, in the superiority of free-market competition over government planning. 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 — companies like Community Education or the private-prison giant Corrections Corporation of America — 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 — as a comprehensive study by the Bureau of Justice Assistance, part of the U.S. Department of Justice, concluded — “have simply not materialized.” To the extent that private prison operators do manage to save money, they do so through “reductions in staffing patterns, fringe benefits, and other labor-related costs.”

And, as the series he mentions, done by the Times, shows, private companies mean less public scrutiny and more abuses.

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