The Perils of Privatization
Make no mistake: The purpose of privatization is to make a profit. The promise of privatization is efficiency. But in its pursuit of both profits and efficiency, privatization creates perverse incentives. It encourages privately managed charter schools to avoid or get rid of "expensive" students" (unless the reimbursement formula makes them profitable to keep); it encourages for-profit hospitals to over diagnose patients and perform unnecessary surgeries; it encourages private preschool providers of special education to misdiagnose children as in need of services to produce profits.
Make no mistake: The purpose of privatization is to make a profit. The promise of privatization is efficiency. But in its pursuit of both profits and efficiency, privatization creates perverse incentives. It encourages privately managed charter schools to avoid or get rid of "expensive" students" (unless the reimbursement formula makes them profitable to keep); it encourages for-profit hospitals to over diagnose patients and perform unnecessary surgeries; it encourages private preschool providers of special education to misdiagnose children as in need of services to produce profits.
And it encourages private managers of prisons to keep the prison population as large as possible, since an empty cell is a cell that produces no revenue.
Here are some recent examples, drawn from the invaluable website "In the Public Interest," which reports regularly on privatization of the public sector:
On the tenth anniversary of Operation Streamline, Free Speech Radio News reporter Shannon Young interviews Grassroots Leadership's Bethany Carson. The policy "significantly increased the caseloads in criminal courts along the southern U.S. border by criminalizing what used to be a civil offense: illegal re-entry into the United States." Carson says "this is also a policy that has funneled people into for-profit federal prisons, that are segregated prisons specifically for immigrants, with worse conditions, the rationale being that they don't want to spend money on people who are not going to be coming back into American society and will be deported afterwards. This has also dramatically increased the proportion of Latinos in the federal prison system."
A new report by the Center for American Progress says "a key factor underlying the explosion in the number of immigrants in custody is the expanded role of for-profit prison companies in the U.S. immigration detention system. (...) The millions of dollars that for-profit prison companies poured into lobbying have paid off in a big way, resulting in an increase in the guaranteed minimum number of immigration detention beds, both nationally and within individual facility contracts."
The National Journal's J. Weston Phippen reports on how privatized probation systems victimize and trap the poor and lead to a loss of public control. "In the Mississippi Delta town of Greenwood, a for-profit company promised city leaders it could take over its cash-strapped probation system without any expense to taxpayers. Not only that, but the company said it could actually turn a profit for itself, and the city, by collecting fines. Just eight months later, nearly 10 percent of the town's 15,000 population was on probation for minor offenses like traffic violations and owing fees to the company."
Corrections Corporation of America is awarded a new 10-year management contract with the state to house up to an additional 1,000 medium-security inmates at CCA's Red Rock Correctional Center. The one-bid contract was the subject of a "public" hearing at which "there was not one member of the public at the meeting." "It was not a public hearing, it was a CCA staff meeting," said Caroline Isaacs, program director of the American Friends Service Committee--Arizona. "Half the people in the room were in uniform."
Tucson stands up against an unjust immigration detention system buttressed by the for-profit prison industry. "Asked to describe a case that gave her the most satisfaction, Launius singles out that of her friend Alma Hernandez, a community leader and activist in Corazon de Tucson. 'She wasn't (an activist) when she first started working with us, but she was stopped and arrested and held in a CCA (Corrections Corporation of America) prison in Louisiana for months. That turned her into an activist. She was one of our first clients and has volunteered with us ever since.'"
Urgent. It's never been this bad.
Dear Common Dreams reader, It’s been nearly 30 years since I co-founded Common Dreams with my late wife, Lina Newhouser. We had the radical notion that journalism should serve the public good, not corporate profits. It was clear to us from the outset what it would take to build such a project. No paid advertisements. No corporate sponsors. No millionaire publisher telling us what to think or do. Many people said we wouldn't last a year, but we proved those doubters wrong. Together with a tremendous team of journalists and dedicated staff, we built an independent media outlet free from the constraints of profits and corporate control. Our mission from the outset was simple. To inform. To inspire. To ignite change for the common good. Building Common Dreams was not easy. Our survival was never guaranteed. When you take on the most powerful forces—Wall Street greed, fossil fuel industry destruction, Big Tech lobbyists, and uber-rich oligarchs who have spent billions upon billions rigging the economy and democracy in their favor—the only bulwark you have is supporters who believe in your work. But here’s the urgent message from me today. It’s never been this bad out there. And it’s never been this hard to keep us going. At the very moment Common Dreams is most needed and doing some of its best and most important work, the threats we face are intensifying. Right now, with just three days to go in our Spring Campaign, we're falling short of our make-or-break goal. When everyone does the little they can afford, we are strong. But if that support retreats or dries up, so do we. Can you make a gift right now to make sure Common Dreams not only survives but thrives? There is no backup plan or rainy day fund. There is only you. —Craig Brown, Co-founder |
Make no mistake: The purpose of privatization is to make a profit. The promise of privatization is efficiency. But in its pursuit of both profits and efficiency, privatization creates perverse incentives. It encourages privately managed charter schools to avoid or get rid of "expensive" students" (unless the reimbursement formula makes them profitable to keep); it encourages for-profit hospitals to over diagnose patients and perform unnecessary surgeries; it encourages private preschool providers of special education to misdiagnose children as in need of services to produce profits.
And it encourages private managers of prisons to keep the prison population as large as possible, since an empty cell is a cell that produces no revenue.
Here are some recent examples, drawn from the invaluable website "In the Public Interest," which reports regularly on privatization of the public sector:
On the tenth anniversary of Operation Streamline, Free Speech Radio News reporter Shannon Young interviews Grassroots Leadership's Bethany Carson. The policy "significantly increased the caseloads in criminal courts along the southern U.S. border by criminalizing what used to be a civil offense: illegal re-entry into the United States." Carson says "this is also a policy that has funneled people into for-profit federal prisons, that are segregated prisons specifically for immigrants, with worse conditions, the rationale being that they don't want to spend money on people who are not going to be coming back into American society and will be deported afterwards. This has also dramatically increased the proportion of Latinos in the federal prison system."
A new report by the Center for American Progress says "a key factor underlying the explosion in the number of immigrants in custody is the expanded role of for-profit prison companies in the U.S. immigration detention system. (...) The millions of dollars that for-profit prison companies poured into lobbying have paid off in a big way, resulting in an increase in the guaranteed minimum number of immigration detention beds, both nationally and within individual facility contracts."
The National Journal's J. Weston Phippen reports on how privatized probation systems victimize and trap the poor and lead to a loss of public control. "In the Mississippi Delta town of Greenwood, a for-profit company promised city leaders it could take over its cash-strapped probation system without any expense to taxpayers. Not only that, but the company said it could actually turn a profit for itself, and the city, by collecting fines. Just eight months later, nearly 10 percent of the town's 15,000 population was on probation for minor offenses like traffic violations and owing fees to the company."
Corrections Corporation of America is awarded a new 10-year management contract with the state to house up to an additional 1,000 medium-security inmates at CCA's Red Rock Correctional Center. The one-bid contract was the subject of a "public" hearing at which "there was not one member of the public at the meeting." "It was not a public hearing, it was a CCA staff meeting," said Caroline Isaacs, program director of the American Friends Service Committee--Arizona. "Half the people in the room were in uniform."
Tucson stands up against an unjust immigration detention system buttressed by the for-profit prison industry. "Asked to describe a case that gave her the most satisfaction, Launius singles out that of her friend Alma Hernandez, a community leader and activist in Corazon de Tucson. 'She wasn't (an activist) when she first started working with us, but she was stopped and arrested and held in a CCA (Corrections Corporation of America) prison in Louisiana for months. That turned her into an activist. She was one of our first clients and has volunteered with us ever since.'"
Make no mistake: The purpose of privatization is to make a profit. The promise of privatization is efficiency. But in its pursuit of both profits and efficiency, privatization creates perverse incentives. It encourages privately managed charter schools to avoid or get rid of "expensive" students" (unless the reimbursement formula makes them profitable to keep); it encourages for-profit hospitals to over diagnose patients and perform unnecessary surgeries; it encourages private preschool providers of special education to misdiagnose children as in need of services to produce profits.
And it encourages private managers of prisons to keep the prison population as large as possible, since an empty cell is a cell that produces no revenue.
Here are some recent examples, drawn from the invaluable website "In the Public Interest," which reports regularly on privatization of the public sector:
On the tenth anniversary of Operation Streamline, Free Speech Radio News reporter Shannon Young interviews Grassroots Leadership's Bethany Carson. The policy "significantly increased the caseloads in criminal courts along the southern U.S. border by criminalizing what used to be a civil offense: illegal re-entry into the United States." Carson says "this is also a policy that has funneled people into for-profit federal prisons, that are segregated prisons specifically for immigrants, with worse conditions, the rationale being that they don't want to spend money on people who are not going to be coming back into American society and will be deported afterwards. This has also dramatically increased the proportion of Latinos in the federal prison system."
A new report by the Center for American Progress says "a key factor underlying the explosion in the number of immigrants in custody is the expanded role of for-profit prison companies in the U.S. immigration detention system. (...) The millions of dollars that for-profit prison companies poured into lobbying have paid off in a big way, resulting in an increase in the guaranteed minimum number of immigration detention beds, both nationally and within individual facility contracts."
The National Journal's J. Weston Phippen reports on how privatized probation systems victimize and trap the poor and lead to a loss of public control. "In the Mississippi Delta town of Greenwood, a for-profit company promised city leaders it could take over its cash-strapped probation system without any expense to taxpayers. Not only that, but the company said it could actually turn a profit for itself, and the city, by collecting fines. Just eight months later, nearly 10 percent of the town's 15,000 population was on probation for minor offenses like traffic violations and owing fees to the company."
Corrections Corporation of America is awarded a new 10-year management contract with the state to house up to an additional 1,000 medium-security inmates at CCA's Red Rock Correctional Center. The one-bid contract was the subject of a "public" hearing at which "there was not one member of the public at the meeting." "It was not a public hearing, it was a CCA staff meeting," said Caroline Isaacs, program director of the American Friends Service Committee--Arizona. "Half the people in the room were in uniform."
Tucson stands up against an unjust immigration detention system buttressed by the for-profit prison industry. "Asked to describe a case that gave her the most satisfaction, Launius singles out that of her friend Alma Hernandez, a community leader and activist in Corazon de Tucson. 'She wasn't (an activist) when she first started working with us, but she was stopped and arrested and held in a CCA (Corrections Corporation of America) prison in Louisiana for months. That turned her into an activist. She was one of our first clients and has volunteered with us ever since.'"