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.

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.'"