Saturday 16 June 2012

Public Sector Prejudice

Prisons and Glass Houses

People who live in glass houses should not throw stones--at least that's what we were gravely told whilst  learning social manners.  When we grew up we also learned that conflicts of interest are usually nefarious unless they are disclosed.  Both adages are relevant in the following case.

New Zealand has finally introduced private management contracts for some selected prisons.  The knee jerk reaction from hide bound statists (whose numbers are legion in this country) has been swift, predictable, simplistic and naive.
  Privately run prisons must operate at a profit.  This, we are told, creates two bad consequences.  Firstly, private prisons have a conflict of interest.  They benefit commercially from ever increasing prisoner numbers: therefore, they have little commercial incentive to be committed to rehabilitation and seeing prisoner numbers reduce.  Secondly, they are too expensive because they have to generate a profit.  This, in a state run prison, could be ploughed back into prisons, improving conditions and effectiveness. 

There are all sorts of emotive passions that swirl around also.  How grotesque, we are told, that someone would profit from the degradation and misery of other human beings. 

At the forefront of those making these specious arguments has been the union of state prison officers, the Corrections Association--primarily through the mouth of its president, Beven Hanlon. Of course Mr Hanlon and his members are now competing for jobs with the employees of private prison management firms.  His members, of course, are looking to profit from managing prisoners in the corrections systems.  Moreover, they implicitly benefit from unruly prisons, since they can argue for more staff, more resources, more money--including higher salaries. 

The Corrections Association is arguing the case against privately managed prisons from a deeply conflicted position. Unfortunately, it is a conflict not disclosed.  But a moment's thought would tell even the most hide bound statist that Beven Hanlon and his members should not be the ones making the case against private prison management.  It's like turkeys arguing against Christmas.  The conflicts of interest are substantial--but never disclosed publicly, and disclosure is never demanded by the media, which is telling. 

Secondly, Mr Hanlon has been foolish enough to pour scorn and scathing criticism upon our first privately managed prison because under its management, prisoners have escaped.  Mr Hanlon has publicly lectured Serco, the private management company, on its responsibilities and excoriated it for incompetence and slackness for allowing people to escape. 

But people that live in glass houses should not throw stones.  About a week later, two prisoners escaped from a prison run by Mr Hanlon's union members.  Mr Hanlon's silence has been deafening. 

But there is a world of difference in outcomes for the public in these two instances.  In the case of Serco it will be fined for non-performance of its duties, as per the terms of its contract.  In the case of Mr Hanlon his Association will sound the Oliver Twist argument:  more prison officers, more support staff, more facilities, more resources. 

And that, dear folks, is why prisons managed by private businesses provide an inherently better outcome, provided they are operating under a comprehensive management contract so that the management company has powerful financial incentives not only prevent escapes, but to achieve the required levels of rehabilitation and treating prisoners with respect and human decency. 

Our point is not that we know such contractual terms are functioning in our first privately managed prison but rather that the contractual regime can easily be adapted and negotiated to provide powerful incentives to achieve just such superior outcomes.  The alleged conflicts of interest evaporate, provided the management contract has been properly drafted. 

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