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Privatization



All Reason.com articles with the "Privatization" tag.



Published: Tue, 25 Jul 2017 00:00:00 -0400

Last Build Date: Tue, 25 Jul 2017 06:35:50 -0400

 



DOJ Report Highlights Problem of Solitary Confinement of Mentally Ill. Is Privatization a Solution?

Wed, 19 Jul 2017 15:30:00 -0400

The federal prison system abuses its use of solitary confinement of prisoners, particularly those identified as mentally ill. A new inspector general's report (PDF) from the Department of Justice (DOJ) illustrates how little oversight there is of the Bureau of Prisons (BOP). The report demonstrates the need for some measure of privatization, with the appropriate priorities, to establish clear guidelines for solitary confinement in contracts with the federal government. The Reason Foundation's Lauren Krisai and Leonard Gilroy have written about public-private partnerships in healthcare in corrections helping control costs, improve performance, and increase accountability. You can read the study here (PDF). There is, however, little political will to do it. According to the report, the BOP's "guidance and policies do not clearly define 'restrictive housing' or 'extended placement'." The inspector general noted that BOP "houses inmates, including those with mental illness, for long periods of time isolated from other inmates and with limited human contact," conditions which could constitute solitary confinement under definitions used in DOJ Civil Rights Division investigations and by the United Nations. The Office of the Inspector General (OIG) found one inmate, for example, who spent 19 years in a "restrictive housing unit" before being sent to a residential treatment facility. "Although the BOP states that it does not practice solitary confinement, or even recognize the term, we found inmates, including those with mental illness, who were housed in single-cell confinement for long periods of time, isolated from other inmates and with limited human contact," the report said. The OIG provided numerous examples of the misuse of confinement. BOP didn't have adequate policies to address the needs of mentally ill inmates in restrictive housing, and did not limit how long inmates could spend in restrictive housing (limiting instead how short stays could be). The federal prison system as the largest number of people in solitary and "they're also isolating people, putting people in solitary at a higher percentage rate" than state counterparts, Jean Casella, co-executive director of Solitary Watch, says. The OIG found it was 7 percent in the federal system compared to between 4 and 5 percent at the state level. The national average is "way higher than it needs to be to begin with," Casella says. "I think this report was pretty thorough and pretty hard hitting and we probably will not see its like again for quite a while," Casella says. The OIG found federal prisons kept mentally ill inmates in "Special Management Units" (SMUs), a form of restrictive housing for an average of 896 consecutive days. Inmates with mental illness spent "disproportionately longer periods of time" in restrictive housing than other inmates. And 13 percent of inmates with mental illnesses in the OIG's sample population were released directly from prison after spending nearly 29 months in a special management unit before their release. While the Obama administration imposed a new policy in 2014 increasing the standards of mental health care for federal inmates, the "the total number of inmates who receive regular mental health treatment decreased by approximately 30 percent, including 56 percent for inmates in SMUs, and about 20 percent overall for inmates in" restrictive housing, according to the report "Based on our review, it appears that mental health staff may have reduced the number of inmates, including those in… [restrictive housing], who must receive regular mental health treatment because they did not have the necessary staffing resources to meet the policy's increased treatment standards," the report found. "In the few states that have actually banned the placement of mentally ill in solitary at all, including New York and Colorado and a couple of others, suddenly you find that… fewer people are getting diagnosed as having that mental illness because it means that if they have it, they have to be sent to a special unit," Casella says. The insp[...]



Rural Senators and Private Jet Operators Threaten Air Traffic Control Reform

Fri, 23 Jun 2017 14:30:00 -0400

A bi-partisan group of senators is attempting to scuttle reform with a Federal Aviation Administration reauthorization bill that leaves the agency in charge of America's costly and outdated air traffic control system. Much of the blame for this quick retreat rests with the National Business Aviation Association (NBAA)—which represents the business jet operators who benefit immensely from the current broken system—and its well-funded effort to lobby rural lawmakers, Bob Poole, Director of Transportation Policy at the Reason Foundation (the non-profit that publishes this website) says. The NBAA has spent $750,000 on lobbying, hiring three different lobbying firms in the first quarter of 2017 alone to make their case directly to Congress. Business jet operators, are getting "a pretty sweet deal," Poole says. "[They] pay a tiny fuel tax that amounts to…one percent of the total aviation tax revenue that goes to FAA," while using up to 15 percent of air traffic control services. The NBAA has also covertly mobilized rural mayors and pressured rural senators to block changes to the current system with front groups like the Association for Aviation Across America (AAAA), Poole says. Among them is Sen. John Thune, (R-S.D.), chairman of the Commerce, Science, and Transportation Committee, who said there was not sufficient support in his committee to privatize air traffic control. In numerous policy briefs and open letters, the AAAA (chaired by NBAA president Ed Bolen) has peddled the claim that air traffic control reform would decimate rural air service by empowering big airlines to spend resources at only the most profitable urban hubs. The House version of FAA reauthorization (which includes air traffic control reform), however, requires air traffic control service to be maintained for rural airports, Poole says. The House bill also gives smaller regional airlines who service those rural airports the same voting power in its proposed independent air traffic control corporation as larger commercial airlines. By keeping the FAA in charge of operations, these senators are leaving in place a bad model "that every other civilized country has eliminated by separating air traffic control from safety regulation," Poole says. Poole has since the 1970s advocated, in the pages of Reason and on Capitol Hill, spinning off air traffic control into an independent, non-profit corporation managed by industry stakeholders and funded by user fees, not tax dollars. About 60 countries have already adopted this model. In early June President Trump kicked off his "Infrastructure Week" throwing his support behind air traffic control reform. That was followed up by a House FAA reauthorization bill which closely follows Poole's model for reform. Even people responsible for running the air traffic control system have gotten behind the idea. "Five or six former Secretaries of Transportation and the current one, Elaine Chao, all support this. All three of the people who have been in charge of running the FAA's Air Traffic Organization…say we've got to do this," says Poole. Poole also mentions the example of NavCanada, Canada's privatized air traffic control system, whose charter requires it to service numerous airports in vast rural north of the country. Canada's private air traffic control system has also been able to adopt new and safer technology far quicker than the FAA. Air traffic control reform might still survive the Senate, Poole says. The House version of the bill has the support of several Democrats on the Transportation Committee, as well Republican Rep. Sam Graves of Missouri, who had previously been opposed to the idea. Only a system independent of FAA management and congressional appropriation can bring U.S. air traffic control into the 21st century, Poole says. "You can't run this thing as a high-tech business, which it's supposed to be," he says, "under the constraints of government budgets and congressional micromanagement."[...]



Trump Proposes Major Overhaul of Outdated U.S. Air Traffic Control System

Mon, 05 Jun 2017 17:40:00 -0400

President Trump, in a speech Monday, promised to replace the current government-owned and operated air traffic control system with a private "self-financing, non-profit organization" relying on user fees, not taxes, to fund itself. The idea is not new. Canada, the U.K., and Germany are among the roughly 50 countries that privatized air traffic control. It has been a long-fought goal of libertarians like Bob Poole, senior transportation analyst for the Reason Foundation (the nonprofit that publishes this website). Poole has argued since the 1970s the "high-tech 24/7 service business" that is air traffic control "is a poor fit for a tax-funded bureaucracy housed within a safety regulatory agency." Poole proposed what Trump is now embracing, dumping the Federal Aviation Administration-run system with a nonprofit air traffic control entity less bureaucratic, more cost-effective, and ultimately more responsive to consumer needs. As a 2016 Office of the Inspector General (OIG) report found, the FAA has done a pretty terrible job managing and modernizing a system upon which some two million air travelers every day rely. Despite repeated attempts by Congress to reform the FAA's management, personnel, and organizational practices, its "costs continue to rise while operational productivity has declined," the report concluded. The FAA's budget had increased 95 percent, from $8.1 billion to $15.9 billion from 1996 to 2012 while maintaining the same number of air traffic control facilities . Personnel costs also doubled from $3.7 billion to $7.3 billion over the same time period while the number of overall FAA personnel declined by four percent. The OIG puts the blame squarely on the agency, saying bluntly the "FAA's disappointing reform outcomes are largely the result of the Agency's failure to take full advantage of its authorities when implementing new personnel systems, and not using business-like practices to improve its operational efficiency and cost effectiveness." This and organizational culture "resistant to change" produced spiralling costs and the sandbagging of many the tech modernization efforts the agency undertook. Of the fifteen major FAA systems upgrades examined in the report, eight were both behind schedule and over budget, costing taxpayers $3.8 billion in cost overruns, and delaying the average project by more than four years. These results are in stark contrast to the performance of other nations' far more commercialized air traffic control systems which Poole says have seen "safety either improved or remained the same; that costs were reduced and efficiency increased, and that investments were made in new technology. " New Zealand, the first country to take the privatization route in the late 1980's, saw its air traffic control system go from losing $5.5 million a year to turning a $2.3 million profit in just a year after privatization. A recent Department of Transportation (DOT) study looking at the commercialized air traffic control systems of Canada, Germany, France and the U.K. found that all but France's were self-funded. Privatized systems have also proven nimbler at modernizing their air traffic control technology. "In lieu of developing large and multi-year modernization systems and software," commercialized European air traffic control systems instead adopted new technologies as they came on line, often modifying "commercial off-the-shelf products to meet their operational needs," according to the DOT study. This in contrast with the FAA's slow and unwieldly procurement process to modernize its systems which, according to one analyst, "virtually ensures that any planned "new" technology will be obsolete by the time it is operational." So while Canada and the U.K. are rapidly moving toward satellite guidance and high-altitude digital communications, the U.S. is stuck with mid-century ground radar and radio commands. Given the FAA's performance—considered poor by even the government's standard—and the success of alternative models worldwide, one[...]



How Trump's Trillion-Dollar Infrastructure Plan Could Succeed

Wed, 17 May 2017 11:00:00 -0400

"We're at a really interesting moment where public-private partnerships could blossom in a pretty dramatic way," says Stephen Goldsmith, former mayor of Indianapolis and professor at Harvard's Kennedy School of Government. "If we have technologies that are highly refined…we can anticipate a problem and fix it before it occurs." Goldsmith, author of 2014's The Responsive City: Engaging Communities Through Data-Smart Governance, was the recipient of the Reason Foundation's 2017 Savas Award for promoting public-private partnerships. (The nonprofit Reason Foundation is also the publisher of Reason.com.) As mayor of Indianapolis from 1992 to 1999, Goldsmith trimmed $100 million from the city budget mainly by requiring departments of the municipal government to compete with private companies. "The ideas...frankly, were from Reason," states Goldsmith. "[Director of Transportation Policy] Bob Poole spent I don't know how many lunches in Indianapolis when I was running for mayor and after I got elected kind of going through A to Z on how to privatize." Goldsmith states that one impediment keeping struggling cities from embracing public-private partnerships is a basic understanding of the goal. "[It] isn't to monetize assets," explains Goldsmith. "The goal is efficiency." At the national level, Goldsmith says public-private partnerships could be key to making President Donald Trump's one trillion dollar infrastructure investment program successful. "Regardless of how much money it is that Washington ends up [spending]… it can't be done effectively without public-private partnerships," Goldsmith states. "Both for purposes of paying back the money and for purposes of maintaining the asset." Edited by Alexis Garcia. Hosted by Nick Gillespie. Camera by Jim Epstein and Kevin Alexander. Streetbeat Heat by Podington Bear is licensed under a Attribution-NonCommercial 3.0 International License (http://freemusicarchive.org/music/Podington_Bear/Dance_1228/Streetbeat_Heat). The Dirty by Podington Bear is licensed under a Attribution-NonCommercial 3.0 International License (http://freemusicarchive.org/music/Podington_Bear/Electronic_1224/The_Dirty). ________ Subscribe to our YouTube channel. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes. **This is a rush transcript—check all quotes against the audio for accuracy.** Stephen Goldsmith: Regardless of how much money it is that Washington ends up doing. Donald Trump: We're gonna start spending on infrastructure big. Stephen Goldsmith: It can't be done effectively without public/private partnerships. Nick Gillespie: Hi. I'm Nick Gillespie with Reason. Today we are talking with Stephen Goldsmith, the former mayor of Indianapolis, who has won the newest Reason's Savas Award for pushing public-private partnerships. Mayor Goldsmith, thanks for talking to us. Stephen Goldsmith: Sure. Nick Gillespie: You were mayor of Indianapolis from 1992 to 2000, Special Advisor to George W. Bush, Deputy Mayor of New York, and you're now a professor of government at Harvard's Kennedy School, and most recently the author of The Responsive City, which came out in 2014, and we'll talk about that in a second. At your time in Indianapolis you save taxpayers about $400 million by privatizing. What was the impetus for that? Where did the ideas come from? Stephen Goldsmith: Right. Right. Well, I think we can answer that in two different ways. First, I became mayor. We had a structural deficit in the budget, and we had a Chamber of Commerce report saying we need a billion dollars in infrastructure and our property taxes were higher than our suburbs, but you can't raise taxes. It's not good for the economy. We need to rebuild the infrastructure. So what do you do? Well, you become as efficient as you can. The goal, then, was to reduce the operating costs of government and transfer that into an investment in the infrastructure in the future for the city. So those were the conditions. The ideas about how to get t[...]



Federal Infrastructure Spending Is a Bad Deal

Thu, 09 Feb 2017 06:00:00 -0500

In his first address as president-elect, Donald Trump repeated his campaign promise to invest in America's infrastructure. "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals," he said. "We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it." His plan is for the federal government to entice private investors with $137 billion in tax credits. The idea is that this will unleash up to $1 trillion worth of infrastructure investment over 10 years, spur economic growth, and create countless American jobs. Politicians' love affair with infrastructure spending isn't new. Hillary Clinton, Bernie Sanders, Barack Obama, George W. Bush, and many before them have paid their respects to the idea. Economists have long recognized that roads, bridges, airports, and canals are the conduits through which goods are exchanged, and as such, infrastructure can play a productive role in economic growth. But not all infrastructure spending is equal. Ample literature shows, in fact, that it's a particularly bad vehicle for stimulus and does not, in practice, boost short-term jobs or economic growth. To work that way, government spending would have to be used quickly to put the unemployed to work on shovel-ready projects. But as Obama discovered in 2009 when he tried to spend $47 billion from the American Recovery and Reinvestment Act on infrastructure, there aren't that many shovel-ready projects lying around. And since job seekers rarely have the skills needed to start building a bridge or highway right away, employers are forced to poach workers from their existing jobs. Publicly funded infrastructure projects often aren't good investments in the long term, either. Most spending orchestrated by the federal government suffers from terrible incentives that lead to malinvestment—resources wasted in inefficient ways and on low-priority efforts. Projects get approved for political reasons and are either totally unnecessary or harmed by cost overruns and corruption. For example, we know that infrastructure investment produces the highest returns when it supports already-expanding cities and regions. Yet politicians' tendency is to spend in declining areas, where dollars can't help as many people, such as Detroit and Cleveland. Government statistics show that our infrastructure isn't actually crumbling. While conditions vary from state to state, the most recent data on highway quality (from 2012) classify 80 percent of urban highways as either good or acceptable. For rural highways, the figure is almost 97 percent. Meanwhile, the quality of bridges has improved as well. In 2004, 5.7 percent of bridges were classed as structurally deficient, meaning that the bridge isn't unsafe but that it could suffer from a reduction in its load-carrying activities. By 2014 that number had declined to 4.2 percent. Still, our infrastructure could use some work. Recently, in a debate at the Aspen Ideas Festival with former National Economic Council Director Lawrence Summers, the economist Robert Barro noted that he was "glad that Larry and I can agree that fixing potholes is the most productive activity in government." Unfortunately, the political process is biased against dull but valuable projects, such as basic road maintenance, and biased in favor of flashy or grandiose projects, such as high-speed rail, the Big Dig, and the Bridge to Nowhere. The process also systematically overestimates the benefits and underestimates the price of infrastructure projects. On the bright side, Trump wants to address the "mountain of red tape" that slows down construction projects. His plan would link spending to reforms that "streamline permitting and approvals, improve the project delivery system, and cut wasteful spending on boondoggles." He shouldn't stop there. A new report by Michael Sargent at the Heritage Fou[...]



Will Donald Trump Screw Up V.A. Privatization? Probably.

Fri, 30 Dec 2016 17:00:00 -0500

(image) As my colleague Peter Suderman has pointed out, Donald Trump's rumored privatization plan for the Veterans Affairs hospitals is not much of a plan at all. It seems like some Trump official, somewhere, speaking anonymously said the words system, vets, choose, and private in close proximity and that's really all we know.

But let's assume some kind of privatization plan is, in fact, afoot. Is that good news?

While there's a chance that the right people will be at the helm to craft this plan (I know some smart guys, if anyone's interested) and a robust and carefully considered privatization scheme could be enacted, based on what we know about Trump so far it seems far more likely that we'll wind up with something that looks like a giveaway to private business without the corresponding market mechanisms that are necessary for such a reform effort to show results. At the heart of the idea of privatization is the idea that when providers fail to actually deliver products or services as promised, they no longer get paid. Contracts must be canceled for legitimate (non-political) reasons, and companies must be allowed to fail for privatization to succeed. The V.A. hospitals' immunity to competition and veterans' inability to seek care elsewhere were two of the biggest reasons waiting lists got as long as they did.

True privatization is tricky to do correctly—though not impossible! As the Reason Foundation attests, it happens all the time in the real world on the state and local level in particular. But if the Carrier deal is at all instructive about how the Trump administration is going handle relations between the state and the private sector, some bullying of major market players combined with watered down cronyism and politically expedient favoritism looks like the most likely outcome. Which means that veterans may indeed wind up getting even worse care that the deeply troubled V.A. was providing. What's more, a messy half-assed reform effort with the word privatization slapped on the package will give future efforts at thoroughgoing privatization a bad name.

Those of us who are keen on privatization should take a moment to feel deep empathy for those on the other side of the political spectrum. I can only imagine the anticipatory agony of envisioning Trump-administered faux privatization is similar to what advocates of single-payer health care must have felt as they watched the Affordable Care Act take shape. The might-have-beens are cruel indeed.

I was on Kennedy talking about this very topic yesterday. Check it out:

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Gurgaon: India's Private City

Thu, 15 Dec 2016 12:15:00 -0500

The last time I was in India, it was a familiar scene. The rickshaws rumbling through busy bazaars. Shoppers haggling over everything from gemstones to silk sarees. Pilgrims prostrating their way to salvation. Authentic street food, enhanced by locally-sourced infectious pathogens. This time around, I knew the country had changed. I wanted to see the effects of thirteen years of market reform and hypergrowth since my last visit. So I summoned an Uber (already something new) and headed 15 miles south of my Delhi hotel. As the crumbling roads of the capital city opened up into a 32-lane expressway, the old India I thought I knew, gave way to the future. I'd arrived in the city of Gurgaon. It's hard to imagine, but twenty-five years ago, there was nothing here. No high-rises. No kitschy shopping malls with Vegas-like trompe l'oeil ceilings. No 27-hole Jack Nicklaus signature golf courses. Stretching back to medieval times, Gurgaon was nothing more than a plot of rocky soil with a small marketplace. Until six years ago, it didn't even have a municipal government. So what happened? When Delhi banned private real estate development in the 1950s, Kushal Pal Singh began buying land south of the city limits. His company, Delhi Land and Finance, offered cash and equity stakes to farmers in Gurgaon. Many of these cowherds became instant crorepatis—millionaires, in the local lingo—while KP Singh would become the fifth richest man in India by the turn of the century. The state of Haryana eased land use restrictions, making it easy for developers to use their land as they saw fit. But once land was converted from farmland to commercial use, it was still classified as rural. That's how Gurgaon ended up as a city without a city government. Haryana also allowed women to work past 6pm—a bold policy decision in a socially conservative country. Without flexible labor laws, India would never have been able to develop its famous call center industry, where phone operators must work through the night in order to match times around the world. Maruti was the first to arrive with an auto manufacturing plant in the 1980s. As India stepped back from socialism in the 90s, foreign investment bypassed Delhi, and poured into Gurgaon. When General Electric set up shop, hundreds of multinationals followed. Soon Gurgaon was generating middle class jobs by the hundreds of thousands. Today, it boasts an absurd 30 percent annual GDP growth and the third highest per-capital income in India. Over time, other developers have entered the market, competing with DLF, and diluting its share of Gurgaon. But DLF remains the dominant provider of roads, sewage systems, security, and India's only private fire department. While Gurgaon isn't exactly crime free—the crime rate is on par with Phoenix, Arizona—it doesn't lack for protection. 35,000 private security guards keep a watchful eye on the city, compared with 3,000 public officers. Gurgaon's services and cleanliness are like nothing else I've seen in the country. India's only privately run metro system is fast, modern, and efficient. Employees compulsively sweep floors that already look spotless. It's unclear if Gurgaon's metro turns a profit. But as it increases the value of land owned by DLF and others, it may have already accomplished its mission. I'd like to tell you that Gurgaon has solved all of India's problems. But even here, in the beating heart of hypergrowth, the worst of Old India stubbornly refuses to die. Sixteen percent of Gurgaon's population lives in slums. If that seems like a lot to you, the shocker is that it's less than the average Indian city. There are 150 million fewer poor people in India since my last visit. That's half of the population of the United States, lifted out of the slums. India's achievements over the past decade are awe-inspiring. But as my own country turns its back on the same global markets that transf[...]



Will Homeland Security Continue to Use Private Prison Companies?

Fri, 19 Aug 2016 12:28:00 -0400

The Justice Department's surprise announcement Thursday that it will phase out its contracts with private prison companies sent shockwaves through the criminal justice world and private prison industry, but the bigger question is whether the decision will pressure the Department of Homeland Security (DHS) to sever its considerably larger ties with private contractors as well. As I noted yesterday, the Justice Department's Bureau of Prisons contracts with private companies to run 13 prisons, which house about 12 percent—or 22,000 inmates—of the federal prison population, most of them foreign nationals. But private prison contractors currently run 46 U.S. Immigrations and Customs Enforcement (ICE) immigrant detention centers, housing about 70 percent—about 24,000 people a day on average—of the detainees held by ICE. While the stocks of major private prison companies were taking a nosedive on the news of the DOJ announcement, The Washington Post reported just this week on a sweetheart $1 billion deal between DHS and Corrections Corporation of America, the largest prison company in the U.S., to build a huge new facility to house Central American asylum seekers. In 2015, CCA made $221 million, 13 percent of its overall revenue, from ICE contracts, according to a Center for American Progress report. Asked if ICE would continue to contract with private prison companies, a spokeswoman said the agency "remains committed to providing a safe and humane environment for all those in its custody. For individuals in its custody, ICE seeks to reduce transfers, maximize access to counsel and visitation, promote recreation, improve conditions of confinement and ensure quality medical, mental health and dental care." Which doesn't really answer the question one way or the other, but an ICE official also noted that ICE's immigrant detention facilities serve very different purposes than Bureau of Prison facilities. ICE detention centers, the official said, are not for punitive or rehabilitative purposes, but exist to hold detainees awaiting resolution of their immigration cases or until their removal order is completed. However, the detention centers, especially ones used to house migrant families, have been accused by watchdogs and critics of inhumane conditions and unethical behavior. GEO Group, a private prison company that runs one of those immigrant detention centers, strongly denied the accusations. The three major private prison companies that the Bureau of Prisons contracts with say the Justice Department's decision was based on a faulty inspector general report that failed to take into account the different populations between their facilities and regular BOP prisons. Their facilities, they argue, house mostly foreign nationals, many of whom are violent gang members. Civil liberties groups and critics of private prisons are already putting pressure on the Department of Homeland Security to follow suit. David Fathi, director of the American Civil Liberties Union's National Prison Project, called the Justice Department's announcement "an important and groundbreaking and decision." "With its announcement today, the Justice Department has made clear that the end of the Bureau of Prisons' two-decade experiment with private prisons is finally in sight," Fathi said. "The ACLU applauds today's decision and calls on other agencies — both state and federal — to stop handing control of prisons to for-profit companies." Rebecca Vallas, the managing director of the Center for American Progress' Poverty to Prosperity Program, said the DOJ decision a "long overdue step with both actual and symbolic value." "Too many for-profit prisons have become havens of brutal force, unlivable conditions, inadequate nutrition, and denial of needed medical and mental health care, driven by incentives to keep costs down," Vallas said. "The Department of Homeland[...]



Justice Department to End Contracts with Private Prison Companies

Thu, 18 Aug 2016 12:40:00 -0400

The Justice Department will end or significantly reduce its contracts with private prison companies, citing more safety problems and lesser quality of services, The Washington Post reported Thursday. In a memo, Deputy Attorney General Sally Yates said private prisons "served an important role during a difficult time period," but safety incidents and other problems led her to conclude that they "simply do not provide the same level of correctional services, programs, and resources; they do not save substantially on costs; and as noted in a recent report by the Department's Office of Inspector General, they do not maintain the same level of safety and security." The private prison industry has been under intense scrutiny from media outlets and progressive activists, not to mention Democratic presidential candidates, but the decision will ultimately only affect 13 privately run federal prisons, which mostly house non-citizens. About 88 percent of federal prisoners are housed in facilities run by the government, as are vast majority of those incarcerated at the state and local level. Yates cited a Justice Department Inspector General report released last week that found higher per capita rates of safety incidents, use of force, lockdowns, inmate discipline, and contraband than at facilities run by the Bureau of Prisons. The report noted several high-profile safety incidents at privately run prisons, such as an inmate riot over alleged inadequate services that essentially destroyed a $60 million privately run federal prison in Texas. In a statement, a spokesperson for Management & Training Corporation, one of three private prison companies the Justice Department contracts with, said "the facts don't support the allegations." "Contract prisons have long provided valuable, cost efficient, and effective services to the BOP," the spokesperson said. "If the DOJ's decision to end the use of contract prisons were based solely on declining inmate populations, there may be some justification, but to base this decision on cost, safety and security, and programming is wrong." In response letters to the inspector general report from CCA and GEO Group, the two other companies the Justice Department contracts with, the companies cited the large population of foreign nationals and gang members in its facilities as a driving factor in the higher number of incidents. A CCA official wrote that the"criminal alien population housed in contract prisons" were "significantly more likely to be involved in violence and misconduct." The Bureau of Prisons began contracting with private prison companies in 1997 to help curb overcrowding. However, as of December 2015, the BOP was still operating at 20 percent over capacity, despite the federal prison population dropping in 2014 for the first time in three decades. As the Reason Foundation (which publishes Reason magazine) has pointed out before, the federal and state systems will still have to absorb the populations of current privately operated prisons somehow if their use is discontinued. An Inspector General report from earlier this year found chronic medical staff shortages at BOP facilities—due to trouble competing with private employers—contributed to lack of access to medical care for inmates. The Reason Foundation's Annual Privatization Report 2015 found private prisons housed 141,921, or 9 percent, of the total 1.57 million federal and state inmates in 2013.[...]



How Privatization and Competition Freed the Web and Made the Modern World Possible

Sat, 11 Jun 2016 07:55:00 -0400

How the Internet Became Commercial: Innovation, Privatization, and the Birth of a New Network, by Shane Greenstein, Princeton University Press, 488 pages, $35  In 1991, the internet was one data communications protocol among many competitors. It had taken hold in a collection of research and education institutions serving less than 2 percent of the population. A small, government-funded backbone that tried to exclude all commercial use held its participating networks together. Twenty-five years later, the internet protocol is the lingua franca of the global digital economy. Nearly 4 billion people worldwide depend on it. It is the platform for the business giants of the 21st century—Google, Apple, Facebook, Ali Baba—and the site of monumental battles over regulation and governance. An entire digital ecosystem has grown up around the internet as it evolved from a government-sponsored research community to a commercial economy. Dozens of books, academic papers, and magazine articles describe different aspects of that change. What we've long needed is a comprehensive history that synthesizes all those elements into a single narrative. How the Internet Became Commercial, a new book by the Harvard economist Shane Greenstein, is an imperfect but noteworthy attempt to fill that gap. Greenstein asks: How did economic forces, government policies, and prevailing norms and institutions interact to encourage or discourage the decentralized innovation that we have come to associate with the internet economy? He devotes most of his attention to the economic part of this triad, with institutional analysis coming in a distant third. The narrative begins with the privatization of the National Science Foundation (NSF) backbone—the larger network connecting all the local and regional networks—from 1992 to 1995. This opened up what had been a fairly closed network for education and research institutions to commercial use, and it replaced a single government backbone contractor with multiple competing private connectivity providers. We see the emergence of private internet service providers (ISPs) and an unregulated, decentralized market for interconnection among them. We also see the importance of dial-up Bulletin Board Systems (BBSes) as entrants driving competition in the ISP market. Making the jump from BBS to ISP was relatively easy in terms of the capital investment and expertise required. As demand for internet access grew, what had been a small, localized BBS market for computer nerds exchanging files and messages became a mass market for web access. There is a useful, if stylistically labored, comparison of the early internet boom to the California gold rush. Greenstein is particularly good on the emergence of the World Wide Web and the commercialization of the web browser, including the early browser war between Netscape and Microsoft. Developed in research institutes while internet use was still primarily noncommercial, the web protocols for linking documents and other resources on the network, coupled with the browser's graphical user interface, pushed computer networking into mass adoption from 1992 to 1995. As internet content and applications increased and became richer, Greenstein shows the deepening of capital investment in the telecommunications infrastructure due to user demand for faster upload and download speeds. Dial-up modems went from 2.4 to 56 kilobits per second, and from there to broadband cable modems. Equally important, established firms such as IBM and brick-and-mortar enterprises adapted to the internet, which facilitated organizational efficiencies through more extensive access to relevant information about supply chains, work teams, accounting, and so on. An illuminating chapter is devoted to Google's origins in an NSF-funded research project at Stanford, a[...]



Private Is Better

Wed, 25 May 2016 00:01:00 -0400

Our next president will almost certainly be Donald Trump or Hillary Clinton. But I take heart knowing that America's founders imposed checks and balances, so there will be limits on what bad things the next president can do. Most of what government does is expensive and useless, no matter who is president. Or governor. Or mayor. Politicians say there are so many things only government should do—explore outer space, provide airport security, supply utilities, etc. But even those things work better when the private sector does them. NASA put rockets into space. But the private company SpaceX found a way to bring those same rockets safely back to earth. SpaceX now puts satellites in orbit for much less than NASA thought possible. Private, competitive enterprises routinely find ways to do things more efficiently than lazy bureaucracies. After all, government can keep screwing up forever and just tax you more. But private companies must make a profit or die. "Everybody loves the space program," says Lori Garver on my TV show this week. Garver was President Obama's former No. 2 at NASA, but now she admits, "It's a government bureaucracy. Their incentives are not to do things more efficiently." Obama actually tried to privatize more of it. "NASA uses test stands that cost $300 million to refurbish, says Garver. "When I went to (Amazon's) Jeff Bezos's facility, Blue Origins, they were building the same quality test stand for $30 million... That is crazy." Airport security also works better when government doesn't run it. After 9/11, politicians wanted to show they were making airport security tougher. Republicans at least vowed that workers of the Transportation Security Administration (TSA) would not be unionized. But a few years later, Democrats won, and the TSA became unionized. Now, lines are extra long, and the union whines that it needs more resources. That would be more money wasted. Fortunately, Congress allows airports to beg for the right to opt out of the government-run system. Security lines move faster at airports that have. At San Francisco International Airport, the largest to privatize, travelers even told us the screeners were nicer. They're also better at finding stuff. The TSA tested them and found them twice as good at finding contraband as TSA screeners. Private companies try harder. San Francisco's company has screeners practice racing to find mock contraband. The fastest wins $2,000. More airports are asking the Department of Homeland Security to allow them to use private screeners. DHS stalls, because governments rarely relinquish power voluntarily. In quiet ways, privatization keeps improving our lives. A thousand American cities have now switched from government-run to private water systems. When the government-run system in Flint, Michigan, poisoned people, pundits made it sound like cold-hearted Republican politicians created the problem. But government at all levels and of both parties failed in Flint. Government water departments routinely neglect basic maintenance. In Jersey City, New Jersey, they let the pipes rust. The water didn't taste good, failed government's own tests—and kept getting more expensive. City workers said there wasn't anything they could do. "It can't be done" is an answer heard in bureaucracies everywhere. So the mayor put the water contract out for bid. A for-profit company won. Within months, the private company fixed pipes the government couldn't fix. But the private company hired the same government workers. I asked some: Are you working harder now? "Yes. You're always on the go," one said. "Were you goofing off before?" I asked. "Sitting around?" "Well, occasionally, yes," one worker admitted. "What if the private company screws up?" I asked the man who privatized the system back when he was mayor, B[...]



What To Do About Flint? Evacuate The Residents And Turn it Into a Landfill for Liberal Good Intentions

Thu, 11 Feb 2016 13:03:00 -0500

Private companies had as much to do with Flint’s lead poisoning as Adam Smith had to do with the bread lines in the former Soviet Union. In fact, as I have noted before, Flint was a government-made disaster from top to bottom. Private companies didn’t run the system or profit from it. Government officials switched Flint from the Detroit Water and Sewage Department (a government-owned-and-operated system) to the more—not less—expensive Karegnondi Water Authority (another government-owned-and-operated system). Why? Because it would create union jobs and boost the local economy. This wasn’t an austerity cost-cutting effort but a stimulus move, as I noted previously. But since KWA wasn’t going to be ready in time, government officials decided to reopen a local mothballed plant that drew water from the polluted Flint River. That’s what caused the poisoning. Authorities certainly thought that ditching Detroit would save them money. But given that KWA was going to cost $800 million more over 30 years, it is really hard to argue that the interim arrangement was driven by austerity concerns. However, liberals have a story and they are sticking to it, facts be damned, as my colleague Robby Soave noted. So if they can’t pin the debacle on private companies, then “private sector ideology” will do just fine. Thank you, very much! Among the first to identify this ideology as the real culprit was Washington Post’s Dana Milbank. And now The Nation’s Michelle Chen in a piece entitled “Water Privatizers Have Their Eye on Flint’s Lead Crisis” rails: “The cruel calculation of risking public health to choose ‘cheaper’ source of water is less a product of bureaucratic incompetence than that of a corporate mindset that monetizes human welfare.” If only! Indeed, had Flint “monetized human welfare,” it wouldn’t be in so much trouble. Let’s review the facts: Flint has been under a state-appointed emergency manager since 2011 because it failed to “balance its books”—a euphemistic way of saying that it was spending its citizens blind. Why? There are many reasons, but one is that the city’s public unions for decades extracted lavish benefits for their employees while saddling taxpayers with the costs. Indeed, Flint’s unfunded pension liabilities right now exceed $1 billion—about 20 times the city’s $51 million annual budget. What’s more, Flint charged its water customers—indeed, still does—on average $140 monthly, far more than many other cities in the county and elsewhere. Now consider what would have happened if one of Chen’s imaginary rapacious profiteer had been in control in Flint and had run up the company credit card to overpay its employees and then overcharged company customers to pay its credit card. Shareholders would have pulled out, regulators would have been on its ass, customers would have gone elsewhere, and the company would have collapsed. What happened to Flint? It simply became ripe for a state takeover, which didn’t mean substituting competent managers for incompetent managers as might have happened with a private company. No. It meant having it run by two sets of incompetent managers. Although, technically the tragic decision to switch the city to the local Flint River plant rather than have it stick with Detroit happened on the state emergency manager’s watch, there is reason to believe that the emergency manager was doing the local politicos' bidding (not the least because the Detroit emergency manager was accused of being too much of a hardass and insufficiently cooperative with Mayor David Bing or the city council). This is not in any way meant to absolve Gov. Rick Snyder or Flint’s emergency managers of blame. Hey, they had a hand in breaking Flint[...]



Republicans Vow to Hunt Down Flint Emergency Manager Responsible for 'Government-Made Catastrophe'

Thu, 04 Feb 2016 10:27:00 -0500

At a congressional hearing on the Flint water crisis, Republican Rep, Jason Chaffetz vowed to “hunt down” emergency manager Darnell Earley and drag him to Washington, D.C., to explain why he did nothing while citizens drank poisoned water for months. “We're calling on the U.S. Marshals to hunt him down and give him that subpoena,” said Chaffetz. Rep. Justin Amash was equally critical of Earley, as well as the emergency financial manager law—which allowed Republican Gov. Rick Snyder to install unelected administrators in positions of extreme power in failing cities like Flint. “It’s outrageous that this sort of government-mad catastrophe would happen anywhere in the United States,” said Amash, who maintained that the state of Michigan and not the federal government should cough up the money to fix the problem. Two bureaucrats testified at the hearing: Keith Creagh, the new head of the Michigan Department of Environmental Quality, and the EPA’s Joel Beauvais, who blamed each other’s agencies for myriad failures that created the disaster. LeeAnne Walters, a former resident of Flint, and Marc Edwards, a Virginia Tech engineering professor who helped uncover the truth about Flint’s water, also testified. Edwards was unfailingly critical of the manner in which the government oversaw the crisis. He repeatedly claimed that the DEQ and EPA simply refused to follow the law and obey their own standards, and are directly responsible for the damage they caused. Edwards expanded on those thoughts in a recent interview with The Chronicle of Higher Education in which he accused government agencies of stifling dissent. Scientists and experts have every incentive not to criticize the government, he said, because they rely on government funding for their research: In Flint the agencies paid to protect these people weren’t solving the problem. They were the problem. What faculty person out there is going to take on their state, the Michigan Department of Environmental Quality, and the U.S. Environmental Protection Agency? I don’t blame anyone, because I know the culture of academia. You are your funding network as a professor. You can destroy that network that took you 25 years to build with one word. I’ve done it. When was the last time you heard anyone in academia publicly criticize a funding agency, no matter how outrageous their behavior? We just don’t do these things. If an environmental injustice is occurring, someone in a government agency is not doing their job. Everyone we wanted to partner said, Well, this sounds really cool, but we want to work with the government. We want to work with the city. And I’m like, You’re living in a fantasy land, because these people are the problem. In summary, Flint’s environmental regulators were asleep at the wheel, but nobody wanted to call them out, because bad things happen to people who criticize the government. The horribly mismanaged water system was the result of government planning born of economic ignorance. So far, relief has come in the form of private corporations donating millions of bottles of water. Has there ever been a more compelling case for privatization of publicly-run government services?[...]



Here’s How to Fix Flint’s Water System: Privatize It

Mon, 01 Feb 2016 08:00:00 -0500

Social media sites are awash in pictures of Flint’s awful water. Local children exposed to lead will likely face long term health consequences—and it appears that kids suffer from high lead levels in many Michigan cities. Amidst revelations that the state of Michigan made sure its Flint employees had clean water long before taking action on the rapidly declining tap water, maybe shame will at last lead state and local officials to look at how to fix the water utility. And maybe other localities can start thinking about how to best prevent the next mass water poisoning. It isn’t rocket science. There are more than 50,000 water utilities in the United States, and more than 50,000 of them are providing safe drinking water. When things go wrong—as they did in Flint—bad political and management decision are to blame.  On the political side, it is clear that state and local officials papered over the crisis as long as they could, apparently hoping for some miracle to save them from facing the music. Paul Krugman blames stingy Republicans trying to save money, part of the left-wing narrative that presumes more spending would have prevented the crisis. But as Reason’s Shikha Dalmia has reported, Flint’s water decisions were driven by dreams of economic stimulus. Officials knowingly chose a more expensive approach widely predicted to experience delays.  These delays left the city with nothing but nasty water. Meanwhile, the utility managers who were supposed to ensure the water coming out of taps was safe, and the state regulators who oversaw them, botched the job. Improper testing protocols and practices, on top of bad political decisions, made it hard for consumers to discern the emerging problem and allowed the utility to provide toxic water to people’s homes for months. It is very unlikely any of this could have happened if Flint’s water utility had been private.  Maybe with Walmart, Coca Cola, Pepsi, and other companies overcoming their greed to donate massive amounts of bottled water to Flint residents, suspicion of privatizing water utilities will lessen. Nearly 75 million people in the U.S. get their water from a private utility: almost a quarter of the population. Most probably don’t even know it. And about 1,000 cities in the country have hired a private company to operate their publicly-owned water utility. This is a long running practice. Back in the 1990s, President Bill Clinton’s Environmental Protection Agency said that privatizing water utilities “can be used by communities to provide needed environmental services more efficiently” and “can be used as a way to provide substantial benefits to both the public and private sectors, creating the classic ‘win-win’ situation.” Indeed a number of communities privatized their water utilities in order to get them into compliance with EPA safe-drinking-water standards. Under government operation, they would have never gotten there. Flint residents could learn from the example set by Milwaukee, Wisconsin. In 1993, Milwaukee’s water supply suffered an outbreak of cryptosporidium and had to invest big bucks in new filtration. Since the most likely culprit was their own sewage going into Lake Michigan, they privatized their wastewater utility and required the private company to clean the water even more thoroughly than the EPA requires.  Over 20 years later, privatization is still going strong for Milwaukee. This illustrates a key difference between public and private water utilities—oversight. If Flint’s water utility had been private, it would not have been allowed by state regulators to provide toxic water to citizens. Workers would have been forced to make the investm[...]



Guvmint Is Not Done Screwing Over Flint Water Victims Yet

Fri, 29 Jan 2016 09:11:00 -0500

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The Flint water mess is wholly and solely a government creation, as I have noted before. But innocent taxpayers— federal and state—are on the hook to pay for the cleanup. President Obama has announced an $85 million "relief" package for Flint victims and is also considering handing everyone under 21 years free Medicaid (arguably a fate worse than drinking poisoned water itself!). Snyder himself has arranged for $28 million in state aid.

All of this sounds like a lot of money, but it is actually a pittance compared not just to what Flint residents are in for but also what General Motors and Toyota have paid their crash victims, I point out in my morning column at The Week.

The main reason why Flint residents won't get more is that, unlike private companies, they can't sue the government, thanks to the doctrine of sovereign immunity, which protects government from tort lawsuits. In fact, prestigious law firms that are representing victims of the recent California gas leak in a class action lawsuit against Southern California Gas Co., owned by the non-governmental Sempra Energy, are so far declining to help Flint victims because the odds that they will succeed against the government are low to zero.

"Scrapping or at least circumscribing sovereign immunity may be worth considering although that isn't a great answer because it will only expose taxpayers to liability for snafus they have not committed," I note.

The real answer, however, is privatization, getting the government out of the business of running utilities completely. But that will of course give lefto-liberals like Castro lover Michael Moore a coronary—which would be reason alone to go for it.

Go here to read the whole piece.