Privatization represents the ultimate realization of the free-market libertarian worldview: it renders services, industries and jobs previously owned and paid for by the nation-state into the hands of privately owned individuals and corporations. The ideological justification behind this shift in ownership is rooted in the Randian capitalist tradition – ideally, that putting government assets in the hands of private corporations encourages competition, that so-often-invoked process by which different economic players try their hardest to reduce price and increase efficiency, in whatever way possible.
The private sector operates under these guidelines; individuals or corporations produce consumer goods and most non-fundamental services with minimal government regulation. The rule of survival of the fittest then applies – those companies that cannot produce their good with maximum efficiency and minimum cost die out, and those that can thrive.
Historically, in early-to-mid-capitalist economies, only inessential industries operated on this principle. Other industries, those deemed indispensable, that must be maintained at a certain price and level of quality for society to operate optimally, were nationalized, that is, owned by the nation.
Nationalization protected these industries from the natural price fluctuation of the capitalist system. Sanitation services, police forces, emergency responders, national defense, airport security, prisons, postal services and schools are all industries provided for by the state or federal government in the United States. In many other otherwise-capitalist countries that further embrace nationalization, key industries like coal, oil and gas are owned by the federal government to ensure that important exports are maintained at a certain price or to avoid the resource falling into the hands of a private monopoly.
Usually, this balance works out well. While socialization of all industries arguably would create a more equal society keeping key services nationalized and most others privatized strikes a balance between equality and capitalist wealth production. This was the ideology behind the New Deal, which created many new federally directed agencies aimed at providing jobs for the unemployed and keeping prices of essential goods artificially low, on the backs of the tax dollars of the rich.
American public policy did not change much until the late 1970s, when more and more libertarian-influenced politicians gained public office — many, but not all, through the Republican Party. The Reagan administration in the 1980s ushered in a new era of deregulation and government shrinkage unprecedented in American history. Inspired by Margaret Thatcher, Reagan made privatization of government assets a viable political option. While he only privatized one government holding (Conrail, sold for $1.6 billion), he set the precedent that privatization was the new political reality for the United States – a reality carried out by both the Clinton and Bush administrations.
More importantly, however, was the Reagan administration’s influence on state governments, who saw his attitude towards privatization as an easy way to fill their budget coffers and offer tax cuts, which are politically popular, especially with rich voters. The rich benefit from being able to make money off government industry, and then benefit once again from the tax cuts this enables state government to make. The owners of these formerly nationalized industries then go on to lobby state governments to continue to pursue such policies, and a cycle is created. The most egregious example of why privatization is a problem can be seen when we look at the trend of prison privatization in the United States.
Prison privatization, while not unheard of in the early 20th century, took off with full force in the 1980s with the founding of the Corrections Corporation of America in 1983. At the same time, the Reagan administration was pushing a new “War on Drugs,” a “tough-on-crime” approach to the drug problem that saw as a solution harsh sentencing, violent enforcement of drug prohibition and the massive incarceration of thousands of otherwise innocent Americans.
Since 1975, the prison population in the United States has been exponentially growing, to the point that the incarceration rate in 2008 was exactly five times what it was in 1975. At the same time, violent crime rates have been in steady decline since 1980. With less and less crime, why does the incarceration rate continue to grow?
Clearly Reagan’s drug policies, continued under both Bushes, Clinton and Obama have something to do with it. But those policies are proven to be a failure – drug use continues to rise, despite the harsh enforcement of the prohibition. The answer to this question becomes obvious when one follows the money.
Private prisons are a billion-dollar industry; the Corrections Corporation of America can count among its investors the GEO Group, founded by George Zoley, a group that also runs “detention centers” – more accurately called concentration camps – for undocumented immigrants in the process of being deported. The reason this industry is so profitable, besides being awarded lucrative contracts by state governments, is because the privatized prison business model runs on contracting out prisoner labor.
Every prisoner in a Corrections Corporation of America-run private prison is required to perform some form of labor as part of their “corrections” experience. This labor has nothing to do with reforming their character. The prisoners are shopped out as cheap labor, receiving as little as 17 cents an hour, while the private prison is paid for contracting out their labor. If they refuse, they are placed in solitary confinement, considered by the United Nations to be a form of psychological torture. As Kanye West says, these prisoners are truly the “new slaves” in our society, performing forced labor for next-to-nothing.
This creates an incredibly profitable business model, all dependent on the rising prison population. Unsurprisingly, the Corrections Corporation of America’s investors are all heavily involved in politics. Henri Wedell and the previously mentioned George Zoley are both heavy backers for the Republican Party, while two other investors, Jeremy Mindich and Matt Sirovich fund the Democratic Party. Prison privatization, as we’ve seen in the Clinton administration, is a bipartisan affair. Investors in private prisons go on to lobby federal and state governments, as well as both political parties, to keep harsh drug laws on the books and continue imposing harsh prison sentences for non-violent crimes.
This is what colloquially gets referred to as the “prison-industrial complex.” The private prison business model could not exist without a continually rising prison population, so its investors, who are getting filthy rich off contracted prisoner labor, lobby for policies that keep up the incarceration rate.
It’s a truly violent cycle, and it has resulted in the United States having the largest prison population in the world. Full stop. No other country has more of its citizens in prison than we do. Sixty percent of this prison population is Black or Hispanic. Fifteen percent of the youth prison population identifies as lesbian, gay, bisexual or transgender. Marginalized people of all kinds are overrepresented in our prison system.
Can the problems with United States prisons be placed entirely at the feet of private prisons? No.
Systemic bias is rampant in our society, nationalized prisons or not. But, when 25 percent of United States prisons are now operated on a for-profit basis, there becomes a clear financial interest in getting more people incarcerated and keeping them there longer. The interesting thing is, private prisons, in one way, prove that Randian libertarianism works. They are, objectively, far cheaper than normal, state-run prisons.
Privatized prisons are capitalist competition at work. Of course, slavery made for far cheaper agriculture for the south. It was cheap to build railroads because of undervalued Chinese labor. Saving money does not mean one is doing the right thing. Some industries simply cannot be operated on a for-profit basis. Just look at the results: at a privatized Corrections Corporation of America-run prison four hours south in Natchez, 25 guards were held hostage during a riot staged by prisoners in response to the uniformly poor conditions in the prisons. A study found prisoners in Mississippi private prisons were, on average, ten to 60 pounds lighter than their equivalents in state-run prisons.
These prisons may be cheaper, yes, but at what cost?
Our society has been torn apart by the overpolicing required to feed this machine, as we’ve seen in Ferguson and New York.
But what can be done?
To start, we must call for politicians to end any and all privatization of essential industries. The tax cuts that result from them primarily benefit the rich, and the poor pay for the costs. From private prisons to private police forces to private military contractors, the for-profit model feeds a system that encourages and values violence.
Secondly, we must prevent the rich from exercising undue political influence. Lobbyists and corporations, as dictated by the Citizens United decision, can presently harness United States public policy in order to make their private businesses more profitable.
And finally, perhaps most controversially, we must end the prohibition on drugs. Reagan’s war on drugs has been proven again and again to be a complete failure. Immediate retroactive pardon for all non-violent drug offenders would significantly decrease the minority population in prisons, making communities whole again and undermining the business model that keeps our innocent youth in private prisons. While libertarianism and privatization may save money in the short term, the burden it places on liberty and equality in our society are far too high to stomach.
Robert McAuliffe is a junior international studies major from St. Louis
