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Temple economics professors: Private prisons make fiscal sense

BY SIMON HAKIM AND ERWIN BLACKSTONE Published: May 17, 2013
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Oklahoma's considerable savings from private prisons were achieved in part due to the older age of its public prisons, which added security problems and required higher staffing levels than the newer contractor-operated prisons. Additionally, there are the unfunded pension and retiree health care costs mentioned above, which private prisons address. Additional savings drivers include the greater productivity of private prisons and, possibly, the private prisons' greater purchasing power.

Contractor-operated prisons provide additional benefits to Oklahoma beyond savings. Although not included in the study's savings figures, private prisons contribute income and property taxes to states and local communities, while public facilities do not. These revenues can be used to reduce taxes or finance other public services. Additionally, private facilities provide an important relief valve for overcrowding, something Oklahoma has long taken advantage of, which promotes safer conditions and better inmate treatment.

With many difficult decisions on the horizon for state leaders in Oklahoma, it is important to consider all the opportunities for more efficient delivery of high-quality public services. Contractor-operated prisons — and the introduction of the managed competition model for corrections — are a proven solution that deserves a second look.

Hakim and Blackstone are professors of economics and members of the Center for Competitive Government at the Fox School of Business at Temple University. Hakim is the Center's director.