Reaping Privatization’s Rewards?

Privatization advocates argue that the private sector runs a more efficient and cost-effective ship than the government. Small-government conservatives – the same people, often – argue that fighting wars and fighting crime are among the few constitutionally legitimate functions of government, yet they support turning over even those government functions to the for-profit sector.

You can’t let constitutional legitimacy get in the way when there’s money to be made.

America’s “fiscal scolds” (as the blogger, Digby, calls them) are quick to remind us that when you reward a behavior you will get more of it. It’s the old “moral hazard” line of attack against entitlement programs. So what do we make of private contractors turning wars and prisons into profit centers?

Jeremy Scahill reports that 50% of the manpower deployed by the United States to Iraq and Afghanistan is now private contractors (armed and unarmed), “a 23% increase in the number of ‘Private Security Contractors’ working for the Department of Defense in Iraq in the second quarter of 2009 and a 29% increase in Afghanistan.” The author of “Blackwater: The Rise of the World’s Most Powerful Mercenary Army,” Scahill writes, “This means there are a whopping 242,647 contractors working on these two U.S. wars.” Military sources expect us to be in Iraq for 15 to 20 years. Some estimates put the cost of operations in Afghanistan over the next few years at half a trillion dollars.

It gives a whole new meaning to "soldiers of fortune."

Appearing on “Bill Moyers Journal” last week, Scahill cautioned that most Americans are unaware of how many of their tax dollars are going to “for-profit corporations in both Iraq and Afghanistan,” that is, companies with an economic incentive for perpetuating conflict:

These are companies that are simultaneously working for profit and for the U.S. government. That is the intricate linking of corporate profits to an escalation of war that President Eisenhower warned against in his farewell address. We live amidst the most radical privatization agenda in the history of our country. And it cuts across every aspect of our society ...

You turn the entire world into your recruiting ground. You intricately link corporate profits to an escalation of warfare and make it profitable for companies to participate in your wars.

Corporations with their own private armies is one dystopian outcome already emerging.

Which brings us to the domestic prison industry.

In March, Sen. Jim Webb (D-VA) explained in Parade magazine what is wrong with a U.S. prison system he called “a national disgrace.” With only 5% of the world’s population, the United States holds almost 25% of the world’s prison inmates, “nearly five times the average worldwide.”

Webb put the annual federal, state and local cost to taxpayers at $68 billion annually, and observed,

With so many of our citizens in prison compared with the rest of the world, there are only two possibilities: Either we are home to the most evil people on earth or we are doing something different – and vastly counterproductive.

The war on drugs has filled our prisons to overflowing with non-violent or casual drug users. What Webb did not address is how mandatory sentencing and "three strikes" laws make building and operating for-profit prisons another growth industry, an industry with an economic incentive for perpetuating the United States’ record-setting incarceration rate.

Make operating prisons profitable and you’ll get more prisons and more prisoners one way or another. Reward war-making and you’ll get more of that too. There's a moral hazard for you.

But wait, there's more.

As Scahill suggests, linking corporate profits to an escalation of warfare erodes democratic decision making. With well over 30,000 registered lobbyists in Washington, D.C., keeping profit considerations as much as practical out of policy decisions is already difficult enough. Expanding corporate influence by spinning off core government functions – historically not-for-profit functions – to corporations whose basic instincts are capitalist rather than democratic, and who answer to shareholders, not voters, makes them stronger and the American people and American democracy weaker.

Two of the rewards of the “radical privatization agenda” are more military adventurism and a prison system bursting at the seams. Perhaps it is time we took the profit back out.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future