Friday, September 10, 2010

Private funding for prison rehabilitation -- latest British innovation.

Say what you will about eccentricities in the United Kingdom's political structure, they aren't afraid to try some new things. Particularly, in the area of penal reform.The U.K. prison system is struggling with extremely high recidivism rates; according to the BBC "60% of criminals who serve short sentences reoffend within a year of leaving prison."

So what's the plan? Much like purchasing a bond, investors can put money into the rehabilitation program (currently limited to male inmates with sentences less than one year). If reoffenses among the subject group drop by a specified amount, the investors receive dividend payments.

Quoting the BBC:

"It pays by results," said [Justice Secretary Ken] Clarke. "We're going to pay what works and what works should therefore grow and what doesn't work will vanish.
"I like the innovative funding, the payment by results, the collaborative groups, and if it succeeds it will grow and if it doesn't, by that time we will be trying something else.
"But sooner or later, something has got to be done about reoffending.
Social Finance said there would be indications of whether the project was succeeding within a year but the full return would not be known until the end of the six-year investment term.
Social Finance director Emily Bolton said: "Investors benefit and the government gets some cost savings. The better the reductions in reoffending, the higher the investors' return.
"It's not taking money out of the system, in fact it's enabling us to transfer the money to more socially valuable things."
An interesting idea. America is already using private companies to help run its prisons. However, their incentive structure is reversed -- the more people in jail, the more money. One such company was compared to a "hotel that's always at 100 % occupancy. . . and booked to the end of the century." The opposite strategy - using private industry to prevent crime - hasn't been applied much, unless you count mall cops and security guards.

In spite of a comprehensive parole/probation system, American prisons have their own recidivism problem. Some telling statistics:
In 1999, a total of 244,700 probationers and 173,800 parolees were reincarcerated for new offenses.Those numbers respectively comprise 15 and 42 percent of all parolees and probationers released that year. (41)

It makes me think of George Clooney in Oceans 11, who is paroled and immediately planning his next heist -- except most criminals don't have a screenwriting crew in their corner. Obviously, the rehabilitative aspect of our prison system is lacking something.

While an obvious solution to reoffending would be to increase sentences until no one would be able to get in and out of prison in a lifetime, it's questionable how much that would advance larger social goals (like not incarcerating half our adult population; we're up to 2 million so far). As state budgets continue to tighten, perhaps financial reality will cause us to take a cue from the Brits, and make crime prevention as profitable as punishment.

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