Prisons, Privatization, and the Elusive Employee-Contractor Distinction

I’ve just sent out my latest paper, Prisons, Privatization, and the Elusive Employee-Contractor Distinction. [UPDATE: You can find it here on SSRN.] Here’s the introduction:

Critics of private prisons often argue that privatization is inappropriate because of inherent differences between the public and private sectors. There are, of course, plenty of arguments that focus on empirical issues—on the one hand, “mere accounting” concerns like whether private prisons are cheaper; on the other, larger questions like whether private prisons mistreat their inmates. But the “inherent” critics use a different sort of discourse, one that supposedly transcends contingent, empirical claims, instead staking out a position based on high-level political or moral theory, the purposes of criminal punishment, liberal legitimacy, liberty and dignity, symbolism and social meaning.

Thus, criminologist John DiIulio has written:

[T]o remain legitimate and morally significant, the authority to govern behind bars, to deprive citizens of their liberty, to coerce (and even kill) them, must remain in the hands of government authorities. . . . The badge of the arresting policeman, the robes of the judge, and the state patch on the uniform of the corrections officer are symbols of the inherently public nature of crime and punishment.

These concerns are echoed in the law as well. In 2009, the Israeli Supreme Court ruled that prison privatization violates “the constitutional rights to personal liberty and human dignity of inmates who are supposed to serve their sentence in that prison. This is because of the actual transfer of powers of management and operation of the prison from the state to a private concessionaire that is a profit-making enterprise.”

Alon Harel and Ariel Porat argue in a recent Cornell Law Review article:

[C]ertain tasks[, particularly tasks involving the infliction of violence, such as criminal sanctions,] . . . must be performed by public officials not because public officials are better at performing them (or can perform them more cheaply) but because the identity of the agent who performs these tasks is considered to have an intrinsic value. . . . [T]his view is grounded in foundational intuitions concerning political legitimacy.

And Mary Sigler has similarly recently argued that private prisons implicate “the nature and justification of punishment in a liberal democratic polity”:

Punishment under law is a profound exercise of state power the meaning and justification of which depend on the social and political institutions that authorize it. In a liberal state . . . punishment is inflicted for public wrongs in the name of the people. . . . The delegation of punishment through prison privatization attenuates the meaning of punishment in a liberal state and undermines the institution of criminal justice.

These aren’t just throwaway paragraphs in otherwise empirical pieces. Sigler’s and Harel and Porat’s arguments avoid empirics entirely. And the Israeli Supreme Court, in invalidating private prisons, declined to consider their real-world functioning—in fact, explicitly assuming that, as between public and private prisons, “the term of imprisonment . . . is identical and . . . the violation of . . . human rights that actually takes place . . . is identical.”

The Israeli Supreme Court’s assumption suggests a simple hypothetical implicit in many of these arguments. Even if switching from public to private provision didn’t change any actions in the world, and even if nobody cared whether provision is public or private—so these arguments imply—privatization would still be illegitimate.

I believe that this line of attack is generally unsound. For purposes of this Article, I don’t deny that, as a matter of political theory, only the state should punish. But the argument that the provision of all these services must therefore be undertaken by public actors—by state employees rather than by private contractors—misunderstands what it means for the state to act.

“The state” isn’t the president or governor; it’s not a legislator, or the set of all legislators, or even the set of all government employees. It’s a network of relationships among people. An important network, a real network, a network whose workings perhaps lead to politically legitimate decisions—but still just a network, independent of, and not identified with, any person. Like friendship or parenthood or the corporation, it’s abstract.

And yet, to treat prisoners well, badly, or any way at all, one needs a body: fingers and hands to grab people and pull triggers and press buttons; perhaps feet, eyes, a brain. A state needs a corporeal manifestation to do anything in the world.

Fortunately, there are plenty of potentially available bodies—300 million at home and 7 billion if we cast a wider net, to say nothing of K-9 police dogs. It turns out, though, that—given the assumptions of modern liberal society—all of these come from the private sector. We’re born in the private sector, and we don’t work for the government or pursue its goals by default. The government can convince us to work for it by appealing to our sense of duty, by forcing us, or by paying us money. Modern liberal societies generally prefer voluntary service to compulsory service, and duty can only go so far, so people who do things for the government are generally paid to do so.

In short, government can only “act” by turning to people outside of government. It doesn’t just need agents—it has no physical existence without them. And these agents, by and large, are attached to it by means of market transactions. Sometimes these transactions are called “employment contracts,” and the agents become “employees”; sometimes the process is called “contracting out,” and the agents become “contractors.”

Is there any reason for us to distinguish between employees and contractors? Yes, there is. As long as you can’t specify in complete detail what your agents should do, as long as you can’t monitor everything they do, and as long as enforceability is imperfect, your agents will have some freedom to serve their own agenda at the expense of your own, whether that agenda involves being lazy or being overzealous or cutting corners. Different types of contracts—for instance, flat per-year salary vs. flat per-prisoner-day compensation, civil-service employment vs. hiring by auction—lead to different incentives; and different incentives induce different actions.

Thus, one can argue (rightly or wrongly) that private prisons cost no less, provide worse-quality confinement, and are less accountable than public ones. One can argue that private prison firms might lobby for stricter criminal justice policies or act to prevent their inmates’ early release or that they might use campaign contributions or other illegitimate means to obtain contracts. One can complain that private prison construction can be used to circumvent the requirement that voters approve bond issues, or that privatization will represent a shift away from union wages and civil-service privileges. One can even argue against prison privatization on the ground that it’s too efficient—so efficient that it (undesirably) results in more incarceration. (Similar themes run through the entire literature on privatization: critics argue that privatization is economically inefficient; it worsens distributional inequalities in society; it leads to the underprovision of public goods; it reduces accountability; it increases violations of human rights; it distorts the results of the democratic process; it is plagued with market failures.)

These anti-privatization arguments may be right or wrong. But they all have a few things in common. They’re contingent, not inherent. They’re based on the real-world consequences of different modes of contracting, rather than assigning any inherent importance to the employee/contractor distinction per se. These consequences could be monetary, or they could relate to the protection of human rights, or they could be based on nothing more than some people’s subjective dislike of privatization. But they all focus on how privatization affects people or things in the real world. And they’re all susceptible to empirical data, or even to theoretically well-informed speculation on how we expect people to act in different institutional settings.

It’s therefore not surprising to find that many of these arguments are deeply contested, because they depend on messy data and contingent facts. For instance, before the Israeli Supreme Court, privatization opponents pressed the argument that the private prison legislation should be struck down because human rights violations would be more severe in private prisons. But the Israeli Supreme Court, in rejecting that line of attack, wrote that, while these concerns were “not unfounded,” there was “no certainty that this [would] occur” and that “the comparative figures [were] not unambiguous.” Similarly, an analysis of the empirical literature on prison privatization by Douglas McDonald and his co-authors—one that was not at all positive about private prisons—concluded, fairly mildly, that there was no strong evidence that private prisons performed better than public ones and, more generally, that the quality of existing studies is generally insufficient to draw strong conclusions about comparative prison quality.

These arguments are messy, because they depend on facts about the world that could go one way or another; one’s conclusions are always tentative and subject to revision when the next study comes out. But these are the sorts of messy arguments we should be having, rather than arguments that attach dispositive importance to labels like “the state” and “the private sector.”

Both in-house provision (that is, by employees) and contracted-out provision can be said to be “the state acting,” since both employees and contractors are committing to do what the state tells them to do (subject to a contractual relationship of some sort). Or both can be said to be “private parties acting,” since both employees and contractors are private people who potentially have their own agendas and often have the discretion to act contrary to the wishes of their principal. But, whether one favors or opposes privatization, what we can’t say is that one of them is the state and the other is a private party.