Prisons, Privatization, and the Elusive Employee-Contractor Distinction — Part 4

On Friday, I posted the introduction to my latest paper, Prisons, Privatization, and the Elusive Employee-Contractor Distinction. On Monday and  Tuesday, I posted following sections. You can find the whole paper here on SSRN.

Again, thanks to the commenters for participating in the discussion. Some of you may show up in my star footnote.

Again, I’ll stress: if your problem with contracting out (prison, military, or otherwise) is that you think it will work badly, will harm prisoners, will cost more money, will distort the substantive criminal law through lobbying, will reduce the effectiveness of government, won’t be seen as legitimate by citizens or inmates, etc., I concede all your points for the purposes of this paper. This isn’t a policy paper on whether privatization is a good idea; it’s purely a paper about philosophical foundations. If your argument is that privatization doesn’t work well, even if you think it will never work well because it’s unlikely that it can ever be adequately reformed, your argument may be super-strong, but it’s empirical. So comments stressing these points are unlikely to be helpful.

On the other hand, if you’re willing to engage with the hypothetical, “What if private prisons and public prisons acted in exactly the same ways, and no one actually cared about the mode of provision?”, then this paper is for you and I encourage your comments. Regardless how unrealistic you think this hypothetical is, it’s the proper way of teasing out whether objections to privatization are empirical or not (what I call “inherent,” though you’re free to suggest different terminology).

O.K., here goes with the next round of suggested arguments, which I call the “private purposes arguments.”

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So far, we’ve seen two non-empirical arguments. The first, the argument from accountability, turned out not to be inherently about privatization at all. The second, on the other hand—the argument from moral burdens—really was about privatization as such, but it failed to adequately distinguish between public employees and private contractors, both of whom are private people who do the state’s bidding for money.

The argument from moral burdens didn’t assume anything particular about the private actor. The private actor’s moral judgment was “private” in the sense that anyone’s judgment is his own, but the argument didn’t assume that the private actor was motivated by, say, a profit-making desire. This makes sense, since the argument also covered shaming punishments, which are designed to be administered by ordinary people like you and me, with no pecuniary expectations in the matter.

But the next set of arguments, which I label “private purposes” arguments, are more specifically targeted at private corporations and their profit motive. As we’ll see, though, this line of argument, too, fails to distinguish between public employees and private contractors. To the extent that private purposes animate the latter more than the former, this is an empirical question.

A. Private Purposes and Freedom of Association

Richard Lippke suggests that private prisons may violate a prisoner’s “freedom of conscience and association, in the sense that offenders will be forced to participate, even if only as passive clients, in certain specific private enterprises.”

Obviously we’re not talking about religious prisons; Lippke assumes that no indoctrination is going on,so the problem is merely that the inmate is forced to associate with the organization. But couldn’t one say the same of the state prison? Doesn’t being assigned to any prison violate one’s freedom of conscience and association?

Lippke answers this concern:

I am almost persuaded by [this equivalence], but not quite. One could argue that rational contractors [in the social contract], concerned to protect their autonomy, will look for ways to enforce the law that least infringe their freedom of conscience and association should they run afoul of the law. Granted, public prisons may impose on them things that they object to and that restrict their freedom of association. Private prisons do this and something else besides—they force some individuals to be participants in someone else’s profit-making enterprise.

[The] contention that there are individuals who also benefit economically from public prisons is correct but not decisive. There is a difference, however slight and perhaps mostly symbolic, between being incarcerated in a facility overseen by individuals who earn a living doing so and being incarcerated in a facility where not only are there individuals earning a living by overseeing the facility, but where there are other individuals who seek to earn a profit by efficient management of that facility. The latter individuals may be ones that rational contractors would wish to limit forced association with.

Lippke draws a distinction between those who “earn a living overseeing the facility” and those who “seek to earn a profit by efficient management of that facility.” Maybe by “earn a living,” Lippke means to include public corrections officers, wardens, and Department of Corrections employees. By “seek to earn profit,” presumably he means to include the shareholders (and possibly high-level executives?) of the private firm. I suppose he means to put private corrections officers into the “earn a living” category: he characterizes private prisons as places where some people earn a living while others seek to make a profit, so presumably the corrections officers are in the first category while the shareholders are in the second. Moreover, we say colloquially that prison guards “earn a living,” since they’re paid a wage—though, since prison firms’ employees’ retirement packages often include company stock, one could also say they make a “profit” together with the other shareholders.

But this difference is illusory. Everyone who seeks to “earn a living” is also “seek[ing] to earn a profit”: no one works in a particular organization unless they expect to be at least as well off as in their next-best alternative. Indeed, no one needs to work at all unless they expect to be at least as well off as by not working. For a low enough wage, people wouldn’t bother working; at a certain wage (their so-called “reservation wage”), they’re indifferent between working and not working; above their reservation wage, they strictly prefer to work. Anyone who is paid above his reservation wage (hopefully most of us) can be said to be making a profit, just like, as financial investors, we’re making a profit whenever our money earns more than it could be earning elsewhere. Some of us seek to earn a profit by using our labor, some of us seek to earn a profit by using our previously acquired money, but we’re all seeking to earn a profit. Despite some critics’ protestations that there is a “fundamental difference” or “obvious distinction” between profiting from labor and profiting from capital, it is unclear how this distinction, fundamental and obvious though it may be, is relevant.

Of course, that we all profit from our work (or investment) doesn’t mean we’re all mercenarily minded. Investors might put their money into prison firms—or one may work as a high-level prison firm executive and buy the company’s stock—because they really care about corrections.Conversely, one might work as a (public or private) corrections officer or warden or at a private military company just because it’s a living. And as Bruce Benson points out, high-level public employees may also have:

a desire to avoid tarnishing the imagine of their bureaucracy by revealing abuses by those whom they supervise (the bureaucrats may have a variety of motives here, such as the belief that tarnishing the bureaucracy’s image will reduce their ability to pursue their vision of the public interest or will threaten their job security, support for their families, comfortable lifestyle, discretion, power, or authority).

Despite some speculation that public employees care more about their work while private contractors are more rapacious—this is an empirical question to which I don’t know the answer—the precise form that the profits take has no necessary relation to one’s attitude toward the work. (There is of course an ethic of public service that differs from the ethic of private industry. Max Weber, for instance, refers to the “genuine official” who “engage[s] in impartial ‘administration’ . . . ‘without scorn and bias.’”But Weber was speaking descriptively, and in any event the normatively relevant question is surely to what extent the differences in ethic manifest themselves in actual differences in attitude or behavior.)

Finally, in Lippke’s distinction between those who “earn a living overseeing the facility” and those who “seek to earn a profit by efficient management of that facility,” I’ve been stressing the “earn a living”/“earn a profit” distinction, but maybe we should also look into the “overseeing”/“efficient management” distinction. This, too, fails to distinguish between public and private: presumably no one’s paid to oversee the facility inefficiently. Any public corrections officer is expected to not waste prison resources, and the same goes for wardens and Department of Corrections officials.

Now there might be a significant difference between “overseeing” and “efficient management,” but only if overseeing and efficient management differ as management styles. Certainly, the choice of words suggests a hard-hearted, cost-cutting mentality that may be at odds with sound correctional policy. But if this is so, we’re back in the contested empirical territory of how public and private prisons act.

B. Private Purposes and Legitimacy

The previous argument introduced the “private purposes” strand of criticism, where the significance of the private purposes was that they vitiated freedom of association. But these arguments are much broader: public purposes also play a role in more general theories of liberal legitimacy. Thus, Michael Walzer argues that, according to liberal social contract theory, “the agents of punishment [must] be agents of the laws and of the people who make them.”What he means by “agents” here is that punishers must share the public purposes that justified the punishment to begin with.

Certainly this philosophy precludes having victims punish criminals; but Walzer also extends this theory to private prison contractors. What is wrong with the private prison, says Walzer, is that “[i]t exposes the prisoners to private or corporate purposes.” By contrast:

Police and prison guards are our representatives, whose activities we have authorized. . . . When [the policeman] puts on his uniform, he strips himself bare, so to speak, of his private opinions and motivations. Ideally, at least . . . he treats . . . all criminals in the same way, whatever his personal prejudices.

“Ideally,” perhaps. But can’t non-ideal (i.e., actual) public servants also act out of private purposes? (This approach would make the “public purposes” argument strictly empirical and comparative.) Alternatively, why doesn’t the “ideal[]” of a private prison firm include faithfully fulfilling its contractual obligations, acting in the interests of its contractual partner, and shedding its private prejudices? (This approach is non-empirical, but obliterates the theoretical distinction between employees and contractors.) If this is so, why can’t private firms, too, be “our representatives, whose activities we have authorized”?

Walzer admits as much. “[O]ur impersonal representatives turn out to be ordinary persons; they have careers, interests, feelings of their own.” But, he argues, this risk is less than when “corporate motives” are involved, because of “the professional ethic and internal safeguards of the civil service, . . . legislative oversight committees and civilian review boards, and finally . . . the courts, which uphold the law even, or especially, against the agents of the law.”Walzer stresses standard (empirical) reasons to believe the private sector will underperform: opportunistic holdup, cost-cutting, and reduced opportunities for judicial monitoring.Walzer even suggests that the private sector could have a role in prison provision—but only the nonprofit sector, since “[t]he incentive system is all wrong” in private prisons.

It seems, then, that Walzer’s philosophical point is just derivative of his empirical point: if it could be shown that public servants were pervasively self-seeking and that public-sector accountability were low, or that private-sector monitoring were extremely high-quality, private-sector professional norms extremely well developed, and legal accountability extremely effective, Walzer’s argument would have to go the other way.Moreover, as he says, his argument doesn’t apply to private nonprofits.

The Israeli Supreme Court, on the other hand, which relied exclusively on the public purposes argument in ruling that private prisons violated inmates’ liberty rights, purported to be not quite so empirical.

While the majority opinion recognized the possibility that private prisons, because of profit-making incentives, could violate human rights more often than public prisons, it didn’t rely on those, because such a mere possibility couldn’t justify invalidating private prisons before they were even implemented. Instead, it ruled that prison privatization violated the constitutional right to personal liberty by the mere fact that punishment was being administered by a profit-motivated actor.

In the Court’s view, “the question whether the party denying the liberty is acting first and foremost in order to further the public interest . . . or whether that party is mainly motivated by a private interest is a critical question.”Making inmates “subservient to a private enterprise that is motivated by economic considerations . . . is an independent violation [of the right to personal liberty] that is additional to the violation caused by the actual imprisonment under lock and key.”In fact:

the scope of the violation of a prison inmate’s constitutional right to personal liberty, when the entity responsible for his imprisonment is a private corporation motivated by economic considerations of profit and loss, is inherently greater than the violation of the same right . . . when the entity . . . is a government authority that is not motivated by those considerations, even if the term of imprisonment . . . is identical and even if the violation of . . . human rights that actually takes place . . . is identical.

Throughout, the Court drew a strong distinction between the Israel Prison Service, which is a “bod[y] that answer[s] to” and “receives its orders from” and “is subordinate to” and “acts through” (and “by and on behalf of”) and is a “competent organ[] of” the state or the government or the executive branch (which, in turn, is “the representative of the public”), and the prison firm, which is “an interested capitalist” and “a private interest,” “a party that is motivated first and foremost by economic considerations—considerations that are irrelevant to the realization of the purposes of the sentence, which are public purposes.”Justice Arbel, in a separate opinion, similarly wrote that the private firm is “an outsider that is not a party to the social contract . . . and does not necessarily seek to realize its goals”and that its “main purpose is by definition the pursuit of profit.”

But all this is merely asserted, not justified. The analysis suffers from at least two weaknesses:First, why can’t a private firm receive its orders from, be subordinate to, act through, be a competent organ of, the state? And second, given that, as I’ve argued above, any employee “profits” from his employment, why is a contractor’s profit any different? (Or, if one is willing to allow for non-pecuniary motivations among government employees, why can’t contractors have similarly noble motivations?)

The Court’s opinion does note a few tangible, non-question-begging differences between the Israel Prison Service and private firms, but these are hardly central to the argument; nor do they succeed in distinguishing public and private prisons as a philosophical matter.

First, the head of the public agency is appointed by the government. But “[m]ost public employees . . . , including police and corrections officers, are neither politically appointed nor democratically elected.” Moreover, the private prison firm is also chosen by someone in the government, and it’s not clear what difference these different choosing mechanisms make apart from the empirical question of behavior.

Second, the public agency is “subject to the laws and norms that apply to anyone who acts through the organs of the state and also to the civil service ethos in the broad sense of this term,” which “significantly reduc[es] the danger that the considerable power given to those bodies will be abused.” Perhaps Justice Arbel was getting at something similar when she alluded to the private firm’s not being “bound by the norms inherent” in the social contract, and certainly she did stress practical concerns like directness of supervision(though she didn’t rely on them).

But, as I’ve noted above,this is an argument against unaccountability, not against privatization as such; one can imagine private prisons that are subject to the norms of state actors. Moreover, that the “civil service ethos” is a stronger force against abuse in the public sector than possible competitive or other market or contractual forces in the private sector is a contested empirical question, which is in tension with the majority’s stated intention to not rest their decision on possible future violations.

Third, Justice Arbel notes that the private firm “is chosen and operates on the basis of its ability to maximize income and minimize expenditure”—not to argue that the private firm will take harmful actions, but because that very fact violates human dignity.But prison firms needn’t be chosen on a low-bid basis, and efficient management, at least in the sense of not spending more than the prison budget, is valued in the public sector as well.

Finally, Justice Procaccia at least did better in her opinion, where she justified the distinction at least in part based on public perception: the private firm “does not act as a public trustee” because “[i]ts status and actions are not based on a broad social consensus.” I discuss public perception arguments later in this Article.

C. Private Purposes and Role Responsibility

I’ve argued above that at least some private purposes arguments wrongly treat as inherent what’s in fact contingent: the extent to which private actors are motivated by private considerations. In this section, I’ll suggest another way around the empirical morass, though this workaround has problems of its own.

Regardless of their motivations, private contractors have a conflict of interest that is absent in the public sector. Public and private employees both have a duty to their employer. But in the public sector, that duty runs all the way up to The People, whereas in the private sector, the employer itself (the corporation) has conflicting duties, one to its contractual partner (the government and The People) and a fiduciary duty to its shareholders (who want their profits maximized).

One can understand the multiple-principals problem in two ways. One is purely empirical: perhaps those with multiple principals are less likely to do a good job serving the government’s purposes, because the profit-maximizing purpose gets in the way. As with all the other empirical questions discussed here, this could go either way. Given enough competitive pressure or oversight or the right contractual terms, it’s possible that private contractors will maximize profits for their shareholders by doing well for the government. At least, it’s possible that they’ll do better for the government than employees who, while they only have one duty, don’t take that duty seriously because of, say, civil service protection. Even within government, there can be different principals with different goals (one’s department head may be resisting the President’s policy). The number of principals may be greater in the private sector, and it may result in worse work for the government, but it’s something we can discuss empirically.

Or, one can understand the multiple-principals problem in a categorical way that relates to moral duties. Suppose one imagines conscientious actors who take their various institutional duties seriously, for instance as a matter of role obligation.When the contractual duty technically allows more than one action, say A and B, the profit-maximizing duty might be taken to require that the firm choose the more-profitable A over the less-profitable B. But suppose that B is better for the government’s policy—A was technically permissible only because of incompleteness in the contract. So a conscientious public employee would be required to choose B. Thus, a conscientious actor with two duties would be required to take a different action than the one with only one duty.

Of course, if B is really a better policy, then the problem is empirical: multiple principals are bad because they lead to a worse action being taken. But since this argument is trying to abstract from empirical concerns, let’s now suppose that A and B are equally good from the state’s point of view. Should one care? To care, one would need to also hold a belief that the only legitimate punishment is one that stems from no duty other than the one to the state. If one held these views, one could then argue that the problem of multiple principals is an inherent moral problem, not just a contingent, empirical one.

But this would be a funny argument against privatization.

In the first place, it only applies to companies with shareholders. Sole proprietorships, for instance, owe no duties to anyone other than their contractual partner, so there is no multiple-principals problem there.

In the second place, the objection could be easily overcome by making it clear to the shareholders—for instance by including a declaration to this effect in the mission statement—that the firm intends to act as a fiduciary for the government as well, and that the duty to maximize profits is strictly subordinate to the duty to conscientiously fulfill the contract. Government could insist on such a declaration as a condition of doing business with a provider. (Similarly, any company can choose to do something that its managers feel is “socially responsible” but non-profit-maximizing, and it won’t be violating its duty to its shareholders as long as the shareholders bought stock with this understanding.)