No, I don’t think this is a problem. The prisons are competing against each other, not acting as a single, unified block. Why would a prison spend money on making something illegal (through lobbying) when they still have to outbid their opponents? Not only that, prisons would also have an additional liability to pay for their existing prisoners who might commit these new crimes after their release.
This will predict that organized corporate lobbying efforts to a first approximation do not exist, except for entrenching intrasector monopolies against direct competitors.
You mean the first part? (I.e. Why pay for lobbying when you share the “benefits” with your competitors and still have to compete?) Yeah, when a company becomes large enough, the benefits of a rule change can outweigh the cost of lobbying.
But, for this particular system, if a prison is large enough to lobby, then they’re going to have a lot of liabilities from all of their former and current inmates. If they lobby for longer sentences or try to make more behaviours illegal, and one of their former inmates is caught doing one of these new crimes, the prison has to pay.
One way prisons could avoid this is by paying someone else to take on these liabilities. But, in the contract, this person could ensure the prison pays for compensation for any lobbying that damages them.
So a lobbying prison (1) benefits from more inmates in the future, (2) has to pay the cost of lobbying, and (3) has to pay more for the additional liabilities of their past and current inmates (not for their future inmates though, because the liabilities will be offset by a lower initial price for those inmate contracts). Points 1 and 2 are the same under the current prison system. Point 3 is new, and it should push in the direction of less lobbying, at least once the system has existed for a while.
I would assume that for a private prison that has become good at its business the benefits of more inmates would outweigh the liabilities and that at some point it would (in principle, ignoring the free rider problem for a moment) become easier to increase the profits by increasing the revenue by making more things illegal than trying to reduce the reoffending rate. Also do administrators profit from more crimes in a public system? It of course increases the demand for administrators, but I don’t see how it would increase the salary of a significant number of them.
But, in the contract, this person could ensure the prison pays for compensation for any lobbying that damages them.
Does insurance contracts typically contain clauses for future “products”? I would have assumed that the insurance of the prison would only cover the damage of the point in time the contract was firmed.
I would assume that for a private prison that has become good at its business the benefits of more inmates would outweigh the liabilities and that at some point it would (in principle, ignoring the free rider problem for a moment) become easier to increase the profits by increasing the revenue by making more things illegal than trying to reduce the reoffending rate.
Ignoring the free-rider problem (“problem” being from the perspective of the prison), as the prison gets more and more current/former inmates, it becomes harder for that cost-benefit calculation to make sense. With no change in the law or the performance of the prison, the prison’s liabilities will grow until the point at which the current/former inmates who die are are as numerous incoming inmates. So for lobbying to make financial sense, it would probably have to occur soon after the prison is started or soon after the system is implemented. But that time is also when the prison has the least information about their own competence (in terms of rehabilitation and auction pricing).
Also do administrators profit from more crimes in a public system? It of course increases the demand for administrators, but I don’t see how it would increase the salary of a significant number of them.
Not really, but that’s besides the point. The point is that they don’t benefit from rehabilitating their inmates. They don’t benefit from firing abusive guards. They don’t benefit from reading the latest literate on inmate rehabilitation and creating policies that reduce the chance of their inmates re-offending.
Does insurance contracts typically contain clauses for future “products”? I would have assumed that the insurance of the prison would only cover the damage of the point in time the contract was firmed.
I don’t know much about insurance, but I think you can write pretty much whatever contract you like, as long as no laws are broken.
Also do administrators profit from more crimes in a public system? It of course increases the demand for administrators, but I don’t see how it would increase the salary of a significant number of them.
Not really, but that’s besides the point.
Actually, I was referring to a point you made in an earlier comment:
So a lobbying prison (1) benefits from more inmates in the future, [...]. Points 1 and 2 are the same under the current prison system.
So do we both agree that (1) does not hold in the current system?
Another perverse incentive: campaign for making more offenses punishable by prison sentences.
No, I don’t think this is a problem. The prisons are competing against each other, not acting as a single, unified block. Why would a prison spend money on making something illegal (through lobbying) when they still have to outbid their opponents? Not only that, prisons would also have an additional liability to pay for their existing prisoners who might commit these new crimes after their release.
This will predict that organized corporate lobbying efforts to a first approximation do not exist, except for entrenching intrasector monopolies against direct competitors.
I think this is sometimes untrue in practice.
You mean the first part? (I.e. Why pay for lobbying when you share the “benefits” with your competitors and still have to compete?) Yeah, when a company becomes large enough, the benefits of a rule change can outweigh the cost of lobbying.
But, for this particular system, if a prison is large enough to lobby, then they’re going to have a lot of liabilities from all of their former and current inmates. If they lobby for longer sentences or try to make more behaviours illegal, and one of their former inmates is caught doing one of these new crimes, the prison has to pay.
One way prisons could avoid this is by paying someone else to take on these liabilities. But, in the contract, this person could ensure the prison pays for compensation for any lobbying that damages them.
So a lobbying prison (1) benefits from more inmates in the future, (2) has to pay the cost of lobbying, and (3) has to pay more for the additional liabilities of their past and current inmates (not for their future inmates though, because the liabilities will be offset by a lower initial price for those inmate contracts). Points 1 and 2 are the same under the current prison system. Point 3 is new, and it should push in the direction of less lobbying, at least once the system has existed for a while.
I would assume that for a private prison that has become good at its business the benefits of more inmates would outweigh the liabilities and that at some point it would (in principle, ignoring the free rider problem for a moment) become easier to increase the profits by increasing the revenue by making more things illegal than trying to reduce the reoffending rate. Also do administrators profit from more crimes in a public system? It of course increases the demand for administrators, but I don’t see how it would increase the salary of a significant number of them.
Does insurance contracts typically contain clauses for future “products”? I would have assumed that the insurance of the prison would only cover the damage of the point in time the contract was firmed.
Ignoring the free-rider problem (“problem” being from the perspective of the prison), as the prison gets more and more current/former inmates, it becomes harder for that cost-benefit calculation to make sense. With no change in the law or the performance of the prison, the prison’s liabilities will grow until the point at which the current/former inmates who die are are as numerous incoming inmates. So for lobbying to make financial sense, it would probably have to occur soon after the prison is started or soon after the system is implemented. But that time is also when the prison has the least information about their own competence (in terms of rehabilitation and auction pricing).
Not really, but that’s besides the point. The point is that they don’t benefit from rehabilitating their inmates. They don’t benefit from firing abusive guards. They don’t benefit from reading the latest literate on inmate rehabilitation and creating policies that reduce the chance of their inmates re-offending.
I don’t know much about insurance, but I think you can write pretty much whatever contract you like, as long as no laws are broken.
Actually, I was referring to a point you made in an earlier comment:
So do we both agree that (1) does not hold in the current system?
Good point.