Recent talk continues about the state buying a troubled asset, the Wyatt Detention Facility in Central Falls. The thinking is that the state could purchase the outlandishly overvalued prison, refinance it, and operate a modest profit margin while saving the bondholders on Wall Street. Naturally, such a deal would take decades, if ever, to pay off. As is, a scheduled increase in finance payments should bankrupt the prison within a few years. Like many such large projects, the income is made on the construction and the taxpayer dollars being redirected into the inside investors- a prison is not a “business” that sells a profitable service to customers.
The Wyatt prison operates at about half the cost of the ACI. They also get hundreds of thousands of dollars in free city services. Their subsidized, tax-free, “privatized” efficiency is done primarily by paying their labor on par with WalMart, rather than negotiating with the RI Brotherhood of Correctional Officers. If the state were to buy the Wyatt, there would likely be a considerable push to pay similar salaries and benefits, and the Brotherhood will likely demand those be union jobs. Furthermore, the payouts by Wyatt to prisoners’ widows (such as Jason Ng) would come out of the state coffers. The Wyatt will be guided by 14th Amendment protections under state ownership, which can grow costly, as (surprise) prisoners happen to be human beings and there are limitations on what forms of punishment and neglect can be inflicted upon them. Ultimately, and thoughts on turning a profit should be forgotten.
The desires to own a prison suggest little has been learned by the Bailouts and Foreclosure Crisis. Many people in government appear determined to override market forces and subsidize poor business models. It is much easier for a government official to do than an individual investor because, after all, it is not their money. And all you need to do to keep the Wyatt in business: increase sentences, arrest more people, create new crimes, and put more police on the street. For every dollar that the Wyatt makes, a dollar is spent by the taxpayers. Wyatt’s Wall Street owners need you to keep their pockets lined.
I think anyone interested in how business is done in R I should look into how this prison project was conceived, who all the players were involved in getting the project off the ground – Halliburton, Brown and Root, Dillon and Read, Cornell Corrections, how Sundlun financed the scheme, the kind of financial condition Central Falls was in at the time, the kinds of promises that were made to the city, etc., etc., etc.
Central Falls has been at risk for over two decades. It seems obvious to me that it has long been recognized that Central Falls was been ripe for neo-liberal socio-economic experimentation and exploitation. The prison, there, was the first neo-lib privatization projects in Central Falls. I think it was a landmark project that was closely watched by Harvard Business School because of the potential “pop” prison privatization represents to investors. I don’t think it is a coincidence that Flanders brought Gist to R I, who ended up firing the teachers she had Gallo fire. The receiver is there to protect the bondholders from what happened to them in Vallejo, Ca. Commentators are calling the R I law that allowed the state to appoint a receiver with the powers given to them, “the bondholder priority law”.
This latest announcement by the receiver is very disturbing. It seems Central Falls can go bankrupt and renege on its debts to everyone but the people that hold the city’s bonds. Now we have the prison brought into the picture. Obviously, the city can go bankrupt but the prison cannot because Central Falls and Rhode Island residents are not going to be given the same priority that out of state bondholders are given.
We are on to privatization of the school system now. What next? The highest priority always seems to go to the “private sector”, even when the “private sector” takes over public services, attempts to create needs where none exist, and then badly mismanages taxpayer money.
Privatizing a prison is very different from privatizing schools. The most obvious difference is that people can choose whether to send their children to a private or charter school. None of the fundamental competitive market elements necessary for privatization to work are present in this scenario. Running prisons is a legitimate function of government – running schools is far more of a leap.
Greece is the word
Greece is the word, is the word that you heard
It’s got groove it’s got meaning
Greece is the time, is the place is the motion
Greece is the way we are feeling
This is the life of illusion
Wrapped up in trouble laced with confusion
What we doing here?
Or is it “Greed is the word, is the word that you heard?”
Or is it Central Falls
Or is it all three???
“I don’t think it is a coincidence that Flanders brought Gist to R I, who ended up firing the teachers she had Gallo fire.”
What??? Put down the bong.
Bruce,
Please correct me if I’m wrong but I thought the ‘Brotherhood’ had a lock on all state prison operations in their contract. If the state takes over in any form, aren’t they required to staff it with RIBCO people?
“What??? Put down the bong.”
Well, that’s pretty insulting. I think there is a fallacy with a Latin name for that sort of argument.
Actually, Gist didn’t fire the teachers. Gallo fired them with Gist’s approval (or on her orders? or orders from someone higher up than Gist?). Sorry about the typos.
Yes, sometimes I write things and then wonder later how I was ever so bold to be able to make some my assertions and speculate the way I do. I don’t know. Flanders was head of the board of regents when Gist was hired. He is also an enthusiastic supporter.
Question: How much will the people of R I be shelling out in legal services to protect bondholders as a result of this legislation which is unprecedented?
www.lexology.com/library/detail.aspx?g=7dd45560-fd40-49c9-a916-83b0d13ff597
When I google “the bondholder priority law”, an entry comes up from the WSJ which reads”
Rhode Island Law a Boon For Bondholders - WSJ.com
It isn’t any secret Joel Klein is now working for Ruppert Murdoch. Murdoch sees 500 billion dollars in the technology market for public schools. He gave one million to ERN:
“Below is a snapshot of Education Reform Now/Education Reform Now Advocacy’s semi-annual lobbying report. This deals strictly with New York issues. You can access the New York State Commission on Public Integrity here. The two organizations spent approximately $6.6 million on lobbying in 2010.”
dferwatch.wordpress.com/2011/07/24/ernerna-lobbying-3765167-during-first-half-of-2011/
Of course, this data comes from DFER Watch. I wonder if I should expect more ad hominem dismissiveness about my concerns regarding all kinds of privatization efforts involving both major political parties. DFER seems to have a lot of influence in Democratic party politics. So much so in this state that if one removes social and cultural issues from political debate, there really doesn’t seem to be too much difference between where the two major political parties stand.
DD: The state is required to use RIBCO staff where imprisoning state prisoners. This practically ensures the state can’t bulk up the Wyatt prison with state prisoners, unless they use the Brotherhood at Wyatt. Conceivably, RIBCO will push the state if Wyatt is state owned. One might expect the state to invent some new ownership structure, to own Wyatt when convenient, yet not own it when problematic. (consider financial liability vs. taking responsibility in any other scenario). The Wyatt is currently federal and out-of-state prisoners.
The state vouched for Wyatt once before, when Sundlun’s Economic Development Corp (formerly the RI Port Authority) provided a co-signer to the bonds. Oddly, they vouched to get the bonds a rating on Moody’s (state’s tend to have high ratings because, after all, they have a bunch of powerless working stiffs behind their finances). What many seemed to have overlooked is that the state was never on the hook for the bad financial deal- they explicitly offered no fiscal liability with the co-sign. (Good move.)
RTW: One other major difference between privatized schools and prisons is that the schools, in theory (and often in practice) are creating a positive benefit for society. We can reasonably decide if we want that benefit to go across the board, both in recipients and costs. Other than the initial benefit of separating someone who intends to inflict future harm on another, prisons are producing absolutely no societal benefit… unless you count putting money in the pockets of RIBCO and others. But if the latter were the primary purpose, why use a prison as an intermediary? Why not just put Rhode Islanders on the dole? Or do we only put certain people on the dole? People sure are up in arms about single moms getting any taxpayer support, but apparently no worry about giving bondholders or prison turnkeys taxpayer support.
But ultimately, it remains to be seen how long such wealth redistribution projects remain in effect… because eventually there is only so much wealth of the commoners to be redistributed.
“Other than the initial benefit of separating someone who intends to inflict future harm on another, prisons are producing absolutely no societal benefit… unless you count putting money in the pockets of RIBCO and others.”
That’s really not true. Incapacitation is only one benefit of prisons, and it’s not only an “initial” benefit since some criminals really are incurable and should not ever be released into society. Rehabilitation, deterrence, and retribution are three other benefits commonly recognized. We can debate the extent to which each of these is actually occurring in prisons, but they are all clearly present to *some* degree – even if the effects are small, saying they are “zero” is quite an extraordinary claim. I won’t argue that many prisoners would be better off in mental facilities or rehabilitation facilities of some sort, which would also cost taxpayers a lot of money, but we shouldn’t act like prisons are just an illegitimate racket – they do serve a purpose, even if they aren’t serving it in an efficient way.
‘Cailin Rua’ means ‘red headed girl’ in Gaelic. Where’s the Latin or was that an attempt at humor?
RTW: Not to get all in debate mode, but…I agree that Rehabilitation and Deterrence are positive goals for society, but I suspect you would agree that prisons are not the only way to achieve these things. They are quite ineffective, and can be dealt with in other ways. Prisons can’t be made more efficient towards those ends. (i.e. even the Death Penalty does not create deterrence- as the impetus for crime is hardly deliberated based on prison or not.
Similarly with Retribution, although I personally don’t see that as a benefit within one’s family- but I do recognize that many people do not see their community as their “family.” many people tend to see enemies everywhere, upon whom things need to be inflicted.