Tuesday, February 28, 2017

Free Markets - then and now

In a memo made public on Thursday, Attorney General Jeff Sessions said the Obama policy impaired the government's ability to meet the future needs of the federal prison system.
The Obama administration said in August 2016 it planned a gradual phase-out of private prisons by letting contracts expire or by scaling them back to a level consistent with recent declines in the U.S. prison population.
From Reuters, Feb 27
What Sessions says here is that some element outside the private sector, namely the federal government, needs the private sector in order to function. The federal government needs control of markets. There was a phase-out, of private prisons, under Obama. The claim by Sessions is that the phase-out “impaired the government’s ability” to perform some function or to function correctly or efficiently. If we were to ask whether this is an example of the government staying out of the private sector, it seem that is not the case. Then private sector in prison work exists here only because of government. It is the government, at some level, federal or state, that wants to pay for this. Obviously, it is the government, that pays for the so-called "private" prisons. How is that the private sector? It is the government that is creating private sector activity. What does that tell us? Here, the private sector activity is prison work, by somebody who is working with prison-as-business. According to the reasoning that persons are using here, it is the government that causes the private sector to deploy. This would happen whenever the government buys anything. There are many businesses, the majority of whose business goes to the government. If consumer decisions drive the economy, this is not the case of the private sector making those decisions. Rather, the government (state or federal) making the decisions that create profit for the private companies. Then how are they private companies? The origination of this business for private prisons is not in society at large; it originates with the part doing the spending and it is government spending. Why then would the government prefer a "private" firm for prison work? Why would the prisoners need to be taken care of "privately"? The whole thing strikes me as nefarious. It also shows that the distinctions we make between "private" and "public" in terms of economics are completely confused.
     For many years, all of us were subjected to the standard kind of free market arguments—what were and are called the “free market” arguments. The arguments or ideas said that the market was a characteristic feature of free, private citizens. This means this area called the "market" must not come into the domain of what the government does. Therefore, they argued, the country gets the better result when the market was allowed to stay free from what was always called "intervention," where the meaning is government intervention. But when we look carefully, what do we find? It is that the same people making the "free market" arguments eventually take up a position in favor of government intervention. What is happening here is government funding of prison businesses. It looks to me like government intervention in the market. But markets are always public. This is the real nature of capitalism. It is not private at all. Capitalism is a characteristic of a society, of a whole society, which is very much public. This is so; in this case the private industry originates in a decision by government, when government "green lights" a private business activity. The work is contracted by government, it originates in government, and would not exist without government, which includes the courts and the legal and law enforcement systems wherein the offenders are tried and sentenced. But then it suddenly becomes "private." State governments of course also use the supposedly “private prison" system. Thus, we are saying that "private prisons" are businesses only made possible by means of decisions and planned by governments.
     What is under discussion in the Sessions decision is the federal prison system, which is where Sessions works. He is in the federal government now, which is where the argument for private prisons originates from. Then the decision to allow private prisons does not originate in society, in the lives of  private citizens, or anywhere or in any market at all, outside of government. The prisoners may wind up at the mercy of private captors, but they are put there by the government. What do "markets" have to do with any of this? The government has to hire the private prisons. What Sessions wants, this is according to the statement, is for the federal prison system to work well. His concern is not that the private prison system to work well. He is talking about the federal prison system. The argument he makes is that, in order for the public system to work, you gotta have the private system. So, the idea being argued is that government needs private prisons. And that is not a market decision, or not in the sense of traditional free market arguments. This kind of thing is not being decided by the free markets or the society. But this was the original idea of free market thought--to take government out of it. Rather than being decided by some social or market process, it is entirely subjective—Jeff Sessions saying whatever he wants. All Sessions seems to need to do is tell everyone what the government requires. He is the government so he should know. He can say whatever he likes, since he is the government. Thus: “for the government to work, we need private prisons.” But how do we know? What decision-making process is involved? He might be making that up. The important factor is that he is the government and has government power. Maybe he really believes it. Or, it could just be his opinion. How do we know? That is not letting the markets decide at all. It seems like a very arbitrary statement, or like something Sessions felt like saying and knew he could plausibly say.
     Maybe Sessions wants the government to have the freedom to make its own market decisions. In that case, he wants government to have more freedom. Well, that is one sort of "freedom," but those persons who for so long spoke of “free markets” wanted the people to have more freedoms (since some of them were businessmen). In designating how economic decisions should be make, they specifically  wanted for that power to not be given to government. 
     So, in summary, Sessions (presumably), and others, now implicitly use what we can call heritage  free market arguments for a purpose quite opposed to what the free market arguments were originally intended for. 
     If Sessions does not want the federal government's ability "impaired," it means the federal government should have more power to do what it wants. That does not sound like the original intention of the classic free market argument.


  1. "A key priority for this administration is to help develop opportunities for communities that are often the most underserved. Rather than focus solely on funding, we must be willing to make the tangible, structural reforms that will allow students to reach their full potential.

    Historically Black Colleges and Universities (HBCUs) have done this since their founding." (taken from US Dept. of Education, "Statement from Secretary of Education Betsy DeVos")


  2. The theory of free markets has a long history

    The government spends money to operate, which it raises from taxation. If the government decides to spend its money on federal prisons or spends its money by outsourcing to so-called “private” prisons, it is nevertheless federal money, obtained not on the free market but rather obtained through the practice of taxation.
    The government wants to meet the future needs of the federal prison system. Sessions is trying to keep the “private,” or outsourced, prison option open to government.