Privatizing Public Services | Prisons and Schools

Privatizing Public Services | Prisons and Schools

November 26, 2019 100 By Stanley Isaacs


We often hear politicians say that the government
should be run like a business. It’s one of those intuitive sayings that
many Americans nod along in agreement with. Part of that business model is the push towards
privatization of government services in order to save money and improve quality – and
we’ve seen a lot of that in recent decades. But can public services with a relatively
stable demand be run like a business – and more importantly, should they? The 60s and 70s were an interesting time in
American history. The baby boomers were coming of age and demanding
things like civil rights, women’s rights, the end to the war in Vietnam, and were generally
causing trouble for the political establishment. So, Nixon began the War on Crime. Crime in this case being protests and riots
and later the War on Drugs because you know… hippies. Drugs were already illegal but now they were
hyper illegal. This escalated under Reagan, which is where
the story of privatization begins for most industries, but for now, let’s just focus
on prisons. The first modern private prison opened in
Tennessee in 1984. In the years that followed, three major corporations
turned private prisons into a multi-billion dollar industry. And at the same time, strangely, the prison
population exploded. I can tell you right now that this doesn’t
track with the overall population of the United States, the violent crime rate grew, but that
peaked in the early 90s and has been falling ever since, so why is the prison population
still growing? Because the definition of a jailable offense
has expanded. And not only that, but the punishments for
those crimes have also grown. Thanks in large part to the private prison
lobby. In order to grow like a business, you have
to increase demand for your product, but public services typically have a pretty stable demand. So private prisons pushed for harsher punishments
and longer punishments. In the late 80s and early 90s, they passed
mandatory minimum sentencing laws, first at the federal level and then almost every state
followed suit. This took determining punishments out of the
hands of judges. They couldn’t take context into account,
it didn’t matter if this was your first offense, you were a model citizen, you didn’t
mean to do it – didn’t matter, prison. Then they lobbied for Three Strikes laws. They vary by state, but in general, if you
commit three misdemeanors, it’s a felony; and if you commit three felonies, you’re
done – mandatory life sentence. This artificially inflated demand for prisons. Even though crime rates are down, the prison
population continues to grow, there are currently 2.3 million prisoners in the United States
and about 9% of them are in private facilities. Private prisons have the benefit of being
built quickly, without taxpayer approval. They commonly refuse to take the most violent,
and therefore the most expensive, prisoners, who then have to go to a government facility. But hey, as long as they’re saving the taxpayers
money, right? It costs about 87 dollars a day per prisoner
in a government run facility, while a private facility can do it for only 70 dollars a day,
mostly by cutting staff and services… which as you might have guessed, leads to more violence…
you get what you pay for. And those savings are negated by the fact
that people in private prisons serve longer sentences. You know when you get sent- when someone else
gets sentenced to 5-10 years for whatever crime? In a government prison, you’re up for parole
in five years and will likely get out. In a private prison, you’re far more likely
to serve the full ten. Not only because of the increased violence
and increased infractions, but the fact that the contract with the government usually includes
a 95% or more required occupancy clause. And the parole board remembers that when looking
over your case. Now, we can debate over whether or not prisons
are correctional and serve to rehabilitate prisoners – they don’t – but what isn’t
up for debate is that private prisons are no better at it than government prisons. 76.6% of all federal private prison inmates
are re-arrested within five years, which is virtually identical to government prisons. Because of that, the Department of Justice
and Bureau of Prisons terminated their contracts with private prisons in 2016. Private prisons served an important role during
a difficult period, but time has shown that they compare poorly to our own Bureau facilities. They simply do not provide the same level
of correctional services, programs, and resources; they do not save substantially on costs; and
they do not maintain the same level of safety and security. The contracts were immediately reinstated
by Trump, but still. Private prisons are losing favor in the court
of public opinion, and they know that, so they’re shifting focus away from corrections
and towards immigration. You know those ICE detention centers you’ve
been hearing about on the news? 75% of them are privately run. But prisons aren’t even close to being the
only public service that has seen a shift towards privatization. Even some that you wouldn’t think could
be privatized, like the military, are mostly private. There are currently three private defense
contractors for every one uniformed servicemember serving overseas. And just over half of them are “combat-oriented”…
so mercenaries. They cost an order of magnitude more than
a regular soldier, at taxpayer expense, but the political benefit of having defense contractors
far outweighs the monetary cost. Whenever a politician says we only have so
many troops remaining in whatever country, mentally multiply that number by four. Defense contractors also don’t count towards
the official American casualty numbers, so those look better too. Private contractors don’t have to follow
the same rules, but they also don’t get the same legal protections. There hasn’t been a real push to privatize
police forces in the United States, but we have been privatizing emergency medical services
and even firefighting. Private firefighters aren’t exactly a new
concept. The first fire brigade in Ancient Rome was
owned by Marcus Licinius Crassus, who would haggle over prices with the property owner
as their home was burning to the ground. I sure am glad we moved passed that and that
would never happen in America. Wexford County, Michigan contracted out its
ambulance services in the mid 90s, saving taxpayers $300,000 in the first year. Lowering taxes is one of the main claims and
a primary driver of privatization. I very much doubt that Wexford County residents
saw a reduction in their taxes, but even if they did, that averages to about $10 per person
per year, or just 83 cents a month. I probably accidentally threw away 83 cents
last month. You might be thinking that any reduction is
a good reduction, right up until you need an ambulance and they hand you your bill. Private EMS charges the county less in taxes
but charges the individual users significantly more on the back end. Privatizing infrastructure, like toll roads
and bridges, comes with the same problem. It reduces local taxes but increases individual
costs. In 2005, the operational rights to the Chicago
Skyway were sold for the next 99 years for 1.8 billion dollars to a Spanish transportation
company and Australian investment bank. Because you know, buy American. Cities and states have been doing this for
a short-term cash influx, while offloading the cost of future maintenance, at the expense
of long-term revenue. Had Chicago maintained control, they would
have made almost 8 billion dollars over that 99 years, not accounting for inflation or
toll increases. Which is exactly what happened anyway, a few
years ago the bridge was re-sold to a collection of Canadian retirement funds, who then doubled
the tolls. They will profit from the bridge until the
year 2104. Perhaps the only case where privatization
has saved taxpayers money both in taxes and on the back end is trash collection. And even then, they fail miserably when it
comes to efficiency. Residential trash collection is fine, it’s
pretty straightforward, but commercial trash collection is an absolute nightmare. In New York City, there are over 250 trash
collection companies. All of that competition in such a small space
just makes them get in the way of each other, a five block stretch of 87 businesses will
have 27 different dump truck companies driving through each night. So that’s how mafia works… So privatization doesn’t really drive down
costs or improve efficiency, but all of that competition must improve quality, right? Yeah, ask British Rail how that went. The story of what happened to British Rail
is so astonishingly stupid that it’s a video in itself… that someone else already made. Seriously, check it out after this, it’s
amazing. I just got back from Vidcon London and the
public transportation there is just so… you have no idea how good you have it. I’m so jealous that I kept my Oyster Card,
just so that I can put it under my pillow and dream about that ever happening in America. Seriously, if they ever try to privatize Transport
for London and you guys don’t riot, or at least form an orderly queue to register a
formal complaint, I would be very disappointed. Same goes for the NHS, while we’re at it. I didn’t have to use it while I was there,
but I know someone who did, and their experience, even as a foreigner, was both quick and fantastic. But healthcare is another video in itself,
don’t worry it’s coming. Competition, at least in the free market,
is supposed to lower costs, improve efficiency, and hopefully improve quality. But governmental public services are by design,
meant to lose money. We all pay into them through taxes, because
we all benefit from the service, either directly or indirectly. We as a society pay for it, because we as
a society benefit from it. Competition didn’t improve quality or lower
costs for private prisons and certainly didn’t for public transportation. But for some reason, we all seem to think
it will work for schools. What if schools had to compete for students
in the same way that businesses have to compete for customers? Schools can’t grow like a business. If you have a burger joint in your town and
a second burger joint opens up, overall demand for burgers increases. Both businesses will benefit from competition. But when it comes to schools, if you open
a second one, you’re just cutting the student population and thus the demand, in half. Unless your business plan includes encouraging
parents to have more kids, in which case you’re playing the long game. The demand for schools is relatively stable
over time, you can cut costs and improve quality all you want, the student population is basically
the same. The National Center for Education Statistics
reports that since 1970, public school attendance in the U.S. has gone up by just five percent,
while public school employment has gone up 95 percent! PragerU is correct when they say the student
population has only grown by 5% in the last 50 years, because people just aren’t having
that many kids anymore, the population is pretty stable. But that 95% employment increase is rather
deceptive. Two-thirds of that growth was in administrative
staff, so secretaries, librarians, counselors, and principals. Apparently every school needs four vice principals
now for some reason. The teacher population only accounts for 37%
of that growth, on average over the last 50 years, we went from 22 students per teacher
to just 16. Which if you ask me, that sounds like a good
trend. But ask almost anyone, and they will tell
you that the public school system is broken. The system, especially for economically disadvantaged
kids, is broken. I even asked you on twitter and an alarming
amount of you agreed. Saying that the public school system is broken
is like… supporting the troops. Every time a politician says it, everyone
claps and nods along in agreement, even if their personal experience was great. But nobody seems to be able to agree on how
to fix it. PragerU’s solution is privatization and
introducing free market competition. In almost every state and city where there
is competition today, educational outcomes improve – often dramatically. We don’t need any more money, we need more
choice. Forcing more competition and faster improvement
among existing public and private schools. Private schools have existed basically forever,
certainly longer than any public school. And it shouldn’t surprise you, but a large
number of private schools are religious in nature. Public schools in America didn’t really
come about until after Reconstruction and by World War 2, just about every kid had access
to public education. Because as a society, we all agreed that we
all need this. And that’s essentially how it was for a
decades, everyone had access to public schools, and if you had the means and you wanted to,
you could send your kids to a private school. But in the mid 90s, a third option opened
up: charter schools. Depending on state law, these schools can
be started by parents, teachers, non-profit groups, corporations, or even government organizations. Remember this one, I have a feeling it’ll
be important later. Charter schools are privately run and publicly
funded, they typically use a different teaching style like Montessori or have some sort of
curriculum focus like college prep, fine arts, or STEM. They didn’t really take off until No Child
Left Behind was signed in 2001. Among other things, No Child Left Behind established
standards that every school had to meet, and if they don’t meet those standards, bad
things happen… If a school is unsuccessful in hitting its
annual targets for a sixth consecutive year, a restructure plan is implemented. Common options include: Turning over district
control to the state, turning the school into a charter school, or closing the school. There weren’t enough charter schools to
statistically compare them to public schools until a few years after that law was signed,
so all of the data I will be showing you starts in 2005. Which was still fourteen years ago… why
am I so old!? Then a few other laws were passed like Race
to the Top and Every Student Succeeds, and most recently the bane of all educators was
introduced: Common Core… which just seems like a way to make public schools compete
with one hand tied behind their back. Since depending on the state, charter schools
don’t necessarily have to follow that curriculum. Charter schools are a rather contentious issue
and supporters like PragerU and the Cato Institute know that, so they’ve changed the language
to School Choice. According to researchers at the University
of Arkansas – in the most comprehensive study done to date — students in school choice
programs saw their reading and math scores improve by 27 percent and 15 percent, respectively. Sounds like something we should get behind,
doesn’t it? PragerU is rather infamous for not citing
their sources, so it took some digging, but I did find it. It’s from the University of Arkansas School
Choice Demonstration Project and it comes to a rather interesting conclusion. Generally, the impacts are larger for reading
than for math, for programs outside the US relative to those within the US, and for publicly-funded
programs relative to privately-funded programs. Wait, what?! Okay so, the data is rather difficult to sift
through, but we’ll get through it together. Here it is, TOT Reading, 27% increase for
areas that have school choice programs. But here we can see that they broke it down
by International and United States. Internationally, school choice improves reading
scores by 48%, while it only improves the United States by 2%. It’s the same story for math – yes, that
says negative zero for the United States. PragerU presents this data as if school choice
programs increase scores in the US, when in reality, it increases scores by this much
Internationally, and only this much in the United States. Sounds like something we should get behind,
doesn’t it? This study, the one that PragerU cites as
proof that school choice is better, actually shows that in the United States it has basically
no effect. You can check it yourself, unlike PragerU,
I cite my sources. And while you’re checking, you might find
out that their source wasn’t peer-reviewed or published anywhere. It’s a working paper, there’s even a disclaimer
on the first page saying not to use these results without clearly stating that it is
a working paper. This was fun, let’s do another one! According to a 2015 Stanford study, not only
do charter schools provide significantly higher levels of growth in math and reading for all
students, but minority and low income students benefit disproportionately more. The minority angle is part of PragerU’s
overall school choice narrative. If you don’t support school choice, then
you’re the real racist. They actually sprinkle this into every video
they possibly can about politics and race. It’s no coincidence that Progressivism is
the common thread that binds predominately black cities where single parent homes, failing
schools, rampant poverty, and crime predominate. Opposition to school choice has kept them
trapped in failing schools. However, it’s unfair to hold minority parents
and students hostage in underperforming public schools. It’s conservatives who push for school vouchers,
which would allow all parents, not just wealthy ones, to choose their children’s school. It’s the other side that doesn’t trust
minority parents to select and appropriate school for their children. This is obviously true for wealthy parents
who can afford to send their children to any school they want, but it’s equally true
for middle class and poor parents when they have a choice. Okay wow, this is a poor family… and this
is a wealthy family? While it is technically possible, and props
to PragerU for trying to look progressive, but in the reality that most of us live in,
there’s a 70% chance that the family that sends their kids to a private school is white. In fact, 43% of all private schools in the
country are what they call “virtually all white.” PragerU is rather famous for coloring everyone
this rather neutral blue. So coloring them like this was a conscious
decision. But we’re not talking about private schools
right now, we’re talking about charter schools… and this claim that minority students do disproportionately
better… thankfully PragerU actually cited this one. This study measures success a little differently,
they tested students in charter and public schools at the beginning of the year and then
at the end of the year and calculated how many days of learning they gained or lost
compared to each other. They only did this in 41 urban areas, like
Las Vegas and New Orleans. According to this study, yes, some minority
students in charter schools did perform better on the year-end tests. Just for funsies, let’s take a look at the
break down. Black students gained 36 days of learning
in math, meaning that after a full school year, students in charter schools scored as
if they had 36 extra days of instruction, but still within a standard school year – they’re
getting more bang for their buck. They had a similar 26 days of extra learning
in reading. Hispanic students had similar gains of 22
days and 6 days, while Asian students gained 9 days of math and 0 days of reading. Which is great, I’m all for extra learning,
even if it doesn’t necessarily benefit everyone. White students on the other hand, lost 36
days of math and 14 days of reading, meaning that white students in charter schools do
significantly worse than their public school counterparts. Just to put that into perspective, 36 days
is seven weeks of lost instruction. I wonder what PragerU’s predominately white,
Republican viewership would think if after this sentence…
… minority and low income students benefit disproportionally more… They added that white students perform disproportionately
worse. This was PragerU’s source, I didn’t have
to go looking for this, they deliberately only talked about minority students in order
to show that school choice works. So enough of this, no more cherry picking
racial groups or comparing schools globally, let’s look at the data ourselves. The National Assessment of Educational Progress,
or NAEP, is a standardized test given to 4th, 8th, and 12th graders around the country every
other year. They have a handy data explorer where you
can look at the results yourself. I realize that many of you may have problems
with standardized tests, but we need some reliable measuring stick to compare schools
and this is the best one we have. It’s also what the PragerU studies use,
so it’s what I’m going to use. Here’s how you can look up the data yourself,
by selecting the subject, the grade, and then searching for the charter school variable. It creates a report which you can then use
to make charts. So, simple question, on average, nationwide,
are charter schools outperforming public schools? PragerU would have you believe that they are. But here are the 4th, 8th, and 12th grade
math scores for every year available. Here are the 4th, 8th, and 12th grade reading
scores for every year available. Not once have charter schools done better
than public schools, but in 2017 they finally tied in 4th grade reading. Is it reasonable to assume that eventually
charter schools will surpass public schools? Probably. But when PragerU tells you that they already
are – they’re lying. Not all charter schools are bad, in fact,
statistically, 17% of them do better than public schools and 46% of them perform about
the same. While the remaining 37% of them perform significantly
worse. Just to put that into perspective, if you
have a child in public school and you’re thinking of moving them to a charter, roll
a die and try to predict the number. The odds of you guessing correctly are the
odds of that school being better, about 1 in 6. Overall, nationwide, charter schools just
aren’t performing as well as public schools. Can you focus in on certain groups or states
to make the data say whatever you want? Sure, in fact let’s do that. Here’s 8th grade math in DC and Michigan…
and here are the reading scores. What the heck is going on in Michigan? Well, remember when I told you to remember
this? Depending on state law, these schools can
be started by parents, teachers, non-profit groups, corporations, or even government organizations. DC does not allow for-profit charter schools. Michigan on the other hand does, in fact 80%
of them are corporately-owned and run for-profit. Michigan is also the state Betsy DeVos is
from. So when our current Secretary of Education
pushes for school choice she’s pushing for the country to emulate the system she spearheaded
in Michigan. She even wants to take it a step further. Currently, nationwide, we spend about $10,000
per student per year in public schools, charter schools get about $7000, and private schools
have to charge tuition. Betsy DeVos wants to change that with School
Choice Vouchers, or SCVs…SCV Ready! No one actually abbreviates it I just wanted
to force that joke in. A school choice voucher would take that $10,000
of taxpayer money and attach it to the student, to go wherever they want. The money follows the student. Every child receives funding that their parents
can direct to the school of their choice – public, private, charter or even homeschool. Okay, we’re so not going to talk about homeschool. But private schools have been getting along
just fine with their tuition for centuries, they don’t need taxpayer money. This just seems to be a way to make rich schools
richer and poor schools poorer. Poorer? Is that a word? I dunno, I went to public school. There are also huge first amendment issues
with taxpayer funds going towards a religious private school… but let’s not get into
that. Teachers unions and other public school activists
argue that charter schools take money away from traditional public schools. Because they do. Since charter schools can’t grow the demand
for schools, this just means that both schools get less funding. And when you add profit into the mix, things
get even messier. A for-profit charter school will get $7000
per student, they might only spend $6000 of that and then pocket the rest. As you might have guessed, this system is
ripe for abuse. In fact, John Oliver did a segment a few years
ago talking about several of these abuse cases, where charter schools lied about attendance
or even their physical location to scam taxpayers. There are about 90,000 public schools in the
United States and only 7000 charter schools, for every three charter schools that open
in a year, two close. Whether for financial mismanagement, or low
enrollment, or low test scores. You might think this is just the free market
at work, but this isn’t a burger joint, if you have a bad burger, oh well, you’ll
have another meal in a few hours, you’ll get over it. But if you have a bad year in school, you’re
behind… maybe forever. Now, it’s not fair to only focus on the
failures of school choice. Even though they outnumber the successes two
to one. So if you’d like to see the other side of
this argument, head on over to curiositystream.com/knowingbetter. CuriosityStream is a subscription streaming
service that offers over 2000 documentaries and nonfiction titles from some of the world’s
best filmmakers that you can access across multiple platforms. I specifically recommend the series School
Inc, which presents the pro school choice argument in perhaps the most honest way I’ve
seen yet. Networks of charter schools in Louisiana are
actually performing slightly worse than independent charters. He even cites a study that you are now quite
familiar with and can look up yourself. According to the researchers at Stanford,
charter schools in Louisiana are outperforming traditional public schools, and that’s particularly
noticeable in New Orleans. The difference isn’t enormous, but it’s
good news. You can get access to their entire library
for as little as 2.99 a month, but if you head over to curiositystream.com/knowingbetter
and use the promo code knowingbetter, you get your first month completely free, you’ll
also be supporting the channel when you do. Privatizing public services has rarely ever
worked out for the taxpayer, we’ve looked at prisons, infrastructure, emergency services,
and now schools, and the story is the same every time. But every time, we seem to think this will
be the one where it works. You can only benefit from competition when
you’re able to increase demand, which you’re not able to do for schools and I would hope
you wouldn’t want to do for prisons. Though they seemed to find a way. So the next time a politician tells you that
this time it’ll work, I promise, hopefully now, you’ll know better. I’d like to give a shout out to my newest
legendary patron, Daniel. If you’d like to add your name to this list
of for-profit entrepreneurs, head on over to patreon.com/knowingbetter. Don’t forget to privatize that subscribe
button, follow me on Twitter and Facebook, and join us on the subreddit