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Prisons, Colleges, and the Private-Sector Delusion
A new article in the New Yorker:
Republicans have been touting the inherent superiority of the private sector over the public at least since the Reagan era, but in the past few years it seems to have congealed into an unassailable mantra: the free market as the ultimate guarantor of good services, low costs, and a free and happy citizenry. Mitt Romney is definitely on board. Campaigning this winter, he praised the efficiency of for-profit colleges that he said “hold down the costs of education,” and went on to say, “I just like the fact that there’s competition. I like the fact that institutions of higher learning will compete with one another, whether they’re for-profit or not-for-profit.”
Romney’s education plan calls for putting commercial banks back in charge of federal student loans. (The Obama Administration had stopped that practice in 2010, saying it was too expensive for the federal government.) He has floated the idea of partially privatizing both veterans’ health care and Medicare through a voucher system. We’ve heard more from him about his experience at the private-equity firm Bain Capital than about his tenure as governor of Massachusetts, and he presents his business experience as self-evidently worthwhile: “The fact is I spent 25 years in the private sector, and that obviously teaches you something that you don’t learn if you haven’t spent time in the private sector,” Romney told Time magazine, in a typical declaration.
I thought about the free-market shibboleth this week as I read two excellent pieces of journalism about the injection of the profit motive into education and incarceration. One was Andrew Leonard’s article at Salon about a company called Corinthian Colleges, and the other was Cindy Chang’s eight-part series in the New Orleans Times-Picayune about the prison industry in Louisiana.
Leonard’s piece is not the first to look in detail at the dubious business of for-profit colleges. After Romney talked them up in December, the New York Times ran a long article highlighting the low graduation rates and high tuitions at many for-profit colleges and reported that the C.E.O. of the college Romney had singled out for particular praise, Full Sail, in Florida, was a major donor to his campaign. A 2011 study from the National Bureau of Economic Research found that students who attended for-profit colleges had more of a debt burden, were more likely to default on their loans, and were less likely to be employed than students who’d gone to nonprofit institutions.
In 2010, the Obama Administration announced that it would be seeking new regulations on the for-profit college industry. But the industry fought back, hard. According to the Web site OpenSecrets, which tracks lobbying efforts, for-profit colleges went from spending $2.7 million on lobbying in 2009 to nearly $7.4 million in 2010 and $12.5 million in 2011. Prominent Democrats, including Obama’s former communications director, Anita Dunn, who was working with Kaplan University, and the former House Majority Leader Richard Gephardt, joined the lobbying effort; so did investors such as Donald Graham, the chief executive of the Washington Post, which owns Kaplan. According to the Times, the result of this full-court press was “a much-weakened final plan” for regulating the industry “that will almost certainly have far less impact as it goes into effect next year.”