This is not what OWS had in mind: Goldman Sachs is headed to Riker’s Island — to make a few bucks. New York City is about to try a cutting-edge approach to reducing recidivism rates among inmates at Riker’s Island prison. Goldman Sachs will invest $9.6 million in the initiative, which uses “social impact bonds,” also known as “pay-for-success bonds.” The New York Times has the details:
The Goldman money will be used to pay MDRC, a social services provider, to design and oversee the program. If the program reduces recidivism by 10 percent, Goldman would be repaid the full $9.6 million; if recidivism drops more, Goldman could make as much as $2.1 million in profit; if recidivism does not drop by at least 10 percent, Goldman would lose as much as $2.4 million.
The naysayers and the public-sector unions will scream and whine and warn about the risks. Defenders of the blue model will weep and wail and warn about the possibility that programs like this will fail. The Times dutifully lined up one such quote:
“I’m not saying that the market is evil,” said Mark Rosenman, a professor emeritus at Union Institute and University in Cincinnati, “but I am saying when we get into a situation where we are encouraging investment in order to generate private profit as a substitute for government responsibility, we’re making a big mistake.”
To be sure, the possibility of failure is real and it cannot be discounted. However, with current recidivism rates among Riker’s Island inmates at nearly 50 percent, what we are doing right now costs plenty of money and is failing miserably. A chance of success is better than the certainty of failure. Government needs to innovate and experiment and try a lot of things.Sometimes you have to kiss a lot of frogs to find a prince. It’s time for America’s governments to pucker up.