July 09, 2007
Paul Rubin on Volokh's Privatization
Posted by Christine Hurt

There are many good things about this paper. Volokh considers the argument that privatization is harmful because it creates private sector lobbyists for expansion of programs. He considers this in particular with respect to the issue of private prisons and lobbying for increased imprisonment. He does a nice job of showing that this is incorrect. The model he relies on is basically the Olson (1965) model of free riding in interest group formation and activity. He shows that by moving from a monopolistic (government) supplier to a more competitive set of suppliers lobbying can actually decrease. Thus, those commentators who have argued against privatization because they do not like imprisonment have it exactly backwards. In this case, the government lobbyists for increased use of prisons are guards and their unions, rather than the prison system administrators (who actually often lobby for smaller prison systems and more use of alternatives.) This is a nice point and an interesting application of Olson’s theory to an area that has not much been considered.

I have a couple of comments on the paper. First, it could do more with the state issue. Lobbying for increased imprisonment and sentencing would occur at the state, not federal or national level. Thus, data and arguments based on the relative size the national private prison market and the national public prison market would not be relevant. Volokh does spend some time talking about California, so there is some corrective, but there is some confusion. Moreover, it might be possible to develop some hypotheses about the issues being discussed that could be tested using state data, and a greater discussion of state differences would facilitate this analysis. For example, Sasha suggests that there is more prison privatization in states with weaker unions. This would seem to be a hypothesis that could be tested; since he is familiar with the data and issues, he could have fleshed out this argument with some suggestions as to how to test it. There may be other testable hypotheses as well. I am not suggesting that he should have tested these hypotheses, only that he might have made some suggestions as to how to test them.

Second, there is another version of this paper available on SSRN, "Privatization, Free Riding, and Industry-Expanding Lobbying." (This is cited in note 38 of the target paper.) The second paper is mathematically dense and would not be suitable for a law review. Nonetheless, I think a little more of the flavor of the mathematical version would have somewhat improved the target paper. However, this is a matter of taste.

Third, the paper is too long . For example, virtually the same information is in the mathematical version of the paper, which is 19 pages including lots of math; the Stanford version is 55 pages and 243 footnotes. That seems to be a general problem of law reviews, not one specific to this paper. Nonetheless, it is certainly true that more people would read a shorter paper (if it could get published.)

Nonetheless, this is a very nice paper and one that makes a very interesting policy point.

Olson, Mancur (1965), The Logic of Collective Action: Public Goods and the Theory of Groups, Harvard University Press.

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