Laura Tyson: How to Fix the Incarceration Economy

Laura D. Tyson

In a new column published Monday by Project Syndicate, Laura D. Tyson and Lenny Mendonca outline a two-pillar framework for reducing both mass incarceration and recidivism in the United States.

As Tyson and Mendonca point out, three decades of increasingly rigid incarceration policies have produced terrible results.   The U.S. has by far the highest per capita rate of imprisonment in the world; untold millions of lives have been ruined; and the costs to government have been staggering.  For all that, the evidence is slim that these policies have reduced crime.  Republicans and Democrats alike are pushing for major reforms.


lenny mendonca





But Tyson and Mendonca note that it isn’t enough to undo the old policies or release inmates held for minor, non-violent crimes.  It’s at least as important to reduce the recidivism rate.  More than two-thirds of released prisoners are re-arrested within 3 years.   To achieve a real drop in the prison population, that has to change.

Tyson and Mendonca outline two basic elements of a national strategy to reduce recidivism.  The first is “progressive federalism,” in which the federal government encourages and helps finance innovative pilot projects and strategies conceived by cities and states around the nation.  These experiments are already underway in both red and blue states, from New York and Massachusetts to Georgia.  The key is to find out which strategies work best, and to scale them up.

“The federal government can work to sharpen and reinforce state efforts by providing funding and encouraging best practices, while avoiding imposing any ideology on the projects,” Tyson and Mendonca write.

A second element is to finance new projects through pay-for-performance contracts, such as social impact bonds.  In a social impact bond, private investors and often philanthropic organizations provide the upfront money for a pilot project that will be rigorously assessed by an independent evaluation group.   If the pilot project meets the benchmarks of success agreed to in advance, its backers can potentially earn a return on their investment.  If the project doesn’t deliver, the backers get nothing.

Social impact bonds are especially well-suited for testing strategies to reduce recidivism.  Indeed, the world’s first social impact bond, launched in the United Kingdom, was for a recidivism project.  Here in the United States, New York, Massachusetts and other states are using social impact bonds to test their own strategies.

In effect, the writers argue, social impact bonds are a way to crowd-fund new ideas.  The approach has attracted support from Republicans and Democrats.

“Democrats want an active government that solves tough social problems, whereas Republicans want private-sector investment and innovation to do the job,” they write. “But both parties like the idea of testing rival strategies in the real world, as evidenced by bipartisan support in Congress for a new federal fund to support pay-for-performance projects on a wide range of social problems, including health care, child care, and job training. The combination of pay-for-performance contracts and progressive federalism seems to meet both sides’ requirements.”

Meanwhile, social sector organizations across the nation are developing strategies as well as the analytical tools to identify those that are most effective.

“Advocacy groups like The Coalition for Public Safety are changing the national dialogue,” they note.  “There is an entire sub-industry of nonprofits like Defy Ventures working to help former inmates build new careers and even become entrepreneurs. Others programs, such as Measures for Justice, are creating the data needed to gauge results, while non-profits like Pew Charitable Trusts, California Forward, and Third Sector Ventures are helping counties and cities find economically effective alternatives to expensive and ineffective prison expansion.”

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