Bullshit. As noted in the article, everything was fine (pay $1.50 for a money order and $0.50 for postage) until people pushed to get private contractors involved. You can say "government created the problem" but that's totally obtuse. Should people who commit armed robbery (like the man in the article) not be in jail? If they should be, someone has to take care of their logistical needs. The drumbeat since Reagan has been that private companies should handle the logistics, because government is inefficient. Well governments responded, and what we are seeing is that the svrice of the for-profit corporations dwarfs the inefficiency of government.
> The drumbeat since Reagan has been that private companies
Companies! Plural! The free market cannot exist when there is One True Company that the government let operate and Oh! See! The One True Company is charging too much so clearly free markets don't work.
The problem I see here is that the inmates and their families don't have a word to say in what company is managing the prison logistics.
The ones who decide are the prisons themselves, so they don't care if the inmates and their families get even more milked, all they are incentivized to care is their commissions (so JPay and consorts are encouraged to milk even more the inmates to please the authorities).
So it's an example where the free market doesn't work.
There isn't "one company." Different departments of corrections have contracted to hire companies to handle deposits, just as your business might contract with a company to outsource some service.
More generally, I'm not saying that the free market doesn't work. I do think market solutions are merely tools to be used in appropriate situations. And when the potential for abuse is high, as with prisons and other traditional functions of government, private organizations are not appropriate, because private industry has the wrong values and the wrong culture for the situation.
Ok, so lest we shift the conversation - as right now we're talking about the specific prison and the specific banking corporation that this prison is using as described in the full article - please tell me who is the competitor to JPay.
Don't give me "different departments of corrections" blah blah blah. I'm arguing the system as explained in the article is broken specifically because JPay is not competing in a free market, i.e. it has no competitors. You seem to disagree. So please tell me the names of JPay's competitors.
Naming the competitors is irrelevant. What is relevant is that these states are not procuring contract services with a competitive process.
In other payment related areas where honest procurement happens, there are a number of companies in the market -- for example welfare EBT card systems are managed nationwide by 5-7 different large payment processors.
Sounds to me that JPay found a loophole in contract law that allowed them to burrow into the bureaucracy. Once a vendor digs in as an incumbent, it's hard to dislodge them.
It is a competitive process but like you said, once they get in it his hard to dislodge them. JPay has been dislodging other incumbents more rapidly in the past few years. There are a few other companies that are out there but their name isn't in the news like JPay.
Is your assertion that there is no free market just because any given prison only contracts with one payment service? Is there no free market in cleaning services because my building only contracts with one provider? Is it only a free market if every individual transaction is put up for bidding?
Who makes the decision to contract with that one payment serivce? Is it the government? If so, is it the government that's making the bad decisions or the payment service?
Does it matter? It is the inmates and their family who get scammed in the end.
Arguing between "oh is it the government, or the market? don't know let's have a long discussion about it". The article clearly shows there isn't much of a separation between. These companies (in this case single company) is heavily lobbying and bribing government officials with kickbacks and such tricks.
I wouldn't be surprised that when some prison official retires she/he gets to work as a "consultant" for JPay.
Hell, these people are infants compared to what is going on in the rest of the industries -- military, healthcare, agrobiz, telecoms.
Repeat after me "the there is no effective difference between the governmental agencies and the large companies and conglomerates". It is the same people just playing musical chairs. FDA chairman worked for Monsanto (as an example). Ex procurement general works for Northrop Grumman and so on.
Objectively, can anyone say that isn't a rational outcome of a the "free market"? I can't. The best and easiest way to turn a profit at that scale is regulatory capture. A few millions in bribes have a chance of getting back billions in profits in the future.
But when the government privatizes services, that agency problem always exists. Instead of contracting to one service like any other entity, government would always need to contract with several. You're just making a stronger argument for not privitizing government services.
Moreover, laying all the blame at the feet of government for these companies being scumbags is precisely why I said private industry has the wrong culture for this sort of thing.
If you read the article you will see that they do it most likely cheaper than the prison can do:
JPay’s rapid rise stems in part from the generous deal it offers many prison systems. They pay nothing to have JPay take over handling financial transfers. And for every payment it accepts in these states — prisoners typically receive about one per month — the company sends between 50 cents and $2.50 back to the prison operator.
The government does have the power, and they most likely are outsourcing this part of their non core infrastructure like most other companies do, to save money.
There are a lot of prisons out there, state, local, federal, private and public and they use a wide range of companies. However, they have little incentive to allow multiple venders at the same time so there is little real completion after the fact.
JPay or JPay? What will the benevolent invisible hand pick. It is anyone's guess really.
> The free market cannot exist
That much I agree with.
> ... when there is One True Company that the government let operate and Oh!
Guess what happens if there there is a second JPay? Yes. It gets gobbled up by the first and becomes The One True Company.
It is as if the invisible hand of the market is really invisible, maybe even a fantasy. And in reality it needs a very visible hand of lobbyists and government. To either exert laws in its favor. Or constant "adjustment" via monopoly laws to prevent showing the obvious failure with the "free market".
