Does Privatizing Prisons Work?

Matthew Yglesias says no:

Privatizing prisons hasn’t been the boon that was promised:

The conviction that private prisons save money helped drive more than 30 states to turn to them for housing inmates. But Arizona shows that popular wisdom might be wrong: Data there suggest that privately operated prisons can cost more to operate than state-run prisons — even though they often steer clear of the sickest, costliest inmates.
The state’s experience has particular relevance now, as many politicians have promised to ease budget problems by trimming state agencies. Florida and Ohio are planning major shifts toward private prisons, and Arizona is expected to sign deals doubling its private-inmate population.

There are important general lessons here. The genius of the real private economy is that firms that are really poorly run go out of business. It’s not that some magic private sector fairy dust makes the firms all be runs soundly. Lots of bad businesses are out there. But they tend to lose money and close. Meanwhile, well-run firms tend to earn profits and expand. The public sector doesn’t have this feature. Just because a public agency is inept is no guarantee that it will go out of business. Resources are allocating according to political clout rather than any criteria of merit. It’s a problem. But it’s not a problem that “privatizing” public services actually solves. There’s no magic private sector fairy dust.

I'm not surprised that private prisons end up costing more than publicly-run prisons, as there has to be a profit factor figured in there.  But also, I would guess that while the private prisons pay guards and other workers much less, they end up paying executives more.  They also will end up handling more administrative duties that are spread out over all the prisons in the public system.  Therefore, they end up doing redundant work that adds up to higher costs than a similar publicly-run prison.  I think that higher executive pay and profits for the shareholders is considered a feature by Republican governors like John Kasich, not a bug.  They really don't care about how much government spends, they really care about where they spend it.