Goldman Sachs' Outrageous Scheme to Profit off Jailed Young Offenders' Recidivism Rate

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http://www.alternet.org/economy/goldman-sachs-outrageous-scheme-profit-jailed-young-offenders-recidivism-rate



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1. So what exactly are social impact bonds?

Social impact bonds, a.k.a. pay-for-success bonds, are billed as an “innovative” way of linking private investors, nonprofits and government to deliver social services with demonstrable outcomes. Private financiers or foundations pay for the costs of a new program, and the government later repays the investors, often with a bonus, if program accomplishes its goals.

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2. When I hear “innovative financing” and Wall Street banks in the same breath, shouldn’t I be nervous?

Yes, you should. There’s a long, nasty list of innovative schemes pushed by Wall Street and billed as ways to save governments money that have drained city and state coffers.

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3. But social impact bonds deal with things we want to change. What’s the problem?

Mark Rosenman, professor emeritus at the Union Institute & University, has argued that while the programs themselves may be helpful in some cases, the problem is that companies like Goldman Sachs are profiting from them at the expense of taxpayers. He cites the example of Head Start, which 57,000 children have lost as a result of tax cuts and the sequester.

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4. Shouldn’t we be focusing on what puts young men in prison in the first place?

Excellent point. Part of the problem with social impact bonds is that private investors are less likely to look at big-picture problems with long time horizons. They want a discrete, limited program in which results can be easily measured and demonstrated.