Mike Bloomberg, still the mayor of New York after all these years, has announced a new four-year program to keep prisoners from reoffending after their sentences, funded by $9.6m from Goldman Sachs. When we said we wanted to see the bankers in the clink, this is not what we meant.
It may sound like a nice philanthropic gesture, but that $9.6m sum isn't a donation; it's a loan. As City Hall explained, Goldman is being incentivized to produce results – if recidivism drops by 10%, Goldman gets the money back, and if it drops further then the GS boys will turn a small profit.
New York's foray into cash-for-results social services is part of the voguish infatuation with "social impact bonds", in which a private investor invests in a public service and makes a positive return only if things improve. They are currently all the rage in Britain, whose coalition government espouses a hazy ideology called "the big society" to obscure a much clearer ideology of across-the-board cuts. And they've begun to seduce US policymakers. The Goldman-Rikers deal is the first social impact bond in America, though governments from Massachusetts to Ohio are preparing to jump on board.
You might wonder why, since reducing crime and offering better lives to past offenders are obvious social pluses, the government doesn't just pay for such a program itself. (The usual cries about public sector inefficiency don't apply. The ex-offender education scheme isn't a state program; it's administered by a nongovernmental social enterprise.) Alas, this is the nature of Bloombergism. There is no social problem that can't be reduced to metrics, no public function that an unaccountable private undertaking can't perform better, and no incentive like the profit motive.
How much does Bloomberg believe in this new plan? So much so that he is personally guaranteeing to make Goldman whole if the program doesn't work. Our billionaire mayor's own philanthropic foundation will cut a $7.2m check to the social service provider with which Goldman is contracting if the bank needs to be repaid. Say what you like about risk and reward; the plan announced Thursday is an exceedingly safe bet for the bank but a giant gamble for us.
If this goes well, the Bloomberg team has said, it'll be the model for all sorts of for-profit social initiatives. Corporations could make money if an adoption agency finds a home for a child, or if you survive a heart attack, or if your kid's reading scores on one of his five thousand exams increase by such and such percent. This latest neoliberal swindle is the stuff of a million MBA case studies, and the wet dream of a new crop of young, pseudo-beneficent capitalists who think their guilt at profiting from inequality can be assuaged by "humanizing" their businesses.
Jason Farrago really gets Bloombergism:
There is no social problem that can't be reduced to metrics, no public function that an unaccountable private undertaking can't perform better, and no incentive like the profit motive.
That's it, in a nutshell.
And of course Goldman Sachs, one of Bloomberg LP's biggest clients, is on the other end of this deal.