Government has been happy to involve the private sector in the judicial process as punitive partners. Louisiana privatized its prison system and has been able to leverage that into the largest prison population in the world. This results in paydays all around… except for the parolees who then often find themselves caught in the revolving cycle of recidivism.

Is it possible to break the revolving prison door cycle AND allow paydays all around? Could there be a better way to leverage corporate funding that would be more beneficial to the community?

New York City and Goldman Sachs believe there is.

In a very promising-sounding social experiment, Goldman Sachs will invest $10 million dollars into “social impact bonds” —  essentially, they will become private investors in social service programs usually funded by the government. The city will use the money to focus on the youngest  inmates at Rikers Island — those between the ages of 16 – 18  — with education, training and counseling.

In New York City, half of teens who leave city jails are back within a year. Why not try something new?

So… what is in it for Goldman Sachs? Sachs is making a bet with the city. The city says it can reduce recidivism with a little funding. And if Sachs helps them reduce the re-incarceration rate the city will pay Sachs a return on their investment. This  money will come from the savings to the city’s judicial and penal systems.

Both NYC and Sachs are betting that the savings will be substantial enough for the city to make its payment and still realize additional savings. If there is no reduction the city will not have to pay anything to Sachs but will have to maintain their bloated judicial budget. So both sides have a financial incentive to make this system work.

Sound to me like an idea that has some legs. It’s also one of those unusually-niched ideas that blends the best of both progressive social thought and old fashioned blue-blood capitalism. Let’s hope it works.

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