Government continues to struggle to find solutions for many of our most pressing social problems: reducing homelessness, lowering incarceration rates, improving the performance of inner-city schools. Despite the constant stream of taxpayer money into these efforts, the results have been slow to come and unimpressive (with some notable exceptions, like the reduction in overall crime under Mayor Giuliani).
The New York Times reports today on a new public-private partnership between Goldman Sachs and a Rikers Island program that aims to reduce recidivism rates among adolescent prisoners. If it succeeds, Goldman profits off its initial investment in the program; if it fails, Goldman loses money:
In New York City, Mayor Michael R. Bloomberg plans to announce on Thursday that Goldman Sachs will provide a $9.6 million loan to pay for a new four-year program intended to reduce the rate at which adolescent men incarcerated at Rikers Island reoffend after their release. …
The Goldman money will be used to pay MDRC, a social services provider, to design and oversee the program. If the program reduces recidivism by 10 percent, Goldman would be repaid the full $9.6 million; if recidivism drops more, Goldman could make as much as $2.1 million in profit; if recidivism does not drop by at least 10 percent, Goldman would lose as much as $2.4 million.