Friday, June 22, 2012

What Krugman Missed on Community Education Centers

NYT columnist Paul Krugman noted governments contacting out functions to corporations with political connections.  Krugman's example is Community Education Centers, a firm running prison halfway houses in New Jersey.   New Jersey Governor Chris Christie once lobbied for Community Education Centers. 

The NYT did a nice job highlighting horror stories and Krugman noted crony capitalism with his: 

"glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation." 

However, both missed the PEU connection.  Private equity firms Primus Capital and LLR Partners invested $53 million in Community Education Centers in 2007.

Primus is based in Cleveland, Ohio, while LLR Partners is in Philadelphia, Pennsylvania.  Fellow PEU Carlyle Group expects 30% annual return on investment.  Does Primus do likewise?

Gov. Christie knows who to cater to and how.  PEUs make rain and fund kings.  Prince Christie could be in line for the top spot in America's Kingdom.

(Thanks to Economic Policy Journal)