Politicians compete for electability. Convicts can’t vote, prisons make campaign contributions and jobs, and appearing “tough on crime” appeals to a large portion of the voter base.
You seem to have forgotten why appearing "tough on crime" appeals to current voters.
Breif history lesson: During the 1960's and early 1970's politicans competed for electability by appearing compasionate to criminals, who were after all only "victims of society". The result was the massive crime wave of the 1970's. As a result the generation which grew up during that time learned that politicans promissing being compasion for criminals leads to an increased chance of them being mugged. Now that generation is the one in charge and they like politicans who are "tough on crime".
Reduced recidivism bonuses don't say how to achieve reduced recidivism. This policy change would arguably be neither tougher nor softer on crime because it doesn't change the length of the sentences or make any value judgement on which treatment methods should be used.
In other words, if being soft on crime isn't working, then prisons don't get a bonus for being soft on crime. Everything we know about human psychology, though, says traumatic experiences make someone more likely to commit crime or suffer mental problems that contribute to increased crime risk, so I don't expect that harsher prisons are the answer. But who am I to know, let the data show what works.
Summary
I'd like to increasing the well-being of those in the justice system while simultaneously reducing crime. I'm missing something here but I'm not sure what. I'm thinking this may be a worse idea than I originally thought based on comment feedback, though I'm still not 100% sure why this is the case.
Current State
While the prison system may not constitute an existential threat, At this moment more than 2,266,000 adults are incarcerated in the US alone, and I expect that being in prison greatly decreases QALYs for those incarcerated, that further QALYs are lost to victims of crime, family members of the incarcerated, and through the continuing effects of institutionalization and PTSD from sentences served in the current system, not to mention the brainpower and man-hours lost to any productive use.
If you haven't read these Meditations on Moloch, I highly recommend it. It’s long though, so the executive summary is: Moloch is the personification of the forces of competition which perverse incentives, a "race to the bottom" type situation where all human values are discarded in an effort to survive. That this can be solved with better coordination, but it is very hard to coordinate when perverse incentives also penalize the coordinators and reward dissenters. The prison industrial complex is an example of these perverse incentives. No one thinks that the current system is ideal but incentives prevent positive change and increase absolute unhappiness.
The incentives have come far out of line with human values. What can be done to bring incentives back in alignment with the common good?
My Proposal
Using a model that predicts recidivism at sixty days, one year, three years, and five years, predict the expected recidivism rate for all inmates at all individual prison given average recidivism. Sixty days after release, if recidivism is below the predicted rate, the prison gets a small sum of money equaling 25% of the predicted cost to the state of dealing with the predicted recidivism (including lawyer fees, court fees, and jailing costs). This is repeated at one year, three years, and five years.
The statistical models would be readjusted with current data every years, so if this model causes recidivism to drop across the board, jails would be competing against ever higher standard, competing to create the most innovative and groundbreaking counseling and job skills and restorative methods so that they don’t lose their edge against other prisons competing for the same money. As it becomes harder and harder to edge out the competition’s advanced methods, and as the prison population is reduced, additional incentives could come by ending state contracts with the bottom 10% of prisons, or with any prisons who have recidivism rates larger than expected for multiple years in a row.
Note that this proposal makes no policy recommendations or value judgement besides changing the incentive structure. I have opinions on the sanity of certain laws and policies and the private prison system itself, but this specific proposal does not. Ideally, this will reduce some amount of partisan bickering.
Using this added success incentive, here are the modified motivations of each of the major actors.
Roadmap
If it could be shown that a model for predicting recidivism is highly predictive, we will need to create another model to predict how much the government could save if switching to a bonus system, and what reduction of crime could be expected.
Halfway houses in Pennsylvania are already receiving non-recidivism bonuses. Is a pilot project using this pricing structure feasible?