Nicely put.
You didn't mention though that all those people in prisons and in security jobs help bring down jobless figures. I'd be curious re the actual net effect - it's something that was mentioned once here by an Aust economist (bullshit or not, I don't know).
One other thing about public education and community services generally, is that I think they do reinforce the "contract" between an individual and the society. If I hadn't ever received a (mainly) state funded education or benefits - personally I'd feel a lot freer morally, to commit crime if I fell on hard times.
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