That's just privatization of the government's sphere. It was still done on public lands, under the state's direction and in the state's interest. It was a deliberate choice to have someone else build it -- and allow price-gouging -- than to build it themselves.

I don't think privatized prisons charging $14/minute for phone calls is a good thing either, even if the "market" (prisoners needing to call their lawyers, and having no other options, etc.) allows it.